My Opinion

Struggling Middle Class – needs, wants and desires

Is the middle class “struggle” self-imposed? 

You can look at the macro data and conclude all the negative that is expressed in these quotes.  You can see flat incomes and all the rest, but that does not translate into the state of every individual or family and it does not account for the ability, indeed obligation, for people to adjust, to modify behavior, to reset priorities.

At the risk of being labeled paranoid, I see a plot here or perhaps a strategy is a better word. Convince the majority of people, in this case the middle-class, they are victims. Find the appropriate scapegoats, in this case billionaires, the 1%, wealthy, CEOs, Wall Street and convince them government is their salvation to achieve fairness. If you espouse this concept and make glowing promises, you will likely build a constituency to keep you in power.

 There can be no doubt now: The U.S. econ­omy is strug­gling, in­equal­ity is on the rise and too many Amer­i­cans feel un­cer­tain about their future.

On the cam­paign trail, I have met many of these men and women, who sit at the kitchen ta­ble each week, strain­ing to stretch their dollars from shrinking pay­checks. Fam­i­lies who can’t save for retirement with near-zero in­terest rates. Young par­ents who are be­ing crushed by their stu­dent debt. Shop own­ers who can’t get a loan be­cause their com­munity bank went out of business.   By CARLY FIORINA, WSJ 10/27/15

What has low-interest rates to do with saving for retirement? Retirement savings have no business in a savings account anyway. You most certainly can save for retirement. Has Carly followed the stock market since 2008?

I don’t need a television, I want a large flat screen TV and I desire a home theater.

imageUnless one has limitless financial resources, correctly defining needs, wants and desires and acting accordingly is the key to long-term success in my opinion. It is also my opinion that many, many Americans do not have or do not exercise this type of financial acumen.

imageThe circumstances related above may be real, but they may also reflect something else. They reflect life choices. They reflect in many cases an inability to differentiate between needs, wants and desires. I am not being callous, I am surely not being politically correct, but I am being realistic. If you define needs, wants and desires correctly and do not let them get mixed up in your financial life I am betting the vast majority of middle class families do not fit the above political descriptions.

Who is it that is spending the $700 million on marijuana in Colorado? Not billionaires‼️ But based on age data, it is the group that can’t afford to pay for its own birth control 😰

Who is buying the record 18 million cars being sold on an annual basis?

Disney theme parks across the globe brought in 148,341,000 visitors in 2014, according to attendance data released by the Themed Entertainment Association.

Disney Parks are well represented on the list of 25 most visited theme parks in the world, with nine parks landing in the top 10. Walt Disney World’s four theme parks (water parks excluded) are included in those nine.

With 19,332,000 guests, Magic Kingdom was once again the most visited theme park in the world, seeing a 4 percent increase from 2013 Source: Orlando Sentinel

I recently had some plumbing work done and the plumber’s assistant had a massive tattoo down his right arm. “Mind if I ask what that cost?” I inquired. “$2,000” he replied, “but you should see the one on my chest.” In what world does that fit into any financial need? And remember, somewhere around 17% of Americans have at least one tattoo and about 25% for the under 35 group.

SEN. BERNIE SANDERS: When you see the middle class of this country disappearing, and when you see people you know working two or three jobs trying to cobble together some income and some healthcare, you don’t just shrug your shoulders and say, “That’s the way it is.” You fight to raise the minimum wage to a living wage.

“Cobble together some income?” And exactly what is wrong working two jobs to reach your goals and improve your economic lot? I have had a job since I was twelve, I even had a night job while I was in the army. For most of my working life I had two jobs, which was necessary putting four children through college back in the 1980s, long before we started whining about everything.

The other day I happened to be driving by a middle school as it was letting out. It was a solid middle-class group. I don’t know how the kids found their way home though because virtually every one of them were busy texting or talking on their smart phone (need, want, desire?).

imageI grew up in a modest, frugal household with all the necessities, but few luxuries. Vacations beyond a few days drive were rare as was eating out except for an occasional Sunday lunch at White Castle. There were no credit cards, no debt, nothing that couldn’t be paid for with real money. Toys (a toy) were reserved for Christmas, birthdays usually brought a new shirt or underwear.

The average size American home has grown from 1500 sf in the 1920s to nearly 2,500 sf along with the higher costs of upkeep. Watch what is in shopping carts as people check out at the supermarket; lots of expensive junk makes up a large portion. 

So what does this all mean? It means liars figure and figures don’t give the full story. Is the middle class struggling because of the economy or is it struggling with itself, it’s needs, wants and desires and how to achieve them and how to set priorities? 

image

Photo by Zodar/Shutterstock

The market for lattes and espressos is boiling hot. Sales at Starbucks are up 8 percent over this time last year. Peet’s Coffee & Tea reports sales of the company’s iced coffee offerings have increased by more than 70 percent since the company debuted a new cold brew offering earlier this year. According to market researcher First Research, revenues at coffee shops in the United States increased from $10 billion in 2011 to a projected $12 billion in 2015, an increase of 20 percent in four years. Source: Slate

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16 replies »

  1. Poor: Well, let’s start with those 46+MM Americans the government asserts are poor, where annual direct income (before any government transfers) is consumer debt today.

    Looking at those numbers, I would say the middle class is making progress via restraint. But, not too much restraint.

    Consider one of my favorites about unnecessary (but for me essential) spending – Halloween: Estimated Halloween spending in the US in 2014 – wait for it … $7.4 Billion, $2.5 Billion on candy, and, … wait for it … $350+MM on PET COSTUMES. I say essential because I want the tradition I experienced as a child, the joy I had running the streets with my brothers in pursuit of as much candy as we could carry, to continue where possible. We didn’t buy costumes, for ourselves, our kids, our pets, nor do we frequent adult halloween parties, but, we do spend on candy and carve a pumpkin. Frankly, don’t care if we are dead broke, I plan to continue to do so.

    In terms of marijuana, Disney World, tattoo’s, whatever, some of that spending was a mistake. Some of that spending probably occurred when times were better (for a subset of the middle class), and, simply, I can recall going to Disney World with my son in 1981, and Disneyland with my wife, daughter and son in 2002. The former was a great dad experience. The latter, was quite the patriotic experience as we were there on the 1st 4th of July after 9/11. I don’t remember what I paid (it was certainly too much), but it is a gift I gave myself that keeps on giving.

    I too suspect the target is the 1% and wealth redistribution – when it comes to Democrats. A recent study suggested that the 100 CEOs with the highest accumulated retirement/deferred compensation benefits have a greater value, in total, than 41% of all Americans, over 100MM people. They use these date to suggest we should do away with the tax preferences accorded to retirement plans – and redistribute those monies on a per capita basis as a means to buy votes. Another study shows that the average Fortune 500 CEO has an income now 200+ times higher than the average worker. Again, the comparison is offered to suggest higher taxes on those who are already shouldering more than 50% of the burden of financing our bloated government.

    These types of comparisons are intended to create envy, and the stupid public policies that follow. Let me put those data on their head – expand the CEO comparison to all “CEO’s”, and guess what, in recent years, the average wage for all workers has increased faster than the average wage for all CEO’s. Reduce the retirement benefit comparison to qualified plans, where the tax preferences are, and guess what, pension benefits as a percent of income are not all that different, and sometimes less for highly paid than for the rank and file, taken as a group (because covered compensation is capped, maximum contributions are capped, etc.)

    Who am I to challenge people’s consumer decisions? Who are Hillary and Bernie?

    Finally, we all know how to improve the incomes of the middle class and the poor – we have seen it time, and time, and time again – increase economic growth from the 1.5% we have seen post recession to 3+%. Show me how what you propose will accomplish that – because much of what you propose seems to be an impediment to such growth (no trade agreement, higher taxes, no XL pipeline, less fossil fuels, higher capital gains taxes, higher domestic corporate income taxes, etc.)

    Like

    • Sorry, part of my note did not post, here it is in its entirety.

      Poor: Well, let’s start with those 46+MM Americans the government asserts are poor, where annual direct income (before any government transfers) is consumer debt today.

      Looking at those numbers, I would say the middle class is making progress via restraint. But, not too much restraint.

      Consider one of my favorites about unnecessary (but for me essential) spending – Halloween: Estimated Halloween spending in the US in 2014 – wait for it … $7.4 Billion, $2.5 Billion on candy, and, … wait for it … $350+MM on PET COSTUMES. I say essential because I want the tradition I experienced as a child, the joy I had running the streets with my brothers in pursuit of as much candy as we could carry, to continue where possible. We didn’t buy costumes, for ourselves, our kids, our pets, nor do we frequent adult halloween parties, but, we do spend on candy and carve a pumpkin. Frankly, don’t care if we are dead broke, I plan to continue to do so.

      In terms of marijuana, Disney World, tattoo’s, whatever, some of that spending was a mistake. Some of that spending probably occurred when times were better (for a subset of the middle class), and, simply, I can recall going to Disney World with my son in 1981, and Disneyland with my wife, daughter and son in 2002. The former was a great dad experience. The latter, was quite the patriotic experience as we were there on the 1st 4th of July after 9/11. I don’t remember what I paid (it was certainly too much), but it is a gift I gave myself that keeps on giving.

      I too suspect the target is the 1% and wealth redistribution – when it comes to Democrats. A recent study suggested that the 100 CEOs with the highest accumulated retirement/deferred compensation benefits have a greater value, in total, than 41% of all Americans, over 100MM people. They use these date to suggest we should do away with the tax preferences accorded to retirement plans – and redistribute those monies on a per capita basis as a means to buy votes. Another study shows that the average Fortune 500 CEO has an income now 200+ times higher than the average worker. Again, the comparison is offered to suggest higher taxes on those who are already shouldering more than 50% of the burden of financing our bloated government.

      These types of comparisons are intended to create envy, and the stupid public policies that follow. Let me put those data on their head – expand the CEO comparison to all “CEO’s”, and guess what, in recent years, the average wage for all workers has increased faster than the average wage for all CEO’s. Reduce the retirement benefit comparison to qualified plans, where the tax preferences are, and guess what, pension benefits as a percent of income are not all that different, and sometimes less for highly paid than for the rank and file, taken as a group (because covered compensation is capped, maximum contributions are capped, etc.)

      Who am I to challenge people’s consumer decisions? Who are Hillary and Bernie?

      Finally, we all know how to improve the incomes of the middle class and the poor – we have seen it time, and time, and time again – increase economic growth from the 1.5% we have seen post recession to 3+%. Show me how what you propose will accomplish that – because much of what you propose seems to be an impediment to such growth (no trade agreement, higher taxes, no XL pipeline, less fossil fuels, higher capital gains taxes, higher domestic corporate income taxes, etc.)

      Like

      • Right on as usual even though we disagree on some topics in benefits. How indeed do they propose to grow the economy?

        Like

    • Don’t know what the issue is, but here is what I attempted to post about the poor:

      25% have a DVR or TIVO
      75% have a car or truck, 31% have two or more cars or trucks
      67% have cable or satellite TV
      43% have internet access
      50% have a personal computer, one in seven have two or more computers
      50% of households with children have Xbox or PlayStation
      40% of those officially poor have a wide screen plasma or LCD TV and
      92% of poor households have a microwave over.

      From the Heritage Foundation Backgrounder #2955: The War on Poverty after 50 Years

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      • To start, we could try what worked in the past – reducing barriers to start ups, lowering marginal tax rates, allowing for 100% expensing of new capital investments, etc.

        Personally, I would raise the spread between the effective tax rate on long term capital gains and ordinary income – find a way to encourage folks who are thinking about it to actually start their own business.

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      • 75% do not have a DVR or TIVO
        25% do not have a car or truck, 69% do not have two or more cars or trucks
        33% do not have cable or satellite TV
        57% do not have internet access
        50% do not have a personal computer, one in seven do not have two or more computers
        50% of households with children do not have Xbox or PlayStation
        60% of those officially poor do not have a wide screen plasma or LCD TV and
        8% of poor households do not have a microwave oven.

        Lies, Damned Lies, and Statistics.

        We have to be careful what rose colored glasses we use to make value judgments, about peoples choices in this very complicated life. I am glad that most of the people I know have most of the things on this list.
        But my way of listing these things is just as valid as BenefitJack’s.

        If you look at the last 50 years the bottom 50% of workers have not done near as well as the top 50%.
        Even those that have made all the right choices can find themselves and their families in trouble because of an illness or accident. Nothing in this life is guaranteed. The public schools do a poor job educating and preparing students for the workforce or college.

        As far as CEO pay goes, it is too high. Sure CEO pay may be growing slower, But a 5% raise for some one making $10 to $25 per hour cannot be compared to a CEO getting a 2% increase in their $5 million dollar pay package. Even after 10 years of growth at these levels the CEO will be much better off than the guy making $25 dollars per hour.

        The top 30% will always pay more in income tax and I am sure they would not want to trade places with the guy making $25 per hour. Now I for one do not believe it would be fair to raise the minimum wage to $15, but raising it to $10.50 over 3 years and indexing it to inflation would help low income workers.

        I like many of the tax plans that the politicians are talking about. The first $50,000 exempt from federal tax for everyone and the doing away with most deductions would be a better system. But I am not sure this would ever happen. It would put more income in lower income workers pockets and this would be a good thing for the economy.

        I am still waiting for that trickle down money Reagan talked about in the 1980s.

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      • Agree that it is just as valid to express the data – 92% with microwave, 8% no microwave.

        My point is that the government’s definition of poverty doesn’t measure wealth, or the lack of wealth or possessions. It measures current income -without accounting for government transfers. For me, when you use the word poverty, it is a lack of wealth, a lack of money and posessions. Data show many of our poor are not poor at all in terms of posessions.

        Second, you are absolutely wrong on any 50 year comparison. It is not the same people. 50 years ago, 1965, I was part of an 8 person household where the primary breadwinner was a firefighter, earning maybe $6,000 a year (with overtime, and income from a second job repairing appliances). Today, three of the eight are dead, three are in the top quintile, and two are in the middle quintile. Economic mobility is real.

        Third, don’t fall for comparisons of Fortune 500 ceo’s with everyday workers. A comparison with the next 500 pro ball players, or actors/rock Stars would be just as valid an exercise in envy politics. If you want to compare ceo’s with everyday workers, start by including ALL ceo’s. You’ll find a much different story.

        Last, I would take Reagan’s economic policies over those of his four successors, and those of his predecessors, back to Coolidge.

        You would rather have today’s malaise?

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      • What makes now so different except the challenges and jobs are different, but not the opportunities.

        I graduated high school prepared to do nothing. I walked the streets of Newark NJ for six months trying find my first job which ended up in a union job as a mail boy in a big company where I stayed for 48 years (interrupted by two years in the army in 1968 and 1969). When I started I was the lowest paid employee out of 15,000 at slightly above minimum wage at the time; when I retired I was the 25th highest paid. College was nine years of night school while my wife and I raised four children with her not working outside the home.

        I was raised with two sisters in a one bedroom apartment. My father was a used car salesman who could not afford a house until he was 60 and who at 65 was fired because he was too old and my parents lived on Social Security the rest of their lives.

        Tell me why I should not be annoyed with all the complainers of today, the people who complain about minimum wage, instead of working toward better a job? The ones who believe they are entitled to everything including a bigger portion of my life’s work and savings? The ones who live for today and complain tomorrow?

        We should help those truly unfortunate beyond their control, but everyone else needs a kick in the pants and a class in life decision making and common sense or is it just easier to whine about what’s unfair?

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      • Dick, in response, I don’t have an issue when you indicate your annoyance with today’s complainers. I too criticize them as failing to pursue every opportunity offered – starting with public education. I too criticize “grasshoppers” as I too am an “ant”. The question becomes, how to respond.

        Do we roundly criticize those who attempt to buy votes by offering new entitlements as Bernie, Hillary, Rubio (proposed refundable child tax credit) and others contemplate? Do we roundly criticize big government folks of both parties – like Bush II who bought reelection by adding Medicare Part D and its 10+ Trillion of unfunded liability? Yes, we do. But, it is a successful strategy – promise a lot and send the bill to those who are not old enough to vote and generations yet unborn.

        What do we offer as an alternative? Here, Rubio is right. Historically, in recent decades, most jobs are created by new enterprises, small businesses. In recent years, the number of new startups is less than the number of business terminations. So, what needs to occur so that the unskilled (like you, searching for six months) can gain entrance to a position that they can ultimately leverage, through education and perseverance into a lucrative career?

        Need to identify what changes in government policies, regulations, etc. will reverse these trends – to again make work, and the pursuit of wealth more attractive than dependence on government.

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      • What many fail to realize with millions of people out of work, there are not enough jobs that pay even $15 per hour for those that have the skill set to demand the $15 per hour. They are having to work for way less, than they used to. I know friends who are working minimum wage jobs, or just above it, because that is all they can find. So I guess that is ok, and is why we have so many on food stamps. That is why I am for a tax system that lets the lower income workers keep more of their paycheck. The overpaid CEOs Hollywood Stars, Sports millionaires, overpaid politicians can make up the difference.

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      • First, we are virtually at full employment and second the math doesn’t work taking from some and giving to others.

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  2. Dick well said and lessons for all … especial ‘wants – need – desire’. Where many today have redefined desire to equal need!
    Today at 67, I still need to ‘earn’ a desired purchase, even with the resources to just buy it.

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      • I did not say take from others I said Give the first $50,000 tax free for everyone then start taxing from $50,001. The rich will always pay more in taxes, they have more income. If i made $1,000,000 in one year I would be happy to pay $500,000 in total taxes. I would still have $500,000 to live on. 10 times more than the average family. We need a tax system that provides the government with the funds needed, but we also need a smaller federal government that does not waste tax or deficit dollars. Get rid of the current 70,000 plus pages of the tax code. Tax law should not favor any corporation or people, everyone at the same income, above the $50,0001 should pay the same tax.

        We are no where close to the historic labor participation rate and the unemployment rate is much higher than reported.
        Also, wages for many do not buy the basic needs for a family of four.
        I pay nothing in federal income tax now, on $19,644 in income, I live in a 30 year old mobile home and my wife and I are very happy. But at 60 I sure would not want to be 20 again trying to raise 4 kids, like i did from 1987 to 2008 with today’s low wages and high cost of living. .

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      • Anytime you lower taxes on some you must take from others in one way or the other. I agree we need tax (and other reform). I am betting if you received $1,000,000 and had to pay half of it to the government you would be upset.

        I cannot honestly relate to your situation. The property taxes on my 90 year old house on a 50×100 lot are over 14,000 a year.

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  3. If elected, I promise an iPhone in every pocket….

    I agree with your assessment of needs and wants. My wife and I used to fight over this subject when my son was little. It took her about 10 years before she got it. My vacations in my youth were camping trips. For the last twenty years, cars were the only thing that we really bought on credit and we kept most of them 10-12 years. I think that the only thing that has really changed is that you need Internet access, just like having a phone was important years ago. It is very hard to deal with government, banks, benefits, and insurance companies with out access to forms and information posted on their websites. But that doesn’t mean you need Comcast triple play with every paid movie and sport channel.

    As a person who some would say that I am one of the “haves” I would like to have some of those “have nots” people explain to me why they consider themselves a “have not” even with a steady above minimum wage job. I have met some truly poor people, mostly because of a medical problem, who do not game the system, who can teach you and me the meaning of frugal and they will tell you they have everything they need.

    American advertising has done such a good job that every desire is now a need instead of a want at all income levels.

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