People Shun What They Don’t Understand

Have you ever been poor? Do you understand what like to not have money? I don’t mean just not enough money to buy something you want, I mean you do not have enough money at all for something you need. Say it is the beginning of the month, and the total of all your bills are, for illustrative purposes, $2000 a month. That includes rent, electricity, groceries, transportation, clothing, etc. – all of the essentials. Yet, your total income is only $1500. What do you do?

Before you answer with “But I would never let myself get into a situation like that,” or “my wife/husband/partner takes up the slack,” or “that’s not realistic,” or “this is just an imaginary scenario,” – try to give it some actual thought, anyway. What would you do? Please stop reading long enough to think about that scenario and imagine yourself in it.

Okay, did you think of what you would do? – How you would handle it?

Here is a reality: Most low income people cut back on groceries, buy cheap, sew or patch clothing instead of buying new clothing, cut back on transportation, do not take vacations, combine several tasks into one trip, or take the bus. They do not get cable TV, expensive cell phone plans, computers and laptops, and do not buy little fun things on impulse. They find alternate ways to live with less, and/or they do without.

Let’s Put That Into Perspective

In fact, did you know that (as a percentage of their total income) people with low income spend more on everything than wealthier people do? Think about it. When a wealthier person, making $82,0001 per year, buys a cell phone at, say, $100, they spend .015% of their monthly income. A low income person, buying the same cell phone, spends 6% of their income on that same phone (for someone earning $18,000 per year).  If percentages were dollars, wealthier people would spend 1.5 pennies for that cell phone. Low income people would spend $6 dollars for that same phone.  (Did you know that millions of Americans actually live on less than $18,000 per year?)

And so it goes for everything else they buy: they spend more, as a percentage of their income, than wealthier people do. The more money you make, the less you pay (as a percentage of your income, and actually).

So why should wealthier people want to understand what it’s like to be poor? Well, bluntly, in straight language, the wealthy people are getting richer off the backs of those with less. In fact, most people don’t even know how bad the income disparity is.

income distribution

Here is a video that I think everyone should watch. It shows, graphically, what the actual income disparity is in the U.S.

 You’ll be shocked.

“We may not want to believe it, but the United States is now the most unequal of all Western nations. To make matters worse, America has considerably less social mobility than Canada and Europe.”

Source: http://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/

This is a growing national problem, and the theme of this blog. Income disparity causes class conflict, increases crime, fosters societal bias, promotes unrest – on top of pushing even more people into poverty and making life harder for those with less as well as those who are the most vulnerable (i.e., the elderly, disabled, single parents, children). It violates the very principles this nation was founded on – that “all men are created equal, that they are endowed by their Creator with certain inalienable rights, and that among these are life, liberty, and the pursuit of happiness.”

This reality is reflected in many areas: the “Occupy” movement (the 99% v. the 1%); the push for increases in minimum wage, the expanding push for rent control; the growing contempt for the wealthy; increases child mortality rates; increases in incarcerations; increasing cost and declining quality of medical care;  forces Americans into debt; makes America sick; males Americans less safe; makes America less Democratic; undermines the American Dream; and undermines long-term economic growth.

1I use the amount $82,000 per year (or $6833 per month) because that’s what should be a “reasonable wage” for a family in order to rent a 3 bedroom home at an average $2200 per month rent/mortgage based on realistic housing costs in this area (Sonoma County, California, USA).

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Income Inequality Hurts America and Most Americans

 

I sometimes hear (or read about) people with good jobs and a good income talking about how we need to reform government to curb spending, reduce the deficit, make government more accountable and more efficient … and I believe that is a proper goal. Unfortunately,  when “reform” is actually implemented, guess what happens? The first wave of action nearly always involves cutting spending on social programs that help the poor and the needy. That is, the government takes even more away from programs that provide money, food, medical care, and support services for the nations’ weakest and most vulnerable folks: the elderly, disabled, “working poor” and single parent families with children.

Legislators – most of whom have personal incomes of $200,000 per year and more – cut payments to people with incomes below $15,000 per year. Voters – most of whom earn a “living wage” or better – actually vote to support support this “reverse Robin Hood” tactic so city, county, state and federal legislators can increase their own salaries well over what most people in their districts make.

That is, (for example) county supervisor Jimmy Doe, earning $212,000 per year can increase his income to $265,000 per year (to keep up with expenses, you see …) while Mary Smith’s Social Security check remains at $962 per month for the third year in a row. Her monthly expenses increased by $120 in ways that are not considered when calculating Social Security Cost of Living Adjustment calculations (which do not include rent increases), but Mary doesn’t get to have any increase in income (And it doesn’t even rate consideration that Mary was a helicopter pilot in Desert Storm who took a bullet for her country while serving the people of that country).

Incentives for the rich

I like to read many different sources of information, because I want to get my facts straight before I post. I came across an article that already addressed much of what I intended to discuss here, so without permission, I copied a portion of that article below. I believe it falls under the “Fair Use Doctrine” (17 U.S.C. § 107).

Here are some things I think most people may not even think about:

(Article dated 11/7/2013) by Tyler Durden

In millions of families, both the husband and the wife work multiple jobs and it is still not enough.

If we truly did have a free market capitalist system, the entire country would be a land of opportunity and things would be getting better for everybody.  Unfortunately, that is not the case at all.  The following are 21 facts about “wealthy America” and “poor America” that are hard to believe…

#1 The lowest earning 23,303,064 Americans combined make 36 percent less than the highest earning 2,915 Americans do.

#2 40 percent of all American workers (39.6 percent to be precise) make less than $20,000 a year.

#3 According to the Pew Research Center, the top 7 percent of all U.S. households own 63 percent of all the wealth in the country.

#4 On average, households in the top 7 percent have 24 times as much wealth as households in the bottom 93 percent.

#5 According to numbers that were just released this week, 49.7 million Americans are living in poverty.  That is a brand new all-time record high.

#6 In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#7 Household incomes have actually been declining for five years in a row and total consumer credit has risen by a whopping 22 percent over the past three years.

#8 According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.

#9 The homeownership rate in the United States is at an 18 year low.

#10 The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.

#11 18 percent of all food stamp dollars are spent at Wal-Mart.

#12 According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.

#13 It is hard to believe, but right now 1.2 million students that attend public schools in America are homeless.  That number has risen by 72 percent since the start of the last recession.

#14 One recent study discovered that nearly half of all public students in the United States come from low income homes.

#15 In 1980, CEOs at S&P 500 companies made 42 times as much as their employees did on average.  Today, CEOs at S&P 500 companies make 354 times as much as their employees do on average.  In fact, there are many CEOs that make more than 1000 times what the average employees in their companies make.

#16 U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.

#17 At this point, one out of every four American workers has a job that pays $10 an hour or less.

#18 Today, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

#19 Approximately one out of every five households in the United States is now on food stamps.

#20 The number of Americans on food stamps has grown from 17 million in the year 2000 to more than 47 million today.

#21 At this point, the poorest 50 percent of all Americans collectively own just 2.5 percent of all the wealth in the United States.

——

So who still thinks we should not do everything we can to reduce income disparity in our country – allegedly  the “best country in the world?”