The Daily: 19 November 2024

It’s activity time! We’re going to analyze the US economy… How’s that for ambition on a Tuesday! But anyway… here are some useful tools.

First, here is a handy take-home pay calculator that estimates a bi-monthly paycheck for a given annual salary, based on taxes where you live (if you live in the US). It does not automatically calculate the big chunks of your paycheck given over to insurance and retirement “benefits”, so you need to enter those numbers into the calculations (scroll down to the faded-text bits to find where you enter that). For reference, my rather pitiful insurance and minimal retirement contributions take an additional $300 from my income each month. You can use that number if you have benefits and don’t remember how much you are paying for them. (I had to go look it up at ADP.)

Next, here is a map of median incomes by US state. For those of us who have forgotten, the median is the middle point of a distribution. It is not an average, just the midpoint of a range of values. For example, 5 is the median of the numbers 1-9. However, the median income does not tell us how many people are above or below that income level. Five is the median of one through nine regardless of how many one-through-fours or six-through-nines there are. We do not have a good tool to measure both data frequency and data value on the fly. People like my math-nerd son are paid handsomely to figure that stuff out.

On a side note, we should all by now know that averages mean nothing in a skewed distribution like that of US income — where a tiny minority earns huge amounts of money and a much larger but still sort of small minority earns nothing at all and most of us earn something, but closer to the nothing end of the scale (which graphed distribution looks a long snake who recently swallowed a rabbit… ahem…). Average income graphs are useless in showing us what we want to know about income — which is: what can most of us expect to earn? The mode value, the most common value in a data set, is the answer to that question… but as I said, that takes data crunching. But I digress…

To add on to this real economic analysis toolkit, Google has a fairly robust mortgage calculator that includes taxes and fees where you live. Type in “mortgage calculator” and this is the thing that will likely show up above any other search results. (Which is sort of nervous-making, but whatever…) And Zillow has very good filters for home purchase variables laid out on a map-based grid. I normally set the property size to what I have learned is the minimum required space if you want to raise food (about 1/4 acre), and I need to have at least two bedrooms so my distant son can come to stay. The two-bedroom requirement also seems to select for a house size that can accommodate food storage, so that works out neatly. That’s what I search for, but you may have other priorities.

Now, play with these tools, comparing median wages and take-home pay with the monthly costs of available housing in a given area. This is what I was doing on Saturday morning, because I was absolutely done with my job. After one person was fired in August and one person walked out in late September and one person has so much vacation time to use or lose that she is out for half of every week through the end of the year (and she doesn’t do much but try to stay on top of reporting even when she is there), I am the only person processing all aspects of commercial lending for our entire bank… I am tired…

Also after the town’s water debacle and a scary-but-voluntary house electrical inspection and a fuel tank in the basement that has been pronounced terminal — meaning I have to invest thousands of dollars in either a new tank (which I do not want!) or tens of thousands in a new heating and electrical system, if I want to have heat after next year’s mandatory biennial state tank inspection — I am wondering if I can afford to stay here. More accurately, I was wondering if there is any place I could go to do what I do — which is a fairly ubiquitous job that reliably brings in above minimum wage — and not have to spend quite so much of my income on keeping a house standing, while perhaps not being the only person in a 14-branch banking network doing my job. I sort of thought these were reasonable expectations…

However I found, as you will if you do this exercise, that for just about anywhere in the US, there is no affordable housing for sale. Period. There is no place where the mortgage payments on properties for sale in a given area are not higher than the median monthly income for that area. In other words, you can’t afford to buy a house on median wages, never mind any other expense you might have — like, say, food. If you earn a bit more than median, say somewhere around the 75th percentile, then you might be able to buy a house, but it’s unlikely that you will be able to live near your job because where the jobs are is where housing is most expensive. And all other expenses, again including food, will need to be minimal. Your income will nearly all go to your mortgage.

And it is actually worse for rent. After a quick rental search (also in Zillow), I discovered that on my present wages, I can not afford to rent property containing two bedrooms anywhere in Vermont. That’s not taking into account the money I would no longer save by producing and storing a harvest every year, which, for the record, is not possible in nearly all rentals in Vermont though we are a rural state. There may be some 2-bedroom houses or condos for rent on an annual basis that have sufficient gardening space — maybe… much of Vermont is seasonal or short term rental — but these rentals tend to be far from concentrated populations. Which means out in the real boonies. For a place like that, you would need a work-from-home income because you would be far out on our generally unpaved mountain roads. Every winter you would have accessibility problems. And remember, if you can’t get out, then repair teams can’t get in. Furthermore, your landlord is probably not going to pay for emergency service calls for frozen plumbing and dead electricity.

(Insider info from your friendly banker: Many of the rentals in this state are not owned by people in this state… or they are owned by very old people who are disinclined and sometimes unable to spend money on their investment properties. In short, property owners do not care if it is possible to actually live in their properties as long as they have signed lease agreements. I think this is true just about everywhere… except maybe there is less outsider ownership in places where more people have more money. For example, I think most rentals in Massachusetts are owned by people in Massachusetts… as they are here…)

I still keep tabs on jobs in publishing, mostly because I haven’t bothered to go turn off those Indeed notifications. But it is a useful, if not rigorous, way to keep tabs on the discrepancy between wages and expenses in this country. It’s an interesting case study. To wit… Most publishing jobs are located in New York. Most publishing is in New York. Let me rephrase that, most book or periodical literature publishing jobs are in New York. Publishing jobs outside of New York, which probably outnumber publishing jobs within New York, focus on advertising, mostly web-based. This is really not what anyone looking for a publishing job is thinking of when thinking of looking for a publishing job. (Good thing to keep in mind, English and journalism majors, if there are any of you intrepid souls left.) If you want to work in publishing, you probably want to work in the kind of publishing jobs found in New York. But most publishing jobs do not pay sufficient wages to live anywhere near New York.

I have a morbid fascination with stuff like this. How exactly does publishing expect to hire people? And why haven’t they figured this out? Because from the constant ads on Indeed, they aren’t very successful at keeping people. Yet, they don’t seem to have a clue why. At a minimum, regardless of qualifications or the type of work done, wages have to pay rent in a given region. If a company can’t pay living wages, then they will not be able to hire and retain employees. If your company doesn’t have the revenue to pay living wages, then you need to rethink your business strategies. People do not have to settle for wages that won’t pay rent.

But I suppose capitalism has been forcing people to work for a pittance for as long as it has existed. It probably isn’t going to figure out why that doesn’t work. Not before capitalism fails, anyway… (Why don’t people want to work anymore…) And publishing seems to be stuck in that old wage slave paradigm.

Anyway…

Sometimes I see a job that really makes me yearn. Today it was Little, Brown Kids, in my view the premier picture book publishers in the Anglophone world. (And then there all those absolutely incredible South American and Continental European picture book creators that you can find in Independent Publishers Group… I wasted a lot of my store’s inventory space on that sparkly stuff, which goes completely unappreciated even in a Spanish-speaking majority state.) In any case… Little, Brown Kids…

The job was not a starter level. You needed eight to ten years of editorial experience in addition to a college education in some literature-adjacent field. In other words, you needed to rack up college debt on an education that would open no doors anywhere except in publishing, and you needed to spend about a decade earning even less than this presently advertised job paid. Which was $48,000-$52,000 annually, depending on your experience. (Or on the mood of HR when you interviewed). And for that decadal experience-building duration, you would need to live near the job, which for any job that might feed into Little, Brown Kids is located in New York.

Well, then… we’re not talking about gate-keeping hiring practices among US employers today. So let’s just skip over the college debt and the ten years of wage-earning at lower levels and only consider this present offering. I ran these numbers through all the tools listed above and discovered that, on that job’s salary, you can not buy anything within commuting distance of that job. Of course, nothing in any of the Five Boroughs (how silly to even think that…). But also nothing at all anywhere along the Metro line in any direction. You can buy very little anywhere in Connecticut or New Jersey or New York State, which might be possible as a driving commute if you don’t have to go into the office very often… (but this job was three days in-office per week, minimum…). At $52,000 a year, your monthly take-home pay is $3,516, which barely covers a $500,000 mortgage payment, and only a $500,000 mortgage payment. Needless to say, you would not be qualified to buy that $500,000 mortgage unless you could find a seriously nasty lender that specializes in subprime investments. And were you to find that unscrupulous mortgage lender, you couldn’t live long with that $500,000 mortgage and no food. Or water. Or heat. Or electricity. And etc.

You can almost rent on that salary at a serious train ride remove from the job, but you would be spending at least half your wages just on rent. My son lives in a rent-controlled tenement in Brooklyn. His rent is greater than one bi-monthly paycheck of that $52,000 annual salary. (He has two rooms.) He would need to shove every other expense into one paycheck, including the not insignificant commuting expenses between his Flatbush apartment and the Little, Brown offices in Midtown Manhattan. He could maybe do that, if he eats ramen and keeps the lights and screens turned off (his water and heat are paid in rent). He would never be able to come visit me. A night of New York culture would be beyond his means most of the year. (Is there any point to living in New York if you don’t get to at least partake of this one benefit to living in New York?) And heaven help him if he ever gets sick or injured…

I should point out that this is all mostly true on his actual, much-greater-than-$52,000, annual salary. On that relatively larger paycheck, he still can’t afford to live elsewhere than his two rooms in a Brooklyn rent-controlled tenement. Which rather precludes much of what we consider living. Like having children. (I have a grand-kitty…)

However, I, myself, can not take that job because this house is subsidizing rent for both my sons. Much of their life is stored here. I warehouse everything that isn’t immediately necessary but that is impossible to replace. They would both have to jettison all mementos and, in Son#1’s case, most seasonal possessions like winter tires. Son#2 finally managed to fit his cello into his Brooklyn apartment only after his partner moved out, but his music is still here. If I tried to move into two rooms within commuting distance of that job, even if I supplemented the income with a second or third job to find an apartment with maybe three rooms or closets, I would have to get rid of most of the things in this house, including their stuff. And while you can go through life without a cello (but why?), you can’t live in Vermont without seasonal tires. So someone in this family has to have storage space.

I am not willing to do that. Those mementos are the record of their lives. Mine too. And I’m just not willing to give away (probably throw away) all our stuff for the sake of a poor-paying job (or any job actually) paired with the ridiculous rents charged by property owners in this country, most of which must be ridiculous because these properties are so heavily mortgaged. Most are not in the hands of old wealth, people who have owned property long enough to pay it off. Most were bought very recently at hugely inflated prices as investments that will very likely never be paid off. Slumlords… excuse me… property owners are paying those unaffordable mortgages I talked about above and passing that on as the cost of business to their renters, charging renters more than the mortgage so that the investments actually make profit. I am not going to throw away everything I own to prop up this ridiculous system.

Nor am I willing to live on ramen and other urban “foods”. I will not give up producing and buying locally produced healthy and non-toxic food. I felt crappy in college when I could not afford to produce or buy healthy and non-toxic food — and I ate better than ramen, working as I did in restaurant jobs. I am not going back to that. I can’t. If forced to eat an “affordable” urban diet, I would end up in the hospital in short order. As many folks do. Why are diabetes and heart disease so common? The urban diet.

So I am not taking a publishing job… But how about a banking job elsewhere? Well, the results of my Saturday morning project pretty clearly showed that there is no place that has not tipped over into unlivable. No place where the employers are paying wages that have kept pace with the cost of living. It doesn’t matter if I scrap the garden and the second bedroom — well, it does, because this is my life and those are priorities for my life — because all housing has been turned into revenue extraction and no employer is paying enough to keep pace with that. Having owned a small business, I think many smaller employers simply can’t afford to hire people at living wages. But that is not publishing’s problem. They are more than capable of paying living wages to all employees, but they will not do that because that means spreading out what is probably a stagnating revenue stream more evenly. And, of course, executives will not take a pay cut for the sake of better pay for the hoi polloi down in the editorial basement.

As I said, publishing is a case study. It is an industry I am familiar with. However, there is nothing unique about publishing, except perhaps its odd enduring concentration in New York despite the hurt that must do to the industry. But publishing does not pay its people any worse than any other industry. Perhaps a little better, truthfully. I did an Indeed search for my current job in New York, thinking that being in finance in New York City probably paid well… Well, maybe if you have the top floor corner office and a lot of titles. I could expect to earn a little more in New York, but that slightly large paycheck would have to cover living expenses that would be easily four to five times what I spend to live in Vermont. This is clearly not an option…

So… here I am. I have a house. I have a job that does not pay $52,000 a year, but that does pay enough to live fairly well in Vermont. However, not so well that I can afford tens of thousands of dollars in home repairs. I might be able to borrow enough equity out of my property to pay for the necessary renovations, but I doubt that I would be able to pay off that mortgage before I die. Meaning I have to work for at least these wages until the day I fall down dead. Also meaning that I would be passing on debt to my kids. At his current wages, Son#1 could barely afford to live here and pay my current mortgage payments. That will change in the intervening years, but still… many things have to go right and nothing wrong in those intervening years, not least that I remain able to do my job into old age.

And I am already exhausted by my job…

I suppose that also assumes that my job exists deep into my old age. And that too seems like a stretch. Given the precarious state of our economy, in which nobody can afford to live and which faces extreme stress from every quarter in the near future, banking on a banking job is perhaps foolish. But then, in the case of near-term collapse, it is likely that things like mortgages also will vanish and my need of income will be much-reduced. Though it will also be nigh impossible to fix anything at that point. So whatever I have, whatever we all have when the crash comes, will be all that we ever have. It won’t matter if you have money — if you have money, which you probably won’t because, you know, crash — because there won’t be much of anything to buy. So much of what is for sale in this world comes from far away, too far for its transport to be affordable after an economic crash. Also, those who can still trade on their skills and locally-produced products aren’t going to be interested in your worthless dollars. They’ll want to be paid in something of value to them.

So I guess the wise thing, the economically savvy thing in these times, is to invest in real value, real things. Fix the house so that it will have essentials like heat and water that function in a low-tech, low-transport future. Make a garden that will keep you mostly fed and live where the balance can be sourced locally. Build a social network so you know people who can and will help when things go wrong — among other reasons to live among friends and family.

The point of all this is to point out that where you are now may be where you are stuck for life. I hope that is not true for the millions in urban areas which will fare much worse in all this economic mess than places that have more actual material wealth, like land that is able to produce food. But… how will they change their situation? Before the economic collapse comes there is no affording change, and after collapse happens there are no resources to build anew. Also, where will they go?

I began this search merely seeing if I could move into another position within my bank, one that requires a move north. But I discovered that there are no houses with gardening space for sale or rent near this job. So I kept raising the bar on the sale price to see what I would have to spend to duplicate this house in Burlington, Vermont. Friends, there are but 15 2-bedroom houses for sale in the Burlington region that cost less than $500,000. Fifteen. And this does not include my gardening requirement. Fifteen 2-bedroom houses near Burlington and most of them at the upper end of that price range — which, I should note, is well beyond the means of most Vermont salaries. (Hence all the out-of-state property owners…) So where are fleeing urbanites going to live? Right now, there is nowhere for them to go.

But then, after a collapse? Well, I hope Vermont remains as welcoming as it is now, but how welcoming can you be and still keep the lifeboat afloat? Nevertheless, I suspect it will be easier to come here than many places. But we need to be building quite a lot more houses. And not for investment, but for people. In other words, we need to be building houses that will not turn a profit, that will lose money. Which… is not a thing… even in Vermont.

(Also… we already have our share of collapse stress to manage… It took four days to get the water back on. For the entire town…)

So, I am worried. And I’d like to ask: How are things on the ground where you live… Because I just don’t see how this system can be propped up much longer. It is not merely that there is a housing crisis. This is a country that has zero housing that its people can afford on the median wages paid in any given region. That is simply impracticable. (As well as unbelievable!) And this is only one of the dire stresses on this system, while also being a stress that is impossible to relieve within this system, involving, as it does, a drastic devaluation of property and a severe loss of income to property investors. If Vermont housing was broadly affordable to Vermonters, most of the loans my bank has made would be underwater. Most of the wealth of Vermont property owners would vanish. (But they’re mostly in Massachusetts or at death’s door or both… so do we care?… ahem…) In other words, it would inevitably take an economic crash to eliminate the causes of the inevitable upcoming economic crash.

Or… it would take a voluntary relinquishing of wealth, debt canceling, and downward reassessment of property values — which, by the way, would mean less money for local communities to do things like keep the aging water system intact. (Aaarrgghhhh! Is there anything about this that is NOT an entangled predicament!)

Still, this voluntary degrowth is possible… and probably smart… but highly unlikely. (Especially given old people and Massholes…) So I am worried… I can’t afford to move. I don’t know how long I can continue bearing the workload in my job. And I have an oil tank that will not pass the state inspection next year.

And these are the privileged problems…

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©Elizabeth Anker 2024