I’m from a developing country so even something like American Federal minimum wage seems extremely high to me. That said, I regularly see videos of Americans saying they can hardly afford to survive.
I know cost of living is more expensive, but things like a 20 USD shirt in America is still roughly 20 USD in my country. Except in the US it’s seen as affordable but where I’m from it’s premium.
Prices of goods don’t seem to differ *that* much. What I see, however, is that rent is super expensive.
All that to say, would these “paycheck to paycheck” people in the US be able to live okay or even lavishly if they magically didn’t have to pay rent?
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Rent and healthcare are where most costs go
The issue is far more complicated than that. Our governor proposed overriding local ordinances to force more affordable housing to be built in areas near transit hubs if a certain percentage was not built in the area.
That idea crashed in burned, it would seem that many people, even in the deep blue parts of NY really don’t want affordable housing in their community.
[https://www.nytimes.com/article/nyc-housing-hochul-long-island-westchester.html](https://www.nytimes.com/article/nyc-housing-hochul-long-island-westchester.html)
It’s mostly higher education and healthcare that have ballooned to insane prices for most of the country, though things are really shitty on the housing front in the bay area and nyc.
Neat blogpost from a few years ago:
https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/
It would have to be magic because we’d have to raise taxes on everyone to even begin to prop up such a social system and then that opens about half a dozen other cans of worms. The short answer is no…it would not solve it.
Living rent-free would solve one problem and create a dozen more.
Rent is bigger than all my other expenses combined. I imagine that’s true for a lot of people.
Yeah, people who are barely scraping now by would be massively “richer” proportionally if they had the same income and other expenses.
One thing to note is that “paycheck to paycheck” just means expenses match income with little savings. You can make hundreds of thousands a year and still be paycheck to paycheck. More commonly you can make decent money, let’s say 80k a year and still be paycheck to paycheck.
Yes, rent or mortgage is a significant amount of monthly expenses for all but the richest, and the lower you go the higher the percentage of monthly income it tends to be so having it for free would be life changing for a huge number of people. It’s not uncommon for 50% of the monthly budget to be rent when you get into poor people in even somewhat desirable areas.
That said, if you’re comparing our incomes to yours there are also aspects of expected expenses and what “getting by” means. Air conditioning in the south or needing a car in all but the most dense (and often expensive) areas for example. Not sure where you’re from or what’s expected of “getting by” but statistically speaking it’s likely Americans are including things you might not.
Rent is historically far more expensive today than it was in the past. If we had rent prices nationwide that were just the mid 90s adjusted for inflation that would be an enormous relief for people.
Let me give you a few examples. In the mid 70s my mother had her first apartment, as a 19 year old high school graduate. No college, no trade school, just a first entry level job working as a receptionist/gofer. Her first apartment was a furnished unit in Southern California (we still live in California). She told me it was like $120 per month or so and her pay was $5 per hour. Her apartment was roughly 15% of her income.
Today, that same apartment is $2000. Nearly 50 years later, its not furnished, it might have some new appliances and general upkeep. But it is $2000 per month. In order for someone to afford $2000 per month spending 15% of their income they would need to be making nearly $14,000 per month. I do not think we can expect a 19 year old, fresh high school grad, with an entry level job to make $170,000 per year.
The median household income in my city is $70,000 per year. $70,000 per year is just barely enough to afford this apartment, an apartment that in the past was something that a high school grad could afford on an entry level job quite easily. And that $70k per year earner would be spending 1/3rd of their money on rent as where the 19 year old only spent 1/6th of their money on rent.
Now, many people will just assume that this is living at the beach in California, its a desirable place. Young people should just move inland to the affordable area and commute for 2+ hours a day instead. Nope. This IS the inland part of California. This is Riverside. The coastal areas with the good job markets are even more expensive than this.
The reality is, since at least the 1990s, Urban housing in California has been under developed. Much of this is market manipulation by existing home owners and landlords who realize that housing is purely a scarcity thing, the more scarce something is in the marketplace and the price on their asset. When rental units are scarce, you can charge much higher prices for your 70 year old shit box. Doing no investment or improvement you can drastically increase your income stream.
For some. For those who are good with money and just don’t make a lot it would solve their problem. For those who have sufficient money and are just bad with finances it would not solve their problem.
Who would be footing the bill for everyone’s “free” rent?
Even our homeless (especially in California) have it better than most 3rd world people.
Housing is what is called in economics a “positional good,” and this is doubly true in counties like the US where your housing is tied to the quality of education you get because of school districts. That is, even if you doubled everyone’s income, the result would be that they would spend almost all that money competing for the same housing supply. This is one of the reasons that people aren’t really living substantially better lives now that most families are dual income and workers are more productive than ever.
And because people all want to send their kids to a “good” school district, they just will compete for those houses with no limit, precisely because the only thing that makes a school district “good” is how exclusive it is to live in.
If you magically got rid of a major expense, would people have more disposable $$? Of course. Kinda obvious, isn’t it?
Yes, i pay $1,630 a month just for rent..
No.
The paycheck to paycheck people are simply victims of their own life choices who prefer to blame circumstance. Their budgets are kind of hilarious. They’ve still “got money” for dumb shit like door dash and weed.
Housing is only high in regions.
Opportunity abounds.
There is a ton of section 8 housing assistance already and still the underclass still complains. It’s charity given without love and received without gratitude that only serves to make those landlords wealthier at public expense.
It would be easier to do things like lower the demand by expelling illegal aliens than to find funding to create more taxpayer funded housing programs.
I live well with gig work that isn’t even that consistent, because my rent is very low. I exchange 20 hours of work per month for half my rent…
Most likely. It’s usually the largest monthly expense.
I mean yeah. Of course. Rent is the biggest expense of all renters of all income levels. Mortgage payments are the biggest expense of homeowners and landlords, regardless of income level. Property is expensive. Housing is the most expensive part of almost everyone’s life.
I’m even a supporter of housing as a human right but this would be a massively expensive project that wouldn’t be viable if it was completely free, I think sliding-scale housing is doable, but that would just mean rent or mortgage rates being capped at 1/3 of the individual’s income, and no other expense is that big of a percentage unless you’re making some really, really dumb purchases.
It’s kind of weird ngl that this is a question because it’s so obvious, do people actually not have to pay rent in your country?
If I didn’t have to pay rent I would be in much better financial shape. Housing costs are by far my biggest single expense.
Housing, higher education and healthcare feel like they are priced in a different currency from food and consumer goods. Since higher education and healthcare are not constant expenses and they have built-in “coupons” (loans/scholarships and health insurance respectively), it doesn’t impact your budget as frequently….but housing is something everyone needs.
Until the increased inflation of the past two years (thankfully starting to improve), middle class people didn’t struggle to buy basic food or consumer goods the way they do in other parts of the world…but things like housing, healthcare and higher ed have had runaway inflation (15%+) for decades now…so they basically are priced in another currency.
Definitely. I used to rent and that was most of my paycheck.
Well, theoretically yes but there’s no such thing as “free.”
>All that to say, would these “paycheck to paycheck” people in the US be able to live okay or even lavishly if they magically didn’t have to pay rent?
Tbh I’d wager that a lot of these people are living in a high cost of living area. People will move to a city where rent is like $3k+ a month and then complain they are broke. They get all the benefit of living in a highly desirable area but assume that’s just the norm or something.
I know of a person who makes around $50k a year but they moved very close to Washington DC and they are pretty much broke at the end of the month. This person “lives paycheck to paycheck” technically but they get to live where they want. They could be _very_ well off if they moved to a cheaper area.
So, yea I do think if rent were cheaper it would be easier for a lot of people… but I truly think people would then just start buying stuff they don’t need and _still_ live paycheck to paycheck.
.For many people, bad financial habits are disconnected from income.
There are people who live check to check who make $30k/year and people who live check to check who make $30k/month.
There are doctors who made six figures from the beginning and can basically never retire by choice because they lived check to check. Then there are people who make $50k/year, live within their means, invest, and retire as millionaires.
For many people, bad financial habits are disconnected from income.
There are people who live check to check who make $30k/year and people who live check to check who make $30k/month.
There are doctors who made six figures from the beginning and can basically never retire by choice because they lived check to check. Then there are people who make $50k/year, live within their means, invest, and retire as millionaires.
That’s not to say that there aren’t arguments to be made for providing basic living those who need it, or to everyone. All I’m saying is that this wouldn’t stop everyone from living check to check.
That’s 100% unrealistic
Cutting ~25-35% of your budget, at the very least, wouldn’t hurt.
I’m not paycheck to paycheck but I wouldn’t spend $20 on a shirt when I get find them for $5. Even a nice button up is $15 at tjmaxx
Your point about price being the same but considered less/more expensive probably comes down to income. The US has a high standard of living that comes with generally higher incomes than many other countries.
Of course. It’s my biggest expense is rent. Not having to pay rent would allow me to save for a home.
Yes and no. Some people are paycheck-to-paycheck because they don’t live beneath their means. Removing rent would lead to them spending it on other things. There are also some people who can’t be pleased; making their rent zero wouldn’t improve their outlook because they figure getting ahead even with that boon is mathematically impossible. There are also folks who are truly fucked because their credit is terrible and they’re stuck with loans they cannot discharge through bankruptcy (e.g. student loans).
Others would save that money and use it for smart investments like a house, or business, or something that actually returns money or appreciates in value.
I 100% agree that rent and real estate right now is insane. So is our inflation and so is the fact that wages haven’t gone up appreciably since the 70’s. Many aspects of our economy aren’t entirely fair, but financial decisions are ultimately down the the individual and injecting a lot of money into the system by removing rent would not inherently fix things.
I lived at home for many years to save up money and lived beneath my means. My car is 10 years old and my clothes are also old. I play old video games on a computer that’s 6 years old. I also paid all my debts on time and racked up excellent credit, allowing me to get favorable loan when interest rates were low. Now I own a house and it’s appreciated in value while maintaining a mortgage rate that doesn’t go up like rent does. I was careful with my money for a few years and it paid off. Mind you, I had ZERO money at age 20 and a house in a nice area at age 30.
Many people I know who are my age and still struggling are not so smart. They want to live in a big city, go out to eat every night, spend money on travel, buy nice new things, and so on. Fine, that’s their decision, but it’s hard for me to have sympathy when they don’t pay off their credit cards every month and buy a new car every 4 years.
It really depends on ***why*** they are living pay check to pay check. If it’s because of low income, it will help. If it’s because they spend everything they earn, maybe not so much. I’ve known folks who make more money than me and still struggle when I do not.
Two sides of a balance sheet. There is income and there are expenses.
As far as shirts go, I don’t think I have bought one in about ten years. Any shirt I have that is less than ten years old was a gift.