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AS I READ ARTICLES and comments on HumbleDollar, I see concerns about taxes, Medicare, Social Security, health care costs, college, inflation, investing—and the anxiety caused by the complexity of it all. I also see very different views on what’s earned and deserved. In some ways, it’s about what we consider fair.
I suspect the HumbleDollar community is more aware and more involved in their overall financial life than the majority of Americans, but nevertheless generally representative. If we step back and consider our collective views on money and all that goes with it, have we lost our perspective? Do we realize how good we have it?
Even our poor are comparatively fortunate. If you earn $50 a day, or about $13,100 per year, you’re in the world’s top 20% for income. The average household income in the world is $12,235, while the median (or typical) per-capita household income is $2,920.
Americans have more stuff and larger homes than citizens of just about any other country. There are 300,000 items in the average American home, or so says an article in the Los Angeles Times.
The average size of U.S. homes has nearly doubled since the 1950s, according to National Public Radio. It’s still not large enough for many. A quarter of people with two-car garages say they don’t have room to park cars inside them, and 32% only have room for one vehicle, according to the Department of Energy. No wonder one out of every 10 Americans rents offsite storage—the fastest growing segment of the commercial real estate industry over the past four decades, reports The New York Times.
A Bloomberg article reveals that, when surveyed, even wealthy people—those with incomes in the top 10% of tax filers—say they’re poor. These are people earning at least $175,000 a year. A quarter of these folks say they are “poor” or “just getting by.” Half say they’re just “comfortable.” They’ve achieved the American dream, but as the article notes, it’s not enough.
We lament the demise of the traditional pension and yet not even 50% of working Americans ever had one. We also forget that a pension’s value lies in longevity as an employee. Our tendency to change jobs every four years or so makes the 401(k) plan more valuable than a pension for most workers, especially those whose 401(k) includes an employer contribution. Yet I don’t think I can convince today’s workers of that.
Where does all our money go? I know one place. A new survey says 32% of Americans have a tattoo and 22% have more than one—at an average cost of about $200. A quarter regret their tattoos. Oh well, too late. Based on my back-of-the-envelope calculation, we’ve spent at least $16.5 billion on skin ink. It seems some Americans are filling their bodies faster than their garages.
Meanwhile, our COVID-19 exuberance for pets has left some families struggling to afford their fur babies. They’re going into debt to keep their pets or giving them to shelters. How much emotion is involved in financial choices like these?
About our tax situation: The U.S. is not in the top 10 highest-taxed countries for income, corporate or sales taxes. As of 2021, the U.S. ranked 32nd out of 38 democracies as measured by taxes paid relative to gross domestic product. Although we all want government programs, our taxes are too low to support them.
We also seek legal ways to pay less tax, even as the deficit is growing fast. Each household’s share of federal interest payments on our collective debt is roughly $3,035 per year.
Our lack of appreciation for our good fortune extends beyond money. I had a health issue in 2022 that was quite routine and resolved using a robot. My father had it 60 years ago and spent a week in the hospital. Sixty years before that, he—and I—would have died.
I have a friend in England in need of a hip replacement. She’s been suffering since February and is now told she should have the surgery by Christmas. Don’t get me wrong, Americans wait for health care, too. It’s just that we seem to complain louder based on our unrealistic expectations. We also want lower health care costs with no consideration for the consequences, such as longer waits and less flexibility.
One of my unusual habits while on Cape Cod is visiting old graveyards. The tombstones can teach us a lot, including what we should appreciate. By far the most moving headstones are those of families. One I’ve visited a few times has headstones for 11 children, all of whom died in infancy or when they were just a few years old.
In the U.S. today, the infant mortality rate is 6.2 per 1,000 births. That’s a far cry from what families endured in the past. But sadly, it’s not as good as Belarus, Cyprus, Estonia, Iceland and many other developed countries.
What should we make of all this? I’d say we Americans could do better at appreciating what we have, and be a bit more prudent with our financial planning and discretionary spending.
Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.
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Great points, Richard, and I always enjoy your sound common sense and analysis. We need to appreciate America more and stop joining the “bash America” clubs that are so fashionable now!
Keep up the great work and commentaries!
I agree with most of Richard’s post – and I do think we should stop and appreciate what we have, since for most Americans, the glass is not only more than half full, it is a glass that is far bigger that the glass most other countries have.
On the other hand, I see a real day of reckoning coming. At some point, however temporarily and far in the future that may be, one party will control in Washington, and when that happens, taxes are going to go way, way up for almost everyone. That is the only way the United States can even begin to pay for the safety net that it has put in place and its other obligations. I fully expect that a good chunk of my own nest egg will be raided, and that if it isn’t raided while I am alive, it will be raided from my children when they succeed to it. I’m certainly not opposed to a thoughtfully-designed safety net (particularly so children won’t be doomed to poverty from birth), but all I am saying is that the current math simply does not work and that polarization can lead to extreme outcomes.
Raise taxes, increase productivity and economic growth…
Is the idea that we should get our spending under control just completely off the table now?
Raising taxes isn’t necessarily the only way to address the federal deficit. Another way is for government to enact policies that foster increased productivity and economic growth. Such policies should encourage investment and innovation. And a growing economy would send greater streams of revenue to Washington.
When government enacts too many laws, rules, and regulations it tends to stifle economic growth and increase our dependence on tax increases to manage deficits.
You neglect to mention that the US trails most developed countries in many categories, from childbirth deaths to education and overall happiness. Your health example of waiting for a hip replacement misses the point. So she had to wait. In the US, many who need hip surgery cannot get it because our medical system is based on profit and greed. Having a bigger home and more stuff doesn’t make the US better. There are so many more important things than that. Do comparisons of important categories, and you will find that the US is way behind many other countries. Also, compare the incomes with those of developed countries, not the many undeveloped poverty stricken ones. When comparing incomes, look at incomes relative to expenses in those countries. The US has a lot of good things, but has really slipped and is not the leader we used to be. Readers can figure out why that is. Just watch what is going on here.
I think you need to consider many factors in any comparison. The size and diversity of a country, the demographics and the homogeneous nature of a society among them. It’s hardly valid IMO to compare the happiness of Norwegians for example with Americans. Health care is quite complicated. Doctors in England are on strike, there are shortages. Taxes to pay for their system are high. On the other hand everyone is covered. The thing is Americans want all the good parts of a system, but don’t want to pay for it and don’t want restrictions on access or choice. That doesn’t work as we well know.
My husband and I both grew up always having pets, and when we married, we definitely wanted them. But we were going to school and establishing our careers, and we didn’t think it was prudent or fair to the possible pet to get one while we were still renting and moving frequently. We got our first dog just a few months after purchasing our first home.
Our kids’ generation (I have two Millennial daughters) is amazingly invested in having pets. My younger daughter has two cats and a puppy. My older daughter has a cat. Both are renters and will be for the foreseeable future. In talking with them, their friends, and my students (Gen Zers), it appears to be a child substitute—many of them feel that they can’t afford kids or otherwise don’t feel comfortable having them, so they invest emotionally and financially in the pets.
Maybe someday I’ll have grandkids. Maybe not. In the meantime, my granddog, Dolly Parton, turns 1 today.
A year ago while walking into the “downtown” of our NH town of 5k population for our tricentennial parade we walked past an overgrown cemetery that we had driven past for 6 years and didn’t realize existed.
After contacting our historical society I discovered it was a private family cemetery who was owned by the present landowner, who could not keep up with the maintenance.
Being retired and interested in landscaping I volunteered to take up its maintenance. The cemetery dates to the 1800s. One of the men buried there was married four times in his eighty years due to deaths of his wives, the first at age 30.
To answer your title question:
All pain hurts the same, only the details are different.
Jeff Amick, I hope you’re doing okay.
*Financial pain, Charlie.
If you have it, it hurts all the same. The details are just different. We’re better off today than we were, sure, but the point is pain is pain. That’s why the “long face” for many.
Me, I’m good. Thanks for the concern.
You forgot to tell those damn kids to get off your lawn!!
As I’ve written elsewhere, I have twins in college and their brother who’s nearly 18. One of my older kids is washing test tubes for minimum wage a few hours a week, not enough to pay rent but as a chem major a step in the right direction. The other has cut college to half time and works two part-time jobs, summing to three-quarter time total, as a school librarian and a kindergarten classroom aide in a local public school. Not a full benefits job, yet, but also a step in the right direction.
Almost inevitably, the littlest children have shared microbes, so lots of in-school sniffles and colds among them. My big kid caught one too, bad enough to stay home Friday (and lucky enough, better by Monday.)
The first paid hours off in their life! Because they have a job with some benefits, including sick leave. A real red letter day and something to be grateful for. The biggest job benefit is the rest of the school’s workforce, all of whom are offering solid career advice (take it or leave it.)
Not making per hour even as much as Target or McDonald’s, yet, and it took months of testing and paperwork and interviews to get a public school part-time job.
I agree there’s a lot of grumbling and comparing. It seems to work for some people, gets them some of what they want, it’s just not something I encourage. Life is short.
Mr.Quinn, when I prepared an income tax return for a young single lady with one child 20 years ago, she was making about $20,000 per year and was paying $20,000 for her child care while she was working long hours. She was living off income tax credits (child care credit, dependent care credit, and earned income tax credit). She definitely was not better off than most others in the countries you mentioned. Child care is an enormous burden every day, even for well paid people. And very few married couples can afford for one of them to stay home to watch the kid(s). We need to take better care of the poor in the USA who have kids. Higher taxes would help. Also, less government spending.
I thought you were asking for more government spending. You mean higher taxes and greater income transfer You’re right, few couples these days can live on one income. It didn’t used to be that way, but that’s another article. The overall state of American families is not great
Doesn’t that have more to do with spending than income? I’m always amazed at how much people spend who earn less than I do.
I think that’s called debt.
Unfortunately I do not agree with you. Two examples: your friend in England will get her hip replacement but many Americans without insurance or the means will not and infant mortality for black children much worse than what you stated.
Black children indeed have a much higher rate, but still one fourth of Africa. Nothing to be proud of, but still a fact.
Yes, too many Americans have no health insurance, but don’t automatically transfer that to no health care. Again, we need to do better, much better, but that doesn’t change the big picture comparing American society to the world.
Guilty on the tatoo. My middle son was determined to get a tatoo when he turned 18. I turned it into a father/son bonding experience and got a small one with him. I don’t regret it. Given the contentious nature of our relationship at the time it was a small effort at reconciliation. He’s almost 32 y/o now, and fortunately we’re much closer now.
Sounds like money well spent.
In regards to your visiting graveyards, I agree you can learn a lot from reading the tombstones. I was intrigued in my youth by how old various prominent historical figures had lived to be. For example, Benjamin Franklin (1706-1790), lived 84 years while life expectancy at birth in England in 1700 was 37 years. And many others too lived to ripe old ages. The obvious then occurred to me that the expectancy at birth averaged in all those unfortunate babies who died in infancy or early childhood. In the US in the year 1900 life expectancy for a male baby was 46 years. Infant mortality was about 15% in the first year and for the first ten years of childhood was about 23%. For babies born in the US in 2010, mortality in the first year and in the first 10 years of life was about 0.6% and 0.76% respectively. While I am amazed and grateful for modern medicine today, much of the major improvement in life expectancy today is due to dramatically lowered early childhood mortality, the result of vaccines and antibiotics, not to mention government mandated safe water and food. Nice article Dick!
Great post. The most vocal amongst us seem to crave the status of “less fortunate”. That includes many of my former colleagues making $80k a year.
I read an old article about the infant mortality rate. The US tracks mortality from the moment of birth. Some other nations do not count a birth until several days after the actual birth. A birth didn’t happen until certain forms are filed days later. Such nations would have much higher infant mortality rates if the counted infants who passed away in the first few days.
The UN is good at statistical manipulations that make the US seem to be lagging.
32 out of 38. I’d be interested to know what 6 Democracies have a lower tax rate. I’ll jump the gun and venture that the US subsidizes them somehow. Footing the lion’s share of their defense expenditures of such.
You would be mistaken. The democracies Richard mentions are Mexico, Colombia, Chile, Ireland, Costa Rica and Turkey (now devolving from democracy somewhat), and only the latter gets any significant military aid from the United States. Other low-tax democracies that get little or no military aid from the US include Singapore, Canada, Andorra, Malta, Montenegro and New Zealand.
It’s interesting to know who the 6 were, thank you.
I don’t know if the Monroe doctrine is still in effect. But certainly, those countries in the western hemisphere are safe in the knowledge that the US would defend them from any invasion.
Telling an American making $50/day that they are doing fine because they are in the top 20% worldwide isn’t going to help them meet the high costs of living here. In any case, it’s meaningless because much of the world’s population is making very little. A better comparison would be the other industrialized nations, where higher taxes buy more services.
I don’t think anyone earning $50 a day is doing fine. It’s all relative. I went to an elderly women’s home in Russia a few years back and her total income was $250 a month and rent was $150.
Higher taxes are just about everywhere and when added to income, various social services tend to show reduce poverty levels, but much higher taxes is the key. Americans have a distorted view of taxes. Even the well off make the effort to avoid the taxes we have, like keeping income under IRMAA levels.
I agree with Judge Learned Hand of the Supreme Court when it comes to taxes…
“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury, there is not even a patriotic duty to increase one’s taxes.”
Old union thugs like me love defined benefit pensions but the sad truth is that many (if not most) are severely underfunded and I fear that the PBGC won’t be able to keep on bailing out the failed ones.
Defined contribution plans can be more efficient and can follow workers from job to job. The trick is for workers to invest properly in the accumulation phase and to make the right decisions in the spend-down phase. This is easier said than done as I’ve seen many retirees treat their pension like a cookie jar, reaching in to grab a treat (car, boat, RV, and etc.) every time they get hungry.
Regarding living within or beyond your means, I had a client who only earned 40k/year and fully funded his IRA. I had another married client who made 300k and was on the brink of bankruptcy. I wish I knew how to get to and help the latter.
Great thought provoking article Richard.
One of the advantages of a union is the ability to switch employers and still be covered by the same pension. I had 4 different employers in 32 years with the Teamsters under the same pension. It allowed me to retire at 55. I worked various non union jobs for another 10 years, although by choice not necessity.
Having designed and managed both DB and DC plans and negotiated union contract related to pay and benefits for 30 years, you are right on all counts.
I’m very happy I have a pension, it allowed me to retire early. But it’s sadly worth less and less every year because it has no COLA. Apparently this was standard for US corporate pensions. Coming from the UK it was quite a shock. With no COLAs and the demise of long-tenure jobs, a 401k with employer match and opt-out rather than opt-in is probably a better deal, but there are a lot of pitfalls.
Pension COLAs are only common in public employee plans. The lack of a COLA is why we used to refer to the three legged stool of retirement income with SS and savings handling inflation. My pension does not have a COLA either, but I also had a 401k with employer match.
Before we introduce the 401k we voluntarily gave seven COLAs over the years skewing them to oldest retirees at the time. Ten years after the 401k started it was decided that the company match should be considered in lieu of COLAs.
The thing about eliminating pensions because of short worker tenure is flawed because the tenure of 4-5 years or so was always true except in certain industries.
Thank you, Richard, for these reminders!
Once upon a time, I felt at the top of the financial world in my first salaried position. Then I learned from the evening news that I was barely even a member of this country’s middle class. Context is important — such as the examples you point out — and I did not let my place on the financial ladder lessen my gratitude for being fortunate.
Another terrific article. Thank you.
There’s a natural tendency to be discontent and acquisitive, and it’s easy. It takes effort to count our blessings and deny our impulsive desires. I’m thankful I was never tempted to impulsively purchase a tattoo.
Oh yes, about our ability to save, paycheck to paycheck and all that. During 2020 the savings rate topped 30% because it was difficult to buy much. Now the savings rate is down to 3.5% making up for lost time possibly, but hardly helpful in the long run.
Agreed!