Have you ever heard of the “Economic reality common sense paradox?” I kind of doubt it mainly because I just made it up.
My theory is simple. It says you can’t rely on economic statistics or political interpretive rhetoric to explain how individuals and families live their economic lives.
Simply put, the struggling middle class, the people who aren’t making a living wage, the victims of the rigged economy and stagnant wages as the rhetoric says, are not as bad off as the rhetoric suggests. Why? Because individuals set their spending priorities and in doing so create what they can and can not afford; which often is counter to what I would classify as common sense and logic … yes, my 72-year-old logic. In addition, we tend to ignore the relative standard of living we all have.
For example, over 90% of Americans have cable or satellite TV access in their homes. The average American home as 2.86 televisions (for 2.5 people). In the 43 states with lotteries, the average spending (with variations among the states) is $300 per adult; generally skewed toward lower-income. The average worker spends $1,100 a year on coffee. And American families are big on entertainment (movies, sporting events, electronics) averaging $2,485 per year. As you may guess that spending goes up with income, but even the lowest 20% by income spends $1,002 on entertainment.
According to Psychology Today, women spend over three weeks pay each year on … shoes. Forty-percent of millennials have at least one tattoo at an average cost for a basic tattoo of $100 (very basic). According to brewbound.com “Every year consumers shell out an average of $1,270 on beer. The highest reported amount was $10,000 while the lowest was just $100. Twenty-two percent of consumers buy and drink beer two to three times a week while 20 percent imbibe just once a week and 9 percent pop open a bottle more than five times per week.” According to one study, the average beer drinker spends 3% of their yearly income on their brew … and that ain’t high income people.
Do you see any basic necessities in the examples above? With all those TVs we have, why bother going to the movies and stadiums?
And while all this spending was going on, in 2015 the credit card debt per American household was $5,883.44 and the average credit card debt for families with credit card debt was $15,762.97
And to think there are some of us who lived our working years exactly the opposite way. No, Walmart didn’t steal your American dream, nor did Wall Street or anyone else. If your dream is gone, most likely you sold it yourself by the life choices you made.
So, about that theory of mine. For many Americans resetting their spending priorities and lifestyle easily changes their struggle. Income statistics, wage growth and Old BSs rhetoric is not representative of how Americans live their lives. If they were, there would be a lot fewer nail salons, Chinese take out restaurants and bars. 😎