How Can People Afford to LIVE?
I belong to an organization called "NextDoor" which connects people in a sort of social network that's based around your local community. What's cool about it is that even though it's a large national organization, it focuses on locals helping locals-- and it's even subdivided into neighborhoods.
Tiny Cottage For Rent!
One of our old downtown buildings
Anyway, one of the posts this morning was about a "cottage for rent" nearby, here in our town. Now, let's keep in mind here that I live in a smaller town of some 10,000 people, not in a big expensive city.
So here you have this cottage that looks quite nice and clean, and basically consists of a small bedroom, a half bath with shower, and a living/kitchen/dining space. Quite tiny, in other words.
$950 a month.
Maybe I have been living under a rock, but how the hell can people afford to LIVE anymore?
What's my point here?
Something isn't quite right here.
Twenty years ago, that cottage would have rented for about $500 a month...
Since they are asking $950 today, that ostensibly means rent has gone up 90% over that 20 year period.
Bearing a burden
Meanwhile, median household income in 1997 in the US was $55,218.
Median household income in 2016 was $59,039.
That represents an increase of about 7%.
See the problem?
And it's not just locally. Just for grins, I checked the 1-bedroom apartment I lived in when I first moved to the USA in 1981. Back then, the rent was $220.00 a month.
Using the inflation calculator for the US, and going forward to 2017, that apartment should rent for $597.00. Guess what? The building is still there, and I just checked their rentals page... 1-bedroom apartments now "start at" $950.00 there.
Somehow, that just seems a little bit out of alignment to me.
The Affordability of Living... or NOT
Maybe we should go live under a rock
Although housing seems to be one of the most affected areas, it is by no means the only one.
Here in the USA, insurance costs have also outstripped the rise in incomes by quite a wide margin, in part due to an aging population, but also due to the fact that we're a litigious bunch and that drives up costs.
Sure, you can look at "absolute" incomes and claim that we're "better off than ever" but there's a "lie by omission" inside that statement... namely that what we have to be able to BUY with that "more than ever" has risen faster than incomes, for the past 40 years.
Which leads me to the original question "How can people afford to LIVE?"
How about you? If you live in the US, have you felt the pinch of living costs rising faster than income, and especially housing? If you live elsewhere, does your country experience something similar? It used to be a standard that you were "rent stressed" if rent/mortgage was more than 30% of your total income. That has changed for many. Has it changed for you? Leave a comment-- share your experiences-- be part of the conversation!
(As usual, all text and images by the author, unless otherwise credited. This is original content, created expressly for Steemit)
Created at 171029 16:52 PDT
This is totally true in Denver, and fast.
I had to explain to my parents once why I didn't own a house yet:
My father, with no college degree, got paid more in actual, non-adjusted dollars in the 70s and 80s at his Manhattan job where people regularly got drunk or stoned on their lunch breaks, those breaks often took three hours, sometimes they just didn't go back to work at all, and they didn't get fired for any of it. The house they bought in a nice neighborhood in Jersey cost LESS THAN HIS YEARLY INCOME and a car cost a couple grand.
Meanwhile, I have never even crossed the $30k/year mark even WITH some college AND a career training school; I have been fired for being late too often when my bus was late while being told I was the best worker they had, houses around here cost $500k and our old house in NJ (that they lost to bankruptcy instead of paying it off which would have been easy) has gone up in price 10x, and a CAR costs more than my annual income, let alone a house. Oh, and I have studen loans to boot.
My parents kinda sat there for a minute and said, "I never really thought about it like that before."
Yeah, my generation got the economic middle finger. 😥
Fact.
The world has gone upside-down in the last 30-40 years or so. I made the most money in my life shortly after leaving college in 1985... $28K was pretty good back then. My income-- not in "dollars" but in inflation adjusted purchase power-- has been flat to down ever since. Even as a self-employed person, I now lose out to qualified online competition that lives in places where $800 a month is a "good" salary. I can't even pay my rent with that...
Yeah. Most articles I read about the downward trend site the start of it around the year I was born (late 70s). So now I just tell people my birth heralded the apocalypse.
A... HA! So it's YOU we have to thank for the end of the world as we know it!
You're welcome! 😈 (evil cackle)
It is heartbreaking to see how hard the middle-class is hit in the US, and other places in the western world too it seems. I know people from the US that works all the time and has only about the same as people on welfare here in Denmark. I am not sure what the solution is. Every step that would turn this development seems to go against what people in the the US feels are the way to do things. UBI would mean very high taxation of the wealthy in the country, making tariff walls against low income countries like China and India would mean hindering competition which is also, hand on the heart, against the spirit of the country.
Here in Scandinavia we have some of the highest taxations in the world and we still can't afford universal basic income.
As a Danish ex-pat living in the US, there are certain econo-philosophical issues in the USA that I still struggle with... although I understand their roots better than I used to.
The US has two financial issues that arise as a result of the great love affair here with "the individual," which in turn opens the door for greed. If the "Self" is always assigned higher priority than the "Community" then people's actions are informed only by personal benefit, not by collective benefit. As as result, there is this financial "freedom" (here meaning "hands off" by government and laws to restrict how people conduct business) which creates an extreme overclass and a very large underclass.
Here, the minimum wage is $7.25/hour. Even with a full-time job, you can't live on that. Even with TWO jobs, you can't live on that. Homelessness and unemployment aside, in the US there is a very large population of what is called the "working poor:" full-time employed, but living in poverty.
At the opposite end of the scale, there is this "no limits" upside. For example, in Denmark, the average company CEO makes about 45-50 times as much as the average worker. In the US, CEOs make 350-400 times more. And they are given lots of preferential tax treatment. That's what American "freedom" is about.
Some of it is based around the economic fallacy that rich people create jobs when they are doing well. However, it's a false theory... because "doing well" is dependent on consumption of goods, and if the average person in the street isn't spending money, companies don't grow, so the LAST thing that will happen is new jobs creation. But economists don't like that particular reality so those things get swept under the carpet...
Not much I can add. Thank you for putting this analysis together.
I sometimes wonder why such a small country like Denmark is so wealthy. We do not have that many natural resources... So things like very low corruption, or the redistribution of wealth via the tax-system, but maybe the community-feeling is also important because it somehow influences the political system (many places I have been have had wonderful community feeling but terrible governing).
And then we have the jante-lov of course :)
It's interesting how the remnants of the Jantelov has become more of a sense of "common good" thinking in Denmark... I mean, I grew up in Denmark in the 1960's/70's and I distinctly remember a couple of things, one being this notion that we're all "relevant to each other" ("komme hinanden ved") and that "society" was important... more important than the individual. And I distinctly remember a subtext in school that just because my father was managing director of a fairly large company, I should get any ideas that that somehow made me "special." Which, of course, never occurred to me, in the first place.
Of course being a smaller country may make it easier for people to relate on common ground... after all, life in Skagen isn't all that different from life in Køge. Here in the US, life in Maine is a LOT different from life in Los Angeles, California. Which sets up more of a dynamic of "differences." That's just theory, though.
True... about the size of a community (or even union of states). Smaller and more homogeneous societies are maybe more prone to uphold the common ideas. The Jantelov was not meant to be a positive thing when Aksel Sandemose invented the term in the thirties, but it might have a strange connection the this community mentality... or pack mentality of Scandinavians.
When you are reading the book, the jantelov is not a nice thing and having experienced the same things in small societies I tend to agree with the original meaning. No one should tell others to repress themselves. Envy and jealousy are bad feelings with no good in them.
But on the other hand. As an artist one of the priviligies is that you move easily between the poor and the rich, the criminal and the law-abiding. I have seen and known person on all social levels here in Denmark. Once I was to a lung-check on the Bispebjerg Hospital due to my asthma and I saw a couple that I knew. The man had built a company based on some invention, and he was one of the richest men in Denmark and biggest patrons of art (which was why I knew him). Normally when I had meet them it was in formal dress (kjole og hvidt) and diamonds etc. but as they stood there afraid of the illness that was just discovered and that he later died from they simply looked like a worried elderly couple. They went to the same hospital that the homeless hobo is using because this is where you will get a world class treatment. There was no difference.
It was not me trying to belittle his achievements, it was just in the face of life and death we are not that unalike.
The dynamics between self-realisation and communality is hard to comprehend, I think. So I often have to see them in anecdotal ways.
This is why it is more important than ever to be smart with your money. Most of my articles deal with being efficient with your finances, but that is a boring subject for many.
Look around you - do you have 'stuff' everywhere? Do you go out and spend your money on more 'stuff'? Do you have lots of charges for restaurants on your credit card?
Fuck that shit - you don't need it. You need to buy assets that will PAY YOU for owning them. Change your mindset towards money - it is YOUR LIFE. You are trading chunks of your life to get that bit of money, time you will never get back.
Stop throwing away your life on junk. Instead, buy YOUR LIFE back by acquiring assets. Collect enough of that and you will never have to work again.
Make it go quicker by not spending much, then you won't need as many assets and you will be free faster.
Once you change your mindset towards money and you realize that you are trading your life away bit by bit, you will stop doing that wasteful stuff.
If you want to be free, REALLY be free - develop an unending desire for it to be so. Make it your #1 goal in life. When you enshroud yourself in that goal it becomes the only thing that matters and you will see yourself become more and more wealthy as time passes.
Yeah, it's easier when you are bringing in more income. But by making financial freedom your one and total goal, you will develop yourself and find ways to increase your income. Because you know that all the hard work and effort is saving you from decades of wage-slavery.
What I am saying is, is that thing you are about to buy worth X amount of hours/days/weeks of your life? If truly yes, then do it. If not, then FUCK NO.
Thanks for the extensive comment!
These days, we actually have less and less stuff... I've spent the past 6-8 years gradually selling my parents' stuff from when they passed away.
I don't actually have any credit cards, and I also have no debt... if we don't have cash, we don't get it. We don't actually buy any "junk" anymore... things like clothing comes from Goodwill and thrift stores.
A lot of the challenges people face is that traditionally "fixed" expenses are becoming less and less fixed. For example, in this post I use housing as an example. OF COURSE, I can choose to move into a refrigerator box under an overpass, and I could totally afford my life then. But who wants that life?
The street level shit we deal with is stuff like our local electric utility taking upon itself to up it's "base charge" from $20 to $50 a month in order to fund putting in "smart meters" in town. They are not funding it out of their profits, they are funding it with consumers. OF COURSE I can "choose" to not have electricity... but I happen to like light after dark.
Don't get me wrong, I totallt get that lots of people are out there wasting their money willy-nilly on useless stuff and $200 sneakers for their kids... but not all of it is "empty dollars."
In 1971 I rented a one bedroom apt in Aurora Colorado for ....
(wait for it).
$75 a month.
pretty nice neighborhood too....within walking distance of Lowery AFB..where I was stationed at the time..
Oh crap Everitt, I didn't know you were in the AF.
ten years...
Yup, I believe it.
My apartment in Austin was pretty nice, too... not far from the UT Austin campus. And I was making $4.75/hr, shelving books at the UT Library system. Adjusted for inflation, that's $12.90/hr in 2017 dollars. Except that job today actually pays $10.50.
Gotta love the FED...they're so GOOD to us...(devaluing the dollar like they do..Quanatative Easing don'tcha know?
I was thinking more like Voodoo Economics...
I never did like Bush much. I always thought Reagan made a YUGE mistake picking him as VP.
Oh woah,
I TOTALLY KNOW WHAT YOU MEAN!
This has been a personal brain crunch for a while for me.
Because I just do not know how people live or afford anything anymore.
I live a lifestyle wherein I spend my time focusing on things I enjoy and not just earning money because I have to earn money.
And with that, I can live somewhat of a good life.
And of course I missing certain things in my life but what I notice is that the people who are earning maybe double as much as I am, are still 'broke'.
It just doesn't make sense to me anymore.
And people who earn a ton of money, I ask myself 'Where are they getting it from?' 'Aren't taxes eating all of that stuff up?'.
I have a huge problem with this society we live in and how we are forced to give up a part of our salary because taxes need to be paid.
Gosh, I've felt so frustrated at this system for so long already.
And I just simply do not know the answers to this.
Anyway, sorry for the very long ramble but this is my reaction to your post :)
Thank you for bringing this issue to light!
Well, thanks for your ramble @ashleykalila!
In a sense, we are blessed that we sunk what we had into buying the place we live with CASH, in the hopes of being somewhat independent of outside influences... but that only goes so far.
My wife and I are both self-employed, and whereas we are somewhat "stable" the challenge we keep facing it that everything around us keeps increasing in price far faster than our incomes. Like you, we are choosing to do "what we like" and whereas people appreciate the goods and services we offer, we seem to be getting more and more requests for "freebies," while the surrounding cost of living seems to be rising sometimes 10% a year. Insurance. Internet. Cost of food. Gas. Propane. Electricity. Not stuff we can readily do without...
I wonder if there are options to changing this economy.
There has to be right?
When I came to US in 2010, rental apartment in my city Folsom cost 1100. Now, after 7 years the same apartment costs 1850. with medium salary after taxes 3.5 - 4.5
Which is an increase of 68%. Which would be OK, if median salary ALSO increased 68% in the 7 years... but I bet it did NOT.
if I would work on the same position my salary would be increased on 10-15% for that time period
I think your approach to today's debate is interesting, but first of all there are many variables that should be considered to define costs, especially for the area of rental housing; the simple use of "the inflation calculator for the USA", is misguided by the simple fact that it is one of the least important points for the calculation of costs and prices. First of all, the list of offers and demands must be considered (high demand and few offers raise prices speculatively, housing case). Another crucial point that must take into account what you touch when you say "due to the fact that we are a litigious group and that increases the costs". Regards...
Your point is well taken @josevasquez... and in a short post like this, it's difficult to cover all the depths and nuances of what is a very complex issue.
What we do know, however, is that in 2017 you have to work more hours at the exact same job compared to 1987, in order to have the exact same apartment (for example).
Are people still "well off" compared to most of the world? Absolutely! But it is a lie by governments, and economists and people in power to suggest that we have made "gains," relative to the time.
But it is all in HOW you measure things. If you just look at numbers? Not so much. If you look in terms of "hours of effort," the result is different.
This is largely the result of Chicago School Neoliberal policy which once again put civilization in the hands of mafias gone legit. I talk about it in today's post. It's also the result of the economics of fiat with its built-in inflation, combined with allowing big finance complete speculative power AKA--the casino owners. This is only going to get exponentially worse over the coming century. The economics of this system is completely unsustainable.
And fair warning: this topic brings out the trolls paid for by your tax dollars to put the blame on you! Don't buy into their corruptions: they are culpable for this corrupt economic system.
What you say has definitely had an impact, but I also think the problem lies with housing becoming more about "investing" than about "places you live." As long as a large number of people are buying houses "to make money" rather than "to live in them" housing is driven by a profit motivation. Which means they "must" increase in value all the time... as a factor that operates independently of what people can afford to pay.
It's a bit like gasoline. Gas is not a "product," it's a commodity. The price of gas isn't tied to what it costs to get it out of the ground, refined and to the pump... but on what's going on with trading in the commodities market. Think about it... the price of gas sometimes fluctuates 25-30% in a year/// does the cost of extraction REALLY change 12-30% in a year? Nope.
Oh yeah, it's financial speculation, you're right! The prices of houses were relatively stable until neoliberalism and speculation. Also, the Chinese financial policies have played a huge role in this. While our corporations sold us out so we could buy dollar store trinkets the Chinese became enormously wealthy and their citizens had little choice in how they could invest that money: worldwide real-estate!
But the root of the trouble is fiat currency and those actors are involved in strange metaphysics, IMO....
I can but hope that enough of us out there are capable of seeing through the smoke screens and will be able to start enough of a groundswell to effectuate change.
Best way to change the world is to simply stop giving power to those who abuse power to your detriment. Vote with your dollars. Or Bitcoin. Or Steem.
I thought this post deserved a more detailed response. I don't know if I've got everything right and I'm open to feedback:)
https://steemit.com/philosophy/@andrewmarkmusic/the-ten-things-people-can-do-to-fight-our-enslavement
Thanks! Read your post and left a comment over there.
People can't afford to live. It's even worse in Australia. Homelessness is on the rise, but nothing is being done about it. It's seriously depressing.
I didn't realize it was that bad in Australia, as well. I think things in the USA started seriously heading in the wrong direction in the 1980s when houses stopped being "places to live" and instead became predominantly "investments." Once houses became investments, they were expected to increase in value every year... and the objective became to make investors happy, not to make people who live in houses happy.
I think that this is a worldwide phenomenon. It was in Canada before we moved, then similar in Costa Rica and now in Nicaragua. I ask the same question every day...How do people afford to live? They just scrape by, pay cheque to pay cheque and they are deep in debt. That's how.
Well, that's at least ONE way my wife and I are still bucking the system-- zero debt. If we can't pay cash, we don't buy it. Which-- here in the US of A-- practically makes us traitors and an "evil threat" to The Holy Church of Capitalism and the Mighty Dollar....
I hear you. I do believe things are beginning to change, but will they change fast enough?