One thing I forgot to put in the post above is that this is a very good example of the difference between cross-section and time-average. One common objection from the Data Knowing community was that "not very many families are in the position of having to pay two lots of childcare costs". Which is true, but nearly *every* family of four will be in that position at some time. Related to this, the viral post is, in my view, correct to emphasise the extreme danger of going into a state (bankruptcy, divorce or eviction) from which it is very difficult to recover. Volatility isn't just bad because it's volatility - having to negotiate a multi-year period in which essential consumption can't be paid out of current income really increases your risk of ruin. Which is why it's a great application for social insurance.
I remember being in this period of life when I had my son in 2017 and was tenure track at Wharton and just feeling like life was impossible. And I was like—is this it? Is it always going to be this hard? Is the fun part of my life over? So when I started studying women’s time use, I wanted to look at time use over the lifecycle and especially during this period.
And what I found was what I was experiencing — this mountain of childcare and household time on average in our 30s, whenever you have young kids, which also tends to be when you’re still making career investments, so your time is crucially important at work, too, but those investments haven’t paid off yet, so money often feels tight at the same time. And looking at the data, I just felt so seen. I was like—oh, it wasn’t just me. That period of life sucks. So I called it “The Squeeze.” Because it’s time and money pressure pushing down at the same time. And then, I call what comes after it “the ironic relief,” because income is higher at the same time as these time pressures abate, and we’re thinking, gosh, could have used this a few years ago!"
and as Sir (as he then was) Fred Goodwin always used to say, "every Class 5 customer has a friend or relative who is a Class 1". You might yourself be prosperous and retired, but if your kids or nieces are going through the Squeeze, that's going to shape your view of the economy.
Makes ya wonder why we don't redesign our institutions so two periods of maximum stress don't occur at the same time...
You may recall that the first space shuttle blew up when they increased the power while they were also going through maximum aerodynamic stress, with brittle O-rings that were about to let the flames through...
The chilling words last words:
“Roger, go at throttle up”
"Uh-oh"
Thought experiment: what if career paths were designed by the women, and not by the men? Say, make the men spend a decade in the military before they are allowed to begin their brilliant civilian careers? Something equivalent to having children...would that even things up? Or, make the guy take a decade off to "run the house" and "just take care of the kids" while you are off making a name for yourself? Whatever happened to that whole "women's lib" thing?
While strongly believing that the US needs universal child care, one point that is often missed is that the young family problem is not evenly distributed. I happen to have a number of nieces and nephews with young families who are not affluent and, while I'm not going to say they are comfortable, are managing OK, own houses, and are getting to the point where their kids are or will soon be in school. What is their secret? Living in a lower-cost metro. If you live in one of the major coastal metros, it's way more difficult.
"If you live in one of the major coastal metros, it's way more difficult."
I was just about to ask where these people lived...
Near Boston a tiny ranch house on a tiny lot is heading for the million dollar mark. About 40-50 times what it originally cost! Is that called inflation, or "hyper-inflation?"
So, where are the nurses, never mind the burger flippers and baristas, or the Walmart checkers, supposed to live? The whole bottom 90 percent? This was the basis of the ski patrollers' strike almost a year ago in Park City Utah. They couldn't afford to live anywhere near where they worked. Nobody made provision for them. But their boss made $10,000,000 a year...did that make her an "essential worker?" ...Until she got fired for losing control, and not making enough money. The company owns half the ski industry, and only serves Wall Street, like United Health Care. She got a couple mil extra in severance, so she'll be OK, she can go skiing....put up a backyard ski lift.
Where I live the working class people have two or even three jobs. Half are single mothers....
But even the less expensive places are getting high, although apparently Austin is going down due to tech job losses. The techies screw up the markets everywhere they go.
Q. Why are people mad at Harvard, but not Stanford? Stanford has actually done more to change our world.
The fact that a wrecking ball named Trump was re-elected is a major piece of data for our consideration. The center of gravity has shifted to Mar-A-Lago, Florida, for now, anyway...
Most datasets can be interpreted in different ways and are "compatible" with very different interpretations if sliced and diced the right way. The "data guys" have created the so-called "crisis of reproducibility" in many disciplines.
Many “data guys” will a a rule look in the data for whichever conclusion they need to reach to please their "sponsors" and employers. They are paid to do so.
This is an odd one, like Sam, I'm a bit cautious of the numbers, because some of the ones I understand seem out of line. However, your other point has always felt important to me. Phrasing it provocatively: Why would anyone think that the training and toolkits of economists would be a good grounding to assess the vibes? (This of course gets extra fun when you notice how many forecasts economists make have a vibe component, wage-price spiral being the obvious inflation one.)
I spent some time futuristing built on cultural anthropology, so while I wouldn't claim to be a vibes expert I have spent time with vibes focussed toolkits. One thing we see in a lot of democracies is that the electoral vibe is on a much longer cycle than the average economic cycle. One reason to ponder the outlier status of both the Trente Glorieuses and the 90s/00s (and hence question if the lessons apply to politics now) is the economic cycle might have been less volatile in those periods and matched the vibe more in some ways.
All of which to say is there is a lot of "the straw that broke the camel's back" or "stochastic sandpile models" at work. The other is that inflation is an abstraction which can disguise divergences in the data set. Some kinds of inflation hurt "average voters" more than others. Since the hurt is partly psychological, we're back to needing vibes as well as data.
Aside: UK budget day today and I was amused to realise that when I was a kid, Chancellors would obsess over how they were going to treat the question of tax on beer. Today, no-one mentioned it, not Reeves, not any of the commentators. We're a different nation now.
Liked: "We're a different nation now." Same over here!
These sound like good points to me, an observer. I also wonder about the following possibilities:
1. The needed numbers don't exist.
2. The numbers exist but were not included.
3. The numbers were misinterpreted.
4. We should not be looking at numbers...we should be "listening to canaries."
There are times to analyze, time to synthesize, and times to sense the environment directly. We can miss whole forests (or fake forests) on the move by counting trees.
Maggie: "There is no such thing as society."
Shakespeare: "Great Birnam Wood to high Dunsinane Hill / Shall come against him..."
He wasn't fibbing, though! He was grabbing the numbers to hand, but I don't see him manipulating them; if he'd made a serious enough error to get qualitatively the wrong conclusion it would have been an honest mistake but as far as I can see he didn't.
More generally, I think the big problem with the post is what you are talking about in the second half of your post. If you want to know "why do the vibes feel off for parents making median income despite the rise in real incomes" you have to take that question seriously on its own terms rather than trying to torture the incomes data.
Just for example, his claim about heath insurance costs at the 45k income level is totally false, at that income level you're eligible for a $0 heath insurance plan through the ACA marketplace.
And the deductibles for the coverage you get from work can be so high you wonder "How is this even insurance?" That is IF you manage to snag a job that pays for at least 30 hours/wk, which they make mighty efforts to avoid...
All it takes is one serious health problem to ruin someone. I have seen this happen twice at close range. Goes like this: you lose the job (and the health insurance), even through no fault of your own, then the wife kicks you out, the family breaks up, you have no place to live, and your health gets worse...
One person spent time in a homeless shelter, another almost died living in his car...the only "safety net" in both cases was family or friends. Both had solid middle-class, highly-skilled jobs.
These are real world problems we have to solve. Even our military does a better job of taking care of its people. Maybe even that is not sacred any longer...
Thanks to my nephew, I now have family members in Sweden, from whom I have learned how simply losing a job need not threaten your whole life as it does here. They think we are crazy. I agree.
"Winner takes all" is fair enough shorthand to represent the situation, I think. Also: "monopoly."
The opportunistic entertainer/politicians don't fix any of this, but they make sure that their new office is redecorated, and they demand new Gulfstreams to travel around in. They pin a flag on their chest, stick a cap on their foreheads, and play at being a Mighty Superhero on social media.
Or look: the leader of the democrats, Obama, walked out the front door of the White House and immediately collected $400,000 for talking to Wall Street...then came the $64-million-dollar book deal, and a cozy cottage on Martha's Vineyard:
Let's not mention the giant asteroid that just landed in a Chicago park as his new "presidential library" against the wishes of the neighborhood people, but hey: Obama just wasn't thinking big enough; that is all chump change now. Winners now get $400,000,000 747s and $300,000,000 gold-encrusted ballrooms where they can play Jay Gatsby. They brought back the Gold Standard, and the Get Out of Jail Free Card.
«you lose the job (and the health insurance), even through no fault of your own, then the wife kicks you out, the family breaks up, you have no place to live, and your health gets worse... One person spent time in a homeless shelter, another almost died living in his car...»
Talking about people like that is going to be any traction in the current cultural climate: the argument is that wives have every right, to be happy and satisfied and in the 70% of cases where divorce is initiated by a wife that means the husband failed to ensure that she was happy and satisfied and in the 30% of cases where the divorce is initiated by a husband the wife was happy and satisfied and the husband wanted to stop that; so in either case the divorced husband has it coming for being, "objectively", abusive.
Regardless most men vote on class issues, while many women vote on identity issues so it would be more useful to point at the economic difficulties of divorced or single women.
I just went onto Healthcare.gov and pretended to be a 35 year old Ohioan couple with kids aged 2 and 4 and gross income $67,500, and selecting the Silver plans that I seemed to be pushed very much toward I was seeing premiums of about $440 a month and deductibles around $5000 ... so ... ?
I just went to heathcare.gov, entered my actual demographics (my family fits the typology in the post) and an income of $45000 (like in the post) and it gives me silver plans with $146/month and $2000 out of pocket maximum/$100 deductible.
For $65k (not what the post says) I get numbers more like what you say (which, I will note, is broadly similar to what my family pays for good employer-based insurance).
I agree that his numbers are high, and I'd say that there's some bouncing back and forth between, "minimum standard" and "point at which you don't feel like you're making obvious compromises."
For example many people spend less than $15K on transportation, but I don't think it's that difficult to meet that number if you have two people commuting by car.
Is a one-car two-job family in poverty? Not necessarily, but they are making compromises and feeling the squeeze.
15000/year is enough to own two Camrys and drive them 30 miles a day if you keep them for ~10 years. That's not maximum luxury but it's not anything remotely close to poverty.
What stands out here is the discontinuity. These aren’t gradual trade-offs but sharp thresholds where incentives invert. That’s a systems design problem, not a behavioral one.
«"The problem with Gordon," a senior minister said to me recently, "is that he doesn't understand why anyone would ever want to build a conservatory." [...] Although Mr Brown talks a lot about aspiration, he means it in the sense that people at the bottom of the pile should be able to get to the middle, rather than that those in the middle should aspire to get a little bit further towards the top. [...] He is focusing on what he recently called the “squeezed middle” because he knows that the aspirational voters who supported Tony Blair have turned away from him. But the phrase he has chosen is telling: Gordon is interested in the middle classes only if he thinks they are “squeezed” — and therefore joining the ranks of the poor who have concerned him most for all his life.»
Once the "conservatory building classes" have been deprived of their property gains that allow them to build or renovate or upgrade their conservatory (or kitchen or car or holidays etc.) they got very angry that they too were joining the "squeezed middle".
«So I won’t directly get into the Discourse relating to this substack post, in which (in my view) someone does a lot of quite questionable envelope maths to reach a really important conclusion, that conclusions being that the way the modern economy is set up, it’s basically impossible to afford entirely normal aspirations like having a young family, unless you’re either earning a lot more than the median income or qualify for means-tested benefits.»
I will get into it a bit because that post has been vastly misunderstood. What the post by M.W. Green really argued was not about "poverty" but:
* $100,000 is the minimum needed for a *middle class* lifestyle based on national average costs (so not in NYC or in Alabama).
* "middle class" lifestyle means two main things: financial security and not having to think hard about every little expense.
* Financial security can also be had by being actually poor and so receiving social insurance payments.
* The main insecurity between $35,000 and $65,000 is being progressively "fired" from social insurance payments so that between $65,000 and $100,000 there is a huge struggle to cover all expenses with own income with no social insurance help.
* At some point on the lower income level the author cried when losing $20 worth of low quality socks. However on their current higher level of income they managed to save for 6 months of expenses as a buffer.
* Their costs are significantly lower than those used as "national average" by M.W. Green in part because they accept higher risk levels particularly in healthcare, in part because the wife stays at home and spends a lot of effort minimizing costs plus of course avoiding childcare.
* Regardless both the and the M.W. Green post completely ignore the cost of saving for retirement which should take around 25% of their income and without saving for retirement there is no obvious sense of the word "security" that applies.
But overall situations like that family and the "average" family hypothesized by M.W. Green demonstrate the partial success of economic policy since Reagan/Clinton (and Thatcher/Blair): costs (of labor) have been shrunk and correspondingly incomes (from property and business) have been rising robustly.
The success has been partial because USA wages are still "unaffordable" in the $10-$20/hour while typical global market wages are $1-$2/hour so many USA workers still have "uncompetitive" living standards, but some more inflation and globalization will gradually make those costs lower. :-(
«* $100,000 is the minimum needed for a *middle class* lifestyle based on national average costs (so not in NYC or in Alabama).
* "middle class" lifestyle means two main things: financial security and not having to think hard about every little expense.»
This is the essence of the argument that M.W,. Green makes:
“In economics, the energy required to reverse a bankruptcy is exponentially higher than the energy required to pay a bill. The $140,000 line matters because it is the buffer against this Phase Change. If you are earning $80,000 with $79,000 in fixed costs, you are not stable. You are super-cooled water. One shock — a transmission failure, a broken arm — and you freeze instantly.”
“According to the Fed’s 2022 Economic Well-Being of U.S. Households survey released last Monday, 37% of Americans lack enough money to cover a $400 emergency expense”
"* Sixty-three percent of adults said they would cover a hypothetical $400 emergency expense exclusively using cash or its equivalent, unchanged from 2022 and 2023 but down from a high of 68 percent in 2021.
* Progress toward retirement savings goals improved slightly in 2024. Thirty-five percent of non-retirees thought their retirement savings plan was on track, up from 2022 and 2023, but down from 40 percent in 2021 [...]
* Rents continued to rise. The median reported rent was $1,200 in 2024, up about 10 percent each year since 2022.”
Great news for payday lenders, repo agencies, landlords! :-)
«“One day, he just cracked”. Or there might not be any particular catalyst for the “vibecession”.»
An accumulation of misfortunes can indeed make a shift but sometimes that is not needed, here the example of the UK:
* Among "people" there are big economic differences: those who have fairly secure jobs and derive much of their income from property and other forms of rent (for example retirees but also most middle-class families) and those who have insecure jobs and derive nearly all their income from often casual work and some element of social insurance (large fraction of them is immigrants who keep their head low anyhow and cannot vote).
* The latter category of lower class (working-class and under-class) people have long been merely costs to shrink and have adapted to being so and have no political representation and at most they can riot and their rioting is just a cost of doing business. They may riot near immigration centres etc. but for the ruling class that is just of "letting steam off" for the lower classes.
* But something big has changed in the past 2-3 years for the middle-class: property prices have stagnated and those on fixed (or even partially-indexed) incomes have been impoverished by the inflation policy of the past couple of governments (designed to make wages more affordable in real terms it had a side effect on rentiers).
* Many thatcherite middle-class families have based their living standards on £30,000-£50,000 a year of tax free property gains contributing to their incomes or to their pensions ("my property is my pension") and are really really angry about property prices going sideways for a few years now.
* It is these thatcherite families that have deserted the Conservative party and switched to Reform UK, plus the thatcherite families that still voted for New Labour. Their is in grant part a protest vote for missing their Thatcher/Blair given property redistribution from the lower classes.
In every previous property recession (mid-1990s, late 2000s) property owning thatcherites have brutally punished the government party failing to deliver their "vote-moving issue", by switching to abstention or some protest party.
George Orwell "Review of The Civilization of France by Ernst Robert Curtius" (1932)
“In England, a century of strong government has developed what O. Henry called the stern and rugged fear of the police to a point where any public protest seems an indecency.
But in France everyone can remember a certain amount of civil disturbance, and even the workmen in the bistros talk of la revolution - meaning the next revolution, not the last one.
The highly socialised modern mind, which makes a kind of composite god out of the rich, the government, the police and the larger newspapers, has not been developed - at least not yet.”
«The mistake here is in the background – it’s the hidden assumption that the connection between the economy and the way people feel about it has to follow a treatment-response model, with no more than a fairly short lag.»
The whole post like most of a certain type of discourse is about "people" as if "people" were one solid category (except perhaps "billionaires" or "the 1%"). After all David Cameron himself said "We are all in the same boat" and "We are all middle class now". Using another term like "the economy" is also typical of as certain type of argument as if all the "people" experienced the same "the economy". Apparently that some of the "people" did not agree with that "people" and "the economy" framing surprised sincerely some of those who make that certain type of discourse:
“I’ve been told of one meeting where the response to the argument that EU membership had increased GDP was ‘maybe your GDP but not my GDP’. This association of experts with an elite that has helped leave a whole section of society behind is discussed in this perceptive article by Jean Pisani-Ferry.”
Just a speculative thought that links this post with your recent one on Ricardo's rent problem.
Since the 60's, the US population (and I suspect elsewhere as well) has moved very heavily into large urban areas. All part of the shift away from agricultural and manufacturing employment into services. So housing costs, being greater in cities and suburbs, are going to be a much bigger portion of spending, and other costs are going to go up as well: the cost of urban education, child care, health care, etc. because of the pressure on rent/land usage.
At the same time the industrialization of food production, and its related economies of scale, has made food relatively cheaper, while reducing the number of small and family farms, and so the number of people living in rural areas.
Mining as an ex-urban industry has also dropped as an employment sector.
Maybe it's because I'm new to the blog, but I don't understand why a substack post would be a bad way to respond to an argument originally made with a substack post. It doesn't seem like it's "less easy to answer back?" The reply box is right here.
Alternatively, the author could reply with a new post on their own blog. It seems like that sort of back-and-forth is how blogging worked in the old days? What would be a better alternative?
I'm out of touch and don't know what the poverty line should be. I'm not sure that a national poverty line makes sense for the US, given rural-urban differences, widely varying housing costs between cities, and how large the country is. Nationwide averages seem of limited use?
If an analysis makes shocking conclusions, my first impulse is that something must have gone wrong, and the work needs to be checked. It would be interesting to know what went wrong and what a better answer would be.
The “Another world is possible” thing is funny because there doesn't seem to be a big push to bring that pandemic support back, the sort of thing where even if the ideas are popular in abstract you can't win a campaign on them, it's nasty politics. You kinda can conclude what people want is a de-politicized welfare state. I guess that's where you get weird ideas like NESARA and interwar social credit.
One thing I forgot to put in the post above is that this is a very good example of the difference between cross-section and time-average. One common objection from the Data Knowing community was that "not very many families are in the position of having to pay two lots of childcare costs". Which is true, but nearly *every* family of four will be in that position at some time. Related to this, the viral post is, in my view, correct to emphasise the extreme danger of going into a state (bankruptcy, divorce or eviction) from which it is very difficult to recover. Volatility isn't just bad because it's volatility - having to negotiate a multi-year period in which essential consumption can't be paid out of current income really increases your risk of ruin. Which is why it's a great application for social insurance.
"nearly *every* family of four will be in that position at some time. "
That makes me think of this interesting interview: https://annehelen.substack.com/p/i-promise-this-will-change-the-way
--------------------------------block quote---------------------------
I remember being in this period of life when I had my son in 2017 and was tenure track at Wharton and just feeling like life was impossible. And I was like—is this it? Is it always going to be this hard? Is the fun part of my life over? So when I started studying women’s time use, I wanted to look at time use over the lifecycle and especially during this period.
And what I found was what I was experiencing — this mountain of childcare and household time on average in our 30s, whenever you have young kids, which also tends to be when you’re still making career investments, so your time is crucially important at work, too, but those investments haven’t paid off yet, so money often feels tight at the same time. And looking at the data, I just felt so seen. I was like—oh, it wasn’t just me. That period of life sucks. So I called it “The Squeeze.” Because it’s time and money pressure pushing down at the same time. And then, I call what comes after it “the ironic relief,” because income is higher at the same time as these time pressures abate, and we’re thinking, gosh, could have used this a few years ago!"
and as Sir (as he then was) Fred Goodwin always used to say, "every Class 5 customer has a friend or relative who is a Class 1". You might yourself be prosperous and retired, but if your kids or nieces are going through the Squeeze, that's going to shape your view of the economy.
Makes ya wonder why we don't redesign our institutions so two periods of maximum stress don't occur at the same time...
You may recall that the first space shuttle blew up when they increased the power while they were also going through maximum aerodynamic stress, with brittle O-rings that were about to let the flames through...
The chilling words last words:
“Roger, go at throttle up”
"Uh-oh"
Thought experiment: what if career paths were designed by the women, and not by the men? Say, make the men spend a decade in the military before they are allowed to begin their brilliant civilian careers? Something equivalent to having children...would that even things up? Or, make the guy take a decade off to "run the house" and "just take care of the kids" while you are off making a name for yourself? Whatever happened to that whole "women's lib" thing?
Just wondering...
While strongly believing that the US needs universal child care, one point that is often missed is that the young family problem is not evenly distributed. I happen to have a number of nieces and nephews with young families who are not affluent and, while I'm not going to say they are comfortable, are managing OK, own houses, and are getting to the point where their kids are or will soon be in school. What is their secret? Living in a lower-cost metro. If you live in one of the major coastal metros, it's way more difficult.
Liked:
"If you live in one of the major coastal metros, it's way more difficult."
I was just about to ask where these people lived...
Near Boston a tiny ranch house on a tiny lot is heading for the million dollar mark. About 40-50 times what it originally cost! Is that called inflation, or "hyper-inflation?"
So, where are the nurses, never mind the burger flippers and baristas, or the Walmart checkers, supposed to live? The whole bottom 90 percent? This was the basis of the ski patrollers' strike almost a year ago in Park City Utah. They couldn't afford to live anywhere near where they worked. Nobody made provision for them. But their boss made $10,000,000 a year...did that make her an "essential worker?" ...Until she got fired for losing control, and not making enough money. The company owns half the ski industry, and only serves Wall Street, like United Health Care. She got a couple mil extra in severance, so she'll be OK, she can go skiing....put up a backyard ski lift.
Where I live the working class people have two or even three jobs. Half are single mothers....
But even the less expensive places are getting high, although apparently Austin is going down due to tech job losses. The techies screw up the markets everywhere they go.
Q. Why are people mad at Harvard, but not Stanford? Stanford has actually done more to change our world.
The fact that a wrecking ball named Trump was re-elected is a major piece of data for our consideration. The center of gravity has shifted to Mar-A-Lago, Florida, for now, anyway...
Well said. I wish the data guys would have more humility about how many problems can be understood and solved by looking at charts.
Most datasets can be interpreted in different ways and are "compatible" with very different interpretations if sliced and diced the right way. The "data guys" have created the so-called "crisis of reproducibility" in many disciplines.
Many “data guys” will a a rule look in the data for whichever conclusion they need to reach to please their "sponsors" and employers. They are paid to do so.
This is an odd one, like Sam, I'm a bit cautious of the numbers, because some of the ones I understand seem out of line. However, your other point has always felt important to me. Phrasing it provocatively: Why would anyone think that the training and toolkits of economists would be a good grounding to assess the vibes? (This of course gets extra fun when you notice how many forecasts economists make have a vibe component, wage-price spiral being the obvious inflation one.)
I spent some time futuristing built on cultural anthropology, so while I wouldn't claim to be a vibes expert I have spent time with vibes focussed toolkits. One thing we see in a lot of democracies is that the electoral vibe is on a much longer cycle than the average economic cycle. One reason to ponder the outlier status of both the Trente Glorieuses and the 90s/00s (and hence question if the lessons apply to politics now) is the economic cycle might have been less volatile in those periods and matched the vibe more in some ways.
All of which to say is there is a lot of "the straw that broke the camel's back" or "stochastic sandpile models" at work. The other is that inflation is an abstraction which can disguise divergences in the data set. Some kinds of inflation hurt "average voters" more than others. Since the hurt is partly psychological, we're back to needing vibes as well as data.
Aside: UK budget day today and I was amused to realise that when I was a kid, Chancellors would obsess over how they were going to treat the question of tax on beer. Today, no-one mentioned it, not Reeves, not any of the commentators. We're a different nation now.
Liked: "We're a different nation now." Same over here!
These sound like good points to me, an observer. I also wonder about the following possibilities:
1. The needed numbers don't exist.
2. The numbers exist but were not included.
3. The numbers were misinterpreted.
4. We should not be looking at numbers...we should be "listening to canaries."
There are times to analyze, time to synthesize, and times to sense the environment directly. We can miss whole forests (or fake forests) on the move by counting trees.
Maggie: "There is no such thing as society."
Shakespeare: "Great Birnam Wood to high Dunsinane Hill / Shall come against him..."
https://www.woodlands.co.uk/blog/art-and-craft/woodlands-and-forests-in-shakespeares-plays/
A mismatch of signals, mental models, and expectations can be deadly. Here is a great piece of reporting on an actual example:
https://www.miamiherald.com/news/local/article308679915.html
May I throw in a bonus Tracey Ullman for fun? It has even has a forest reference in it!
https://www.youtube.com/watch?v=vUYaMFC3kAA
My reaction to that post was guided by a different maxim, which I learned from a blogger more than 20 years ago: fibbers forecasts are worthless.
He wasn't fibbing, though! He was grabbing the numbers to hand, but I don't see him manipulating them; if he'd made a serious enough error to get qualitatively the wrong conclusion it would have been an honest mistake but as far as I can see he didn't.
More generally, I think the big problem with the post is what you are talking about in the second half of your post. If you want to know "why do the vibes feel off for parents making median income despite the rise in real incomes" you have to take that question seriously on its own terms rather than trying to torture the incomes data.
Just for example, his claim about heath insurance costs at the 45k income level is totally false, at that income level you're eligible for a $0 heath insurance plan through the ACA marketplace.
but those plans have quite high deductibles, so the question is then "would a family of four get through $10k of healthcare in a year"?
And the deductibles for the coverage you get from work can be so high you wonder "How is this even insurance?" That is IF you manage to snag a job that pays for at least 30 hours/wk, which they make mighty efforts to avoid...
All it takes is one serious health problem to ruin someone. I have seen this happen twice at close range. Goes like this: you lose the job (and the health insurance), even through no fault of your own, then the wife kicks you out, the family breaks up, you have no place to live, and your health gets worse...
One person spent time in a homeless shelter, another almost died living in his car...the only "safety net" in both cases was family or friends. Both had solid middle-class, highly-skilled jobs.
These are real world problems we have to solve. Even our military does a better job of taking care of its people. Maybe even that is not sacred any longer...
Thanks to my nephew, I now have family members in Sweden, from whom I have learned how simply losing a job need not threaten your whole life as it does here. They think we are crazy. I agree.
"Winner takes all" is fair enough shorthand to represent the situation, I think. Also: "monopoly."
The opportunistic entertainer/politicians don't fix any of this, but they make sure that their new office is redecorated, and they demand new Gulfstreams to travel around in. They pin a flag on their chest, stick a cap on their foreheads, and play at being a Mighty Superhero on social media.
Or look: the leader of the democrats, Obama, walked out the front door of the White House and immediately collected $400,000 for talking to Wall Street...then came the $64-million-dollar book deal, and a cozy cottage on Martha's Vineyard:
https://www.homesandgardens.com/news/president-obama-new-house-marthas-vineyard
Let's not mention the giant asteroid that just landed in a Chicago park as his new "presidential library" against the wishes of the neighborhood people, but hey: Obama just wasn't thinking big enough; that is all chump change now. Winners now get $400,000,000 747s and $300,000,000 gold-encrusted ballrooms where they can play Jay Gatsby. They brought back the Gold Standard, and the Get Out of Jail Free Card.
After all: "We stole it fair and square!"
See: SI Hayakawa (an early systems thinker.)
https://www.azquotes.com/author/6418-S_I_Hayakawa#google_vignette
I am not competent to get into the facts and figures, I am just looking out the window. So just consider me a single data vantage point :-)
Wish you all a healthy and happy Thanksgiving, wherever you are...
«$300,000,000 gold-encrusted ballrooms»
It seems rather a large deep underground shelter and command center, the ballroom seems to be an excuse.
«you lose the job (and the health insurance), even through no fault of your own, then the wife kicks you out, the family breaks up, you have no place to live, and your health gets worse... One person spent time in a homeless shelter, another almost died living in his car...»
Talking about people like that is going to be any traction in the current cultural climate: the argument is that wives have every right, to be happy and satisfied and in the 70% of cases where divorce is initiated by a wife that means the husband failed to ensure that she was happy and satisfied and in the 30% of cases where the divorce is initiated by a husband the wife was happy and satisfied and the husband wanted to stop that; so in either case the divorced husband has it coming for being, "objectively", abusive.
Regardless most men vote on class issues, while many women vote on identity issues so it would be more useful to point at the economic difficulties of divorced or single women.
No that's not true, at that income level the deductibles are low.
I just went onto Healthcare.gov and pretended to be a 35 year old Ohioan couple with kids aged 2 and 4 and gross income $67,500, and selecting the Silver plans that I seemed to be pushed very much toward I was seeing premiums of about $440 a month and deductibles around $5000 ... so ... ?
(can't put screenshots in comments apparently, but this was typical)
"MedMutual
Silver $3,400 w/ Virtual & Wellness ON-EX (200-250% FPL)
Extra savings
Metal Level:
Silver
Plan type:
HMO
Plan ID:
99969OH0080547
Rating
Quality Rating: 4 of 5 stars
Premium
$436.94/month
Including a $888 tax credit
was $1,324.94
Estimated total yearly cost
Add yearly cost
Deductible
$6,800
Family total
(health & drug combined)
Extra deductible for some services
Out-of-pocket maximum
$16,200
Family total"
I just went to heathcare.gov, entered my actual demographics (my family fits the typology in the post) and an income of $45000 (like in the post) and it gives me silver plans with $146/month and $2000 out of pocket maximum/$100 deductible.
For $65k (not what the post says) I get numbers more like what you say (which, I will note, is broadly similar to what my family pays for good employer-based insurance).
I agree that his numbers are high, and I'd say that there's some bouncing back and forth between, "minimum standard" and "point at which you don't feel like you're making obvious compromises."
For example many people spend less than $15K on transportation, but I don't think it's that difficult to meet that number if you have two people commuting by car.
Is a one-car two-job family in poverty? Not necessarily, but they are making compromises and feeling the squeeze.
15000/year is enough to own two Camrys and drive them 30 miles a day if you keep them for ~10 years. That's not maximum luxury but it's not anything remotely close to poverty.
What stands out here is the discontinuity. These aren’t gradual trade-offs but sharp thresholds where incentives invert. That’s a systems design problem, not a behavioral one.
BTW as to the famous "squeezed middle" here is one of the best examples of New Labour "centrist" thinking:
https://www.telegraph.co.uk/comment/columnists/rachelsylvester/3556538/Brown-and-the-conservatory-building-classes.html
«"The problem with Gordon," a senior minister said to me recently, "is that he doesn't understand why anyone would ever want to build a conservatory." [...] Although Mr Brown talks a lot about aspiration, he means it in the sense that people at the bottom of the pile should be able to get to the middle, rather than that those in the middle should aspire to get a little bit further towards the top. [...] He is focusing on what he recently called the “squeezed middle” because he knows that the aspirational voters who supported Tony Blair have turned away from him. But the phrase he has chosen is telling: Gordon is interested in the middle classes only if he thinks they are “squeezed” — and therefore joining the ranks of the poor who have concerned him most for all his life.»
Once the "conservatory building classes" have been deprived of their property gains that allow them to build or renovate or upgrade their conservatory (or kitchen or car or holidays etc.) they got very angry that they too were joining the "squeezed middle".
«So I won’t directly get into the Discourse relating to this substack post, in which (in my view) someone does a lot of quite questionable envelope maths to reach a really important conclusion, that conclusions being that the way the modern economy is set up, it’s basically impossible to afford entirely normal aspirations like having a young family, unless you’re either earning a lot more than the median income or qualify for means-tested benefits.»
I will get into it a bit because that post has been vastly misunderstood. What the post by M.W. Green really argued was not about "poverty" but:
* $100,000 is the minimum needed for a *middle class* lifestyle based on national average costs (so not in NYC or in Alabama).
* "middle class" lifestyle means two main things: financial security and not having to think hard about every little expense.
* Financial security can also be had by being actually poor and so receiving social insurance payments.
* The main insecurity between $35,000 and $65,000 is being progressively "fired" from social insurance payments so that between $65,000 and $100,000 there is a huge struggle to cover all expenses with own income with no social insurance help.
I have done some discussion about it with a blogger who was in the $50k/y range and now seems to be in the $70k/y range with a family of five and apparently coping: https://yarrow549425.substack.com/p/140kyr-is-not-the-poverty-line
My main takes from that discussion was:
* At some point on the lower income level the author cried when losing $20 worth of low quality socks. However on their current higher level of income they managed to save for 6 months of expenses as a buffer.
* Their costs are significantly lower than those used as "national average" by M.W. Green in part because they accept higher risk levels particularly in healthcare, in part because the wife stays at home and spends a lot of effort minimizing costs plus of course avoiding childcare.
* Regardless both the and the M.W. Green post completely ignore the cost of saving for retirement which should take around 25% of their income and without saving for retirement there is no obvious sense of the word "security" that applies.
But overall situations like that family and the "average" family hypothesized by M.W. Green demonstrate the partial success of economic policy since Reagan/Clinton (and Thatcher/Blair): costs (of labor) have been shrunk and correspondingly incomes (from property and business) have been rising robustly.
The success has been partial because USA wages are still "unaffordable" in the $10-$20/hour while typical global market wages are $1-$2/hour so many USA workers still have "uncompetitive" living standards, but some more inflation and globalization will gradually make those costs lower. :-(
«* $100,000 is the minimum needed for a *middle class* lifestyle based on national average costs (so not in NYC or in Alabama).
* "middle class" lifestyle means two main things: financial security and not having to think hard about every little expense.»
This is the essence of the argument that M.W,. Green makes:
“In economics, the energy required to reverse a bankruptcy is exponentially higher than the energy required to pay a bill. The $140,000 line matters because it is the buffer against this Phase Change. If you are earning $80,000 with $79,000 in fixed costs, you are not stable. You are super-cooled water. One shock — a transmission failure, a broken arm — and you freeze instantly.”
https://finance.yahoo.com/news/percentage-americans-unable-cover-400-133058811.html
“According to the Fed’s 2022 Economic Well-Being of U.S. Households survey released last Monday, 37% of Americans lack enough money to cover a $400 emergency expense”
https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households-in-2024-executive-summary.htm
"* Sixty-three percent of adults said they would cover a hypothetical $400 emergency expense exclusively using cash or its equivalent, unchanged from 2022 and 2023 but down from a high of 68 percent in 2021.
* Progress toward retirement savings goals improved slightly in 2024. Thirty-five percent of non-retirees thought their retirement savings plan was on track, up from 2022 and 2023, but down from 40 percent in 2021 [...]
* Rents continued to rise. The median reported rent was $1,200 in 2024, up about 10 percent each year since 2022.”
Great news for payday lenders, repo agencies, landlords! :-)
«“One day, he just cracked”. Or there might not be any particular catalyst for the “vibecession”.»
An accumulation of misfortunes can indeed make a shift but sometimes that is not needed, here the example of the UK:
* Among "people" there are big economic differences: those who have fairly secure jobs and derive much of their income from property and other forms of rent (for example retirees but also most middle-class families) and those who have insecure jobs and derive nearly all their income from often casual work and some element of social insurance (large fraction of them is immigrants who keep their head low anyhow and cannot vote).
* The latter category of lower class (working-class and under-class) people have long been merely costs to shrink and have adapted to being so and have no political representation and at most they can riot and their rioting is just a cost of doing business. They may riot near immigration centres etc. but for the ruling class that is just of "letting steam off" for the lower classes.
* But something big has changed in the past 2-3 years for the middle-class: property prices have stagnated and those on fixed (or even partially-indexed) incomes have been impoverished by the inflation policy of the past couple of governments (designed to make wages more affordable in real terms it had a side effect on rentiers).
* Many thatcherite middle-class families have based their living standards on £30,000-£50,000 a year of tax free property gains contributing to their incomes or to their pensions ("my property is my pension") and are really really angry about property prices going sideways for a few years now.
* It is these thatcherite families that have deserted the Conservative party and switched to Reform UK, plus the thatcherite families that still voted for New Labour. Their is in grant part a protest vote for missing their Thatcher/Blair given property redistribution from the lower classes.
In every previous property recession (mid-1990s, late 2000s) property owning thatcherites have brutally punished the government party failing to deliver their "vote-moving issue", by switching to abstention or some protest party.
«at most they can riot and their rioting is just a cost of doing business.»
https://books.google.ca/books?id=jJj0NgA08SUC&pg=PA244&lpg=PA244
George Orwell "Review of The Civilization of France by Ernst Robert Curtius" (1932)
“In England, a century of strong government has developed what O. Henry called the stern and rugged fear of the police to a point where any public protest seems an indecency.
But in France everyone can remember a certain amount of civil disturbance, and even the workmen in the bistros talk of la revolution - meaning the next revolution, not the last one.
The highly socialised modern mind, which makes a kind of composite god out of the rich, the government, the police and the larger newspapers, has not been developed - at least not yet.”
«The mistake here is in the background – it’s the hidden assumption that the connection between the economy and the way people feel about it has to follow a treatment-response model, with no more than a fairly short lag.»
The whole post like most of a certain type of discourse is about "people" as if "people" were one solid category (except perhaps "billionaires" or "the 1%"). After all David Cameron himself said "We are all in the same boat" and "We are all middle class now". Using another term like "the economy" is also typical of as certain type of argument as if all the "people" experienced the same "the economy". Apparently that some of the "people" did not agree with that "people" and "the economy" framing surprised sincerely some of those who make that certain type of discourse:
https://mainlymacro.blogspot.co.uk/2016/09/voters-making-big-mistakes.html
“I’ve been told of one meeting where the response to the argument that EU membership had increased GDP was ‘maybe your GDP but not my GDP’. This association of experts with an elite that has helped leave a whole section of society behind is discussed in this perceptive article by Jean Pisani-Ferry.”
Just a speculative thought that links this post with your recent one on Ricardo's rent problem.
Since the 60's, the US population (and I suspect elsewhere as well) has moved very heavily into large urban areas. All part of the shift away from agricultural and manufacturing employment into services. So housing costs, being greater in cities and suburbs, are going to be a much bigger portion of spending, and other costs are going to go up as well: the cost of urban education, child care, health care, etc. because of the pressure on rent/land usage.
At the same time the industrialization of food production, and its related economies of scale, has made food relatively cheaper, while reducing the number of small and family farms, and so the number of people living in rural areas.
Mining as an ex-urban industry has also dropped as an employment sector.
Maybe it's because I'm new to the blog, but I don't understand why a substack post would be a bad way to respond to an argument originally made with a substack post. It doesn't seem like it's "less easy to answer back?" The reply box is right here.
Alternatively, the author could reply with a new post on their own blog. It seems like that sort of back-and-forth is how blogging worked in the old days? What would be a better alternative?
I'm out of touch and don't know what the poverty line should be. I'm not sure that a national poverty line makes sense for the US, given rural-urban differences, widely varying housing costs between cities, and how large the country is. Nationwide averages seem of limited use?
If an analysis makes shocking conclusions, my first impulse is that something must have gone wrong, and the work needs to be checked. It would be interesting to know what went wrong and what a better answer would be.
this is one for @kylascanlon
The “Another world is possible” thing is funny because there doesn't seem to be a big push to bring that pandemic support back, the sort of thing where even if the ideas are popular in abstract you can't win a campaign on them, it's nasty politics. You kinda can conclude what people want is a de-politicized welfare state. I guess that's where you get weird ideas like NESARA and interwar social credit.
Really good essay. Thanks, once again, for the effort.