Eleven Reasons Why You and Your Family are Poor–and Likely to Stay Poor

Adask’s Law

The Wall Street Journal reports in “Five Reasons Why You are Poor” that, according to the Federal Reserve,household net worth rose to $80.6 trillion in the fourth quarter of 2013, up from $70.83 trillion for the same period in 2013–an increase of nearly $10 trillion over the last four quarters–thanks to rising values of homes and U.S. stocks.  

Maybe so, but those numbers don’t make sense to me.

There are about 120 million households in the US.  If their total net worth is $80 trillion, their average net worth is about $670,000.  I don’t know how the Federal Reserve computes average household net worth, but I don’t know very many people whose average household net worth is anywhere close to $670,000.  If America’s average household net worth were really $670,000–and if that wealth were distributed on a bell curve basis–I can’t imagine that we’d have any economic problems at all in this country. There’s something wrong and fundamentally misleading about the $80 trillion number the Fed used to describe American total household net worth. . . .

The Wall Street Journal continued to report that “But . . . employee pay as a share of national income has fallen to its lowest levels since 1951.

“Here are five reasons Americans still feel poor:”

1. “Childcare costs surge

“Childcare payments for families with employed mothers rose 50% from 2002 to 2011 and 250% over the last three decades, according to the U.S. Census Bureau. . . .  Family income after taxes and other deductions, meanwhile, rose by just 0.6%, and the overall cost of living grew by 1.6% over the same period.”

I don’t know where they come up with these numbers.  The cost of living rose by just “1.6%” over thirty years?  That must be a gross mistake.

2. “Rent-to-income ratio

“Many young Americans can’t afford to save for the down payment for a home, partly because a large portion of their income is being eaten up by rent.  50% of U.S. renters spent more than 30% of theirgross income on rent  in 2010, up a record 12% from the 38% of households grappling with such high rent-to-income ratio a decade prior.”

3. “Student loans

“The average cost of tuition and fees at public four-year colleges jumped 27% from 2008 to 2013— and with it, the amount of debt students face. According to a February report from the Federal Reserve Bank of New York, student loan debt increased $114 billion in 2013 alone to $1.08 trillion. The average college graduate’s debt load was $29,400, up roughly 6% a year since 2008.

“However, many students can’t pay: 11.5% of student loan balances are more than 90 days delinquent (this is the highest rate of delinquency among credit cards, mortgages, auto loans and home-equity loans), according to the Federal Reserve Bank of New York.

4. “Savings

“Top-tier interest rates on savings have fallen from 5.3% in October, 2007 to around 1% today. . . . For those on a fixed income, including many retirees who rely on CDs and other fixed-income investments, this is bad news since low interest rates dramatically reduces their purchasing power. For all Americans, these low interest rates will not outpace inflation.

5. “Wages

“A study by the Economic Policy Institute published last year found that the median worker saw wage growth of just 5% between 1979 [!!!; the dollar became a pure fiat currency in A.D. 1971] and2012, despite productivity growth of 74.5%. ‘The vast majority of U.S. workers—including white-collar and blue-collar workers and those with and without a college degree—have endured more than a decade of wage stagnation.’ The Census Bureau found similar wage stagnation with the real median income of $51,017 being virtually unchanged from the late 70s and early 80s.

“Meanwhile, prices on some key items have jumped. Fuel prices, for example, have risen to more than $4 a gallon, up from around $2.50 in 2007, and food prices, thanks in part to the drought in California, have climbed steadily just this year alone.”

And I’ll offer six more reasons of my own as to why some of your are poor and you and your children are likely to stay poor:

6.   We have a fiat monetary system that is unconstitutional and sure to eat away at any paper savings that you or your employers might otherwise acquire.

7.  Big government has imposed a mass of regulations on American businesses that cost each household at least $15,000 per year.

8.  Big government, in its infinite wisdom, shipped many American industries and their jobs to third world countries, leaving you with less opportunity to get a good job and a higher probability of becoming a McDonald’s hamburger-flipper or a welfare dependent.

9.  Government has encouraged the invasion of millions of illegal aliens to take some our remaining jobs, and also depress our wages towards a minimum wage level.

10.  Overall tax rates (local, state, federal and hidden) have risen from 15% in A.D. 1950 to 60% today.

11.  Most Americans are still dumb enough to trust big government.

http://adask.wordpress.com/2014/05/08/eleven-reasons-why-you-and-your-family-are-poor-and-likely-to-stay-poor/