I'm fortunate enough to be in one of the top percentiles of household income but I'm not independently wealthy and I have no idea how my kids are going to make it.
Like Atwood, I did not come from a well-off family; parents divorced in my early teens and father passed away in my late teens from cancer (smoking and alcoholism) and in many ways lucked into a very good career after attending a state university. My spouse's father -- a janitor in a public school -- and mother -- a crossing guard -- passed when she was in her 20's as well. There weren't any large fortunes passed down.
Some friends recently purchased a house in my township and I visited to drop off my kid for a play date. I walked in and thought to myself "wow, this is a $1m house" ... except it looked just like mine...that I had purchased 9 years earlier for a fraction of the price. It boggles the mind to consider when/how my kids will be able to have their slice of the American Dream.
There are clearly some fundamental things that have to be fixed in the US at a policy level, but there's seemingly no political will to fix them; everyone seems out for themselves and to enrich their own coffers. This is handicapping social mobility through the hostile policy positions towards social safety nets and foundational services (e.g. education, healthcare, childcare??). This is the sentiment that I feel Atwood is also feeling.
As a high earning software engineer (IC), I'm not sure how I can survive in the US once I can no longer find companies willing to hire me either because of AI or because of age (early 40's now so I figure maybe 10 years of high earning as an IC?).
Look to the stagnancy of the UK to see where the US could be in a few more decades. They have the same high prices for housing, but far far lower wages. When the powerful political class (homeowners) has all their wealth tied up in their homes, they see little wrong with such broken basic arrangements, because it doesn't hurt them and they see their number going up for wealth. Canada and Australia have similarly destructive housing policies and outcomes.
And since the self-immolation of Brexit, they have far worsened their financial future. Similar politics of self-destruction masked as the appearance of strength are gaining a loooot of ground in the US as well.
Are you accounting for things like free healthcare when comparing wages? (I wish I did't have to say this, but it's a genuine question, not snark). I always wonder when people compare other countries to the US.
Edit: I agree that Brexit was the most incredible piece of self-harm that I've seen a country do to itself. I certainly don't have rose-tinted spectacles about the state of the UK.
I think most Americans over-index on the cost of healthcare and the availability of insurance because it’s constant in our news and our system absolutely sucks. Most people don’t need regular medical care because most people are healthy (until they start getting older). It’s expensive, sure, but most people in the middle-class have employer sponsored healthcare, and retirees have government sponsored healthcare, and many low-income people have government sponsored healthcare. The difference in out-of-pocket costs is easily accounted for within significantly higher salaries.
Of course, the issue is not the actual availability of insurance, it is that there is a patchwork of laws and protections and it’s not universal to be covered at any point in your life. But many states have well above a 90% insurance rate. California, the most populous state, has 93%. Massachusetts is sitting at 98%. Even Texas, the worst state for health insurance, is at 85% of the population covered.
I quit my job as a dev to care for my father who has dementia. Using COBRA and paying for the identical health insurance I had from my employer is $1,000/mo. I have no dependents. California minimum wage annual income is ~$32k. Almost half the income of someone who works a shit job. I'd say that almost 50% of minimum wage just for the privilege of going to a doctor when I have a problem is rightfully a pretty big deal.
This is the issue with American healthcare - it’s super confusing and people don’t even understand that they have better options. And of course, living with a super pricy COBRA plan while being unemployed is not the normal experience for people, and also not the actual “optimal” way to get healthcare in that situation.
COBRA isn’t meant to be a full healthcare insurance, it’s meant to be a “bridge” care for people in between jobs (that’s why it’s tied to your prior employers plans). You also don’t even need to pay the COBRA premiums unless you actually use it, so you can save that $1K/mo while being implicitly insured (helpful in case you only really want to be insured against catastrophic accidents).
If you were not working because you were caring for a dependent (like a sick adult), or if you’re a minimum wage worker, you wouldn’t use an employer sponsored plan through COBRA, you’d use Medi-Cal (California’s expanded Medicaid) or the ACA marketplace, and could be “free” or ultra low (premiums). Medi-Cal is free, and the ACA plan for a 45yo male in SF making Cali minimum wage (34k/yr) would pay $18/mo.
Healthcare is absolutely a “pretty big deal” and absolutely the system is terrible. But if you actually made 34k/yr, it probably makes sense to spend 1hr googling for the actual programs that exist so you’d discover that you can get it for much cheaper.
I take a biologic that costs $5,000 a month without a prescription. $1k a month is honestly easier and I can afford it. I enjoy the luxury of being able to afford to not have to navigate the stupid “oh, so you’re poor” patchwork bullshit that exists. My roommate is not such a person.
No, that's not how it works. Poor people who lose coverage from employer-sponsored health plans don't pay COBRA premiums out of pocket. They spend much less to either buy a subsidized health plan on the state exchange or go on Medicaid. The system is a mess but let's not exaggerate the problems.
I can’t imagine getting Medicaid to cover the biologic that I take that costs $5,000 a month without a prescription to be anything other than a nightmare.
There are a bunch of numbers that are trivially accessible via Google, including government sources, but I couldn’t find any that match perfectly with the time range of the wage data.
Here is one quote, from a few years earlier…
> Median annual out-of-pocket spending on medical care ranged from $360 (Hawaii) to $1,500 (Nebraska). In four states, households in the top 10 percent of out-of-pocket expenses spent $7,000 or more on these items.
Roughly speaking, when I've looked into this comparison, for near-median earners, they're better off in the UK, because of things like healthcare. But when you look at the higher-earning roles, especially engineering or software, then the different in pay more than makes up for the increased cost of living (i.e. a higher percentage of your pay may go towards cost of living, but the smaller percentage of money left over is still larger in absolute terms). There's other tradeoffs in terms of work culture and so on, though (e.g. you get much more holiday in the UK).
In the US, the average out-of-pocket healthcare spending was $1,424.6 per capita in 2022
Most people have insurance. They might have some high out of pocket maximum like $10k. So worse case scenario you're out an additional $10k.
But you pay a lot less in taxes
In US, a single filer, the 12% bracket covers income from $11,926 to $48,475. In UK it's 20%
So at 40k you're paying an additional 3k in taxes, not to mention VAT and others (although I am ignoring other US taxes like state, local and payroll). More than covers your out of pocket healthcare costs.
And pretty much any job in the US is significantly higher paying, for instance a typical accountant in US makes 80k while in the uk that 37k pounds. Pretty much every office job is like this. And note the US 80k figures includes benefits like ... you guessed it, healthcare!
Even if make the generous assumptions that taxes are the same, UK has same healthcare quality and everyone is hitting out of pocket max every year, it's still not close. The whole "but we don't have to pay for healthcare" strikes me as just a cope.
I think if the health insurance situation was as rosy in the U.S as you make out there would not have been as much support for the killer of the United Healthcare CEO. The figure for the average out of pocket expenses hides a lot of pain.
People have lots of anger about healthcare for many many reasons. I can't tell you how many people I've met who are angry about "Obamacare" but don't realize how it helped them compared to the prior situation. There's also lots of anger at the prices for healthcare that we sometimes see, and that anger gets directed at insurance too, even if it's a hospital or other provider setting the prices. And then there's the anxiety of "will this be covered."
Even without out of pocket costs there's lots of reasons to be angry at insurers.
Whether you agree with the Affordable Healthcare Act or not, I feel like nobody remembers “lifetime maximums.” I have some relatively minor (but massively impactful) pre-existing conditions, and I would have exceeded my lifetime maximum by age 30 due to testing, procedures, hospital stays, etc. I have family members that would have exceeded theirs before age 1.
How does the concept of health insurance, risk pooling, etc., make sense if there are no lifetime maximums…?
Eventually 100% of the population will need healthcare of some type.
And without maximums to plan and set prices against, wouldn’t it just be a wealth transfer scheme from the relatively young and healthy to the particularly old and sick…? (With those in the middle roughly neutral)
At least I can’t see any credible way to insure against something 100% of all possible customers will need.
Health insurance is already a huge transfer to older generations (not that that's a bad thing). Medicare pays for older folks but it doesn't pay anywhere near the cost of the services that older folks receive. Prices are higher for everyone else to fill the gap at health care providers.
Health insurance is in many ways not even insurance, it's in many ways a price negotiation mechanism.
Anyway the whole system is overly complex, based off a tax credit from the 1950s, but the transition to a new scheme is nearly impossible while one political party is dead set against any improvement, especially if it might be perceived as a positive for the other political party, and also they have become so hyper partisan that they are not allowed to work with the other party in a bipartisan manner.
It isn’t a simple money in, money out system. You’re taking higher value money in one year, and paying out some money that’s worth less later (inflation)… while at the same time, you’re investing the pool of money you collected, and earning returns on that before you pay out claims - claims that you’ve already negotiated down in price. But by the time the healthier customers need to start making large claims, they’ve already both subsidized the claims of other customers, and made the insurance company more money than they’ll draw in claims.
It's a simple money in, money out system. Health insurance isn't like homeowner's insurance where the insurer accumulates and invests a pool of money in anticipation of occasional rare events like natural disasters that cause a spike in claims. Medical expenses across a large patient population are very predictable and there is no significant carry over of premiums from year to year. In fact, under the Affordable Care Act (Obamacare), it is actually illegal for most health insurers to do that. Any excess premiums collected must be returned to customers at the end of the year.
75% of Americans with employer-provided health coverage are satisfied with their current plans
For Americans overall, 71% rate the quality of healthcare they personally receive as excellent or good. Similarly, 72% give excellent or good marks to the quality of care they receive personally.
Regarding health insurance coverage, 65% of Americans rate their own coverage as excellent or good. Another poll found 63% rated their own health care coverage as excellent or good.
Perhaps. But if I weren’t online I wouldn’t know how widespread the support of Luigi is.
Only 75% of people on employer healthcare plans are satisfied? A great many people aren’t on employer plans.
From the third link you provided:
For the first time in Gallup’s two-decade trend, less than half of Americans are complimentary about the quality of U.S. healthcare, with 48% rating it “excellent” or “good.” The slight majority now rate healthcare quality as subpar, including 31% saying it is “only fair” and 21% -- a new high -- calling it “poor.”
> The poll by CloudResearch found that 27% of U.S. adults expressed “moderate” or “a lot” of sympathy for Mangione.
> A smaller but significant share of adults, 12%, said they were supportive of the decision to murder Brian Thompson, 50, who was shot in New York on Dec. 4.
12% is basically zero in this country. To give you a frame of reference, 14% of people think Obama is antichrist
Is the support that widespread, or is it a bubble created by social media?
I think there's great dissatisfaction with healthcare in general, but social media is not a good way of judging social attitudes across the US. It's great for finding a small niche, however.
Not to mention, they are satisfied compared to what? The situation they'd be in if they were unemployed and had to pay for the entire overpriced thing themselves?
The thing about insurance is that the reason you purchase it is for managing tail events. And the only way to know if you are satisfied with your insurance company is to experience a tail event and see how your insurance company behaves. If you develop an expensive to manage chronic illness, is your insurance company prompt in paying claims? Does it try to deny all of them and require you to hire an attorney to get them to pay anything at all? Does it turn out that much of the treatments you need for recovery were never covered by insurance at all? And even if it is paying - how many hours a week do they expect you to spend submitting and resubmitting claims and calling various doctors to collect more information and submit more and more paperwork?
I've lived in the UK, the USA, and Australia. I've had excellent employer funded/subsidised health insurance in the latter two. The moment my wife & learned we were having our first child it focussed our priorities in an incredibly clear and sudden way, and healthcare was a huge component of that. It was immediately clear we did not want to have a raise a family with the US healthcare system given the other alternatives we had available to us. We saw out the pregnancy in the USA and moved home to Australia shortly after. Our second child was born in Australia. The out of pocket cost difference between the two countries was negligible. My wife would subjectively say the quality of care we got in the USA was slightly higher, though there was nothing wrong with the care we got in Australia either so it's almost splitting hairs just to declare a winner. The most obvious difference is how little planning or effort needs to be made around healthcare decisions in Australia. No worrying about if we're in network or not. No worrying about if the pathology lab that's doing the testing is in network. Is some out of network surgeon going to be attending/observing on the day? What are the financial impacts if there are complications? Do we need to pre-agree a plan of what's acceptable financially? Is the bill we receive at the end accurate? Are there risks of signification on-going medication or other costs for medications if there's a complication in surgery?
Just a whole swathe of anxiety and stress that doesn't exist anymore. I'm not sure I can put a price on how valuable that is for our family. I clearly priced it higher than the higher income and lower tax I'd be paying if I'd stayed in the Bay Area though.
Total healthcare spending per capita includes insurance premiums too though, which is $8,951 for single coverage and $25,572 for family coverage[0], and needs to be added to that ~$1,400 to get the total cost. Some amount of this may be paid by employers, but is still theoretically money that could go to you otherwise.
A health plan like that costs your company 25K/yr on the backend. They pay that as part of your compensation, you just don’t see it.
Even the most basic HDHP Bronze Kaiser plan currently costs over 1K/mo, and that increases about 10% per year.
If you’ve ever had a coworker (or yourself) decline COBRA coverage because it was “so expensive”, you need to understand that the price under COBRA was the price the whole time, you just didn’t see it.
This is a pitch-perfect example of the Brexit-like self-destructive politics that come with the "win" of appearing strong.
Here is a person who has the typical experience, who could easily be convinced by their positive experience to say "everybody should have this." But instead of going that route you impute negative motivations and put very ugly distasteful words into their mouth. Which, even if they are highly supportive of your position, will likely turn them against you. Instead of using this opportunity to advocate for a really good thing, you use it as an opportunity to hit somebody you view as the enemy with a rhetorical hammer. End result: no more people in favor of better means of distributing health care, and perhaps a net negative.
Especially in the context of how to account for free-at-point-of-care healthcare, which started this. If the employer is paying the prices that are revealed to employees only via COBRA, should that be accounted for in part of the wages or not? The US chooses to put about twice the fraction of GDP into healthcare that the UK does, and that per-capita GDP is also higher, how do we account for that in terms of wages and individuals? The $1T that employers pay for healthcare should be accounted for how, exactly? It's a tough question, and most likely in any comparison of nations there's a couple different ways to see how it impacts the average person. And when the "average" person in the US has such varying experiences, that has to enter into any comparison too.
In California there is great healthcare coverage for those with extremely low to no income, due to subsidy. Those with healthy salaries and savings can weather the times of unemployment and pay the COBRA prices. Those who struggle the most are the ones in between, and improving that involves getting those on the high and low end to advocate for the in-between incomes. It does not involve making enemies of them.
This is bullshit: not seeing a bill is atypical in California. Parent is also bullshitting by saying it's easy to get a job with no-bills health insurance in CA, unless they are ignoring 98% of Californians.
Medicare and Medical are not going to see a bill ever (if the people I know on them are anything to go by), and that's almost 40% of the population. A huge majority of people on employer plans are in the same situation, so thats some fraction of the 47%. For example, nearly a quarter of Californians are covered by Kaiser. It's not some super rare privilege reserved for those making >$500k.
I never see bills from my employer based healthcare, and it's not anything super fancy, and it's not Kaiser, just BC/BS. I had a surgery that billed my insurance in the tens of thousands of dollars and I never saw a bill. My spouse sees bills but it's because she has her physician order tests that are a bit outside well established medicine that would never be covered by NHS in the UK or Health Canada.
It's Kaiser in northern California. This is an extremely common healthcare option. Yeah, we're rich. That's the whole point: even out of pocket prices for that plan are dwarfed by the gap in salary to the UK professionals.
> A health plan like that costs your company 25K/yr on the backend. They pay that as part of your compensation, you just don’t see it.
That's very true, but of course the NHS costs some amount of money on the backend, it's just abstracted away in taxes. The real difference is how much care you get for your money, not* which way of not directly paying for health care is better.
It’s also about predictability: medical bankruptcy is an American phenomenon. The average cost isn’t what worries people, it’s the possibility of having coverage denied, being hit with “out of network” charges like an ambulance taking you to the closest hospital or a specialist showing up at an in-network one, or having your health decline rapidly while you need to get a lawyer to convince your health insurer to pay for treatment your doctor considers necessary. It’s especially about what happens if your health declines to where you cannot work and lose all of the treatment that you’ve setup so far.
That isn't the question in this thread though. The question is if you are on net better in the UK vs the US inclusive of taxes, healthcare expenses and salary differences. You get more for your money in the UK, but if you more than that difference for the same job (net of taxes), you could still come out ahead, as an individual. Society as a whole might be worse on some measures (due to the gaps in coverage for many in the US, or the hassle of the whole thing, the behavioral influences and impact of avoiding preventative care, the risk of falling into a scenario where you aren't covered and the anxiety of that risk). There are many downsides. But if you make enough then at some point that covers those risks. The salary gap has gotten sufficiently high that the break-even appoint seems to be somewhere at middle-level salaries now, not jut the high end.
Not really, the US health system is so broken is just costs more. The system of who pays what is very different, but at the end of the day the cost of healthcare is much higher in US than any other country.
According to article linked to below there are 48 million uninsured Americans. Fifteen percent of the UK population isn’t without coverage. The subsidies don’t work well.
That's not how it works for millions upon millions of Americans that are not fortunate enough to work at a job that provides tens of thousands of dollars in healthcare insurance as a benefit.
This line of thinking is exactly why the "American Dream" is falling apart; we increasingly place a handicap on some Americans and then wonder why some slice of America is not advancing generationally.
Americans who have jobs with health benefits that include Kaiser in CA is a whole lot of them in CA! It's a massive hospital system that covers 9 million people, a full quarter of the state.
I was unfortunate enough to have a job that gave me Kaiser healthcare. My job was not my only source of income. Everything about the experience of Kaiser sucked so much that I often paid out of pocket to go to other orgs.
Example: I transferred my prescriptions to Kaiser, walked in and saw the dozens of people standing in line, and immediately transferred them back to CVS (where Kaiser doesn’t apply). They called me before I got home with my scripts ready for pickup. I walked in and it was one of the rare moments when no one was in line. But even when they’re busy, I’ve not seen more than ~10 people and mostly more like 1-3.
Kaiser sucks. It’s the worst healthcare system I’ve had to deal with in terms of my effort vs my satisfaction. I’m very happy to work a job that lets me choose again so that I can go where I please.
I am happy that the doctor calls me to schedule things instead of the other way around. My prescriptions come by mail order, and the few times I've had to get to the pharmacy it's been a very straightforward process.
That's not how it works for millions upon millions of Americans that are not fortunate enough to work at a job that provides tens of thousands of dollars in healthcare insurance as a benefit.
Wal-Mart provides pretty decent health insurance and they hire anyone. If you don’t have health insurance, it’s a choice.
Yeah both the UK and US are notorious for NIMBYism. People filing lawsuits as like a hobby, because they want to stop all development. In these countries it's far to easy for a small group of complainers to grind the entire system to a halt and burn endless amounts of time and money. It seems particularly bad in the anglosphere.
It's particularly bad in the anglosphere because we have common law legal systems that are built around resolving personal disputes in court.
This has upsides -- it was a good solution to the problem in the 1200s of people solving disputes by fighting it out -- but in a modern context the downsides are pretty high thanks to rent-seeking lawyers.
I think the root of many problems is housing costs
I'm somewhere around your age, and I also wonder what the future of software development work looks like. I don't know that I'd direct my kids towards the field; maybe this is just a temporary bumpy patch and it'll improve, but it is hard to say.
One thing I think is that being 40-50 or so means that there is plenty of runway for a second career. Could retrain for something, nursing, cpa, lawyer, trades? Just have to have the savings for making that transition
My thoughts are similar, but I think the cost of commercial space is also driving costs up for everyone, so I classify it as "rent." I'd love to see data, but small businesses (at least in certain sectors) seem bare able to survive--opening and closing constantly.
But, to get to a root cause, I think we have to keep asking why. Why are rents high? One reason is that cities seem unwilling to rezone. Okay, why is city council/the mayor unwilling to rezone (sometimes vast swaths of single family homes?) Voters? Corruption? Something else?
There are several root causes we can potentially drill further down to, but making headway will likely require hard work and involvement in our communities. You could always try running for something and becoming a politician.
My point is: when looking for the "root cause" of these problems, people shouldn't stop asking when they get to the rent being high, that's a symptom.
Additionally, if people care about helping younger generations, it's within reach to jump in and help shape the communities they'll be living in. E.g. If an issue is zoning, go to zoning meetings.
Yes, I think we need to reform zoning and build like crazy. With everything costing a million dollars on the west coast, I don't see why there isn't a crane every block putting up a new building
The problem isn't as much that wages are depressed as "The Rich" is the average person in the older generation that bought housing when an appropriate amount was being built, then lessened the amount of housing so that there's not enough for future generations.
Class analysis must account for the strongest political class being real-estate asset holders that don't set wages but do benefit from a shortage of that real-estate asset.
> "The Rich" is the average person in the older generation that bought housing when an appropriate amount was being built
That's one of the fallacies here, thinking that upper middle class is "The Rich". If you think of it as a whole, you will see that the current trajectory means that the overall amount of property that the middle class owns collectively can only go down. Any house that was bought for dime by the older generation but cannot be retained by the following will drop out of the middle class. And it's not going to be spread among the poor but goes up to those who can still afford it: the actual rich.
Thus the middle class slowly but surely bleeds out and all landownership will remain with the super rich. The older middle class is just a temporary place for assets. Once they have gone the situation I layed out will become more and more obvious.
> And it's not going to be spread among the poor but goes up to those who can still afford it: the actual rich
Which will be the children of the older generation of the middle class.
Lack of housing supply is fueling huge economic inequality that wasn't there before.
The situation you layout is not very clear to me, specifically what is meant by "super rich." How do the older middle class lose out and not become "the rich," specifically?
I think the best description of what I'm talking about is the book The Asset Economy by Adkins et al.
The older middle class have assets that they acquired when those assets cost a fraction of the new price. The older middle class die and try to leave it to their heirs. If asset prices are higher than what a middle class income can afford, the middle class can only own property if they have inherited it. No new property is going to be owned by the middle class as a whole.
There are plenty of ways, however, that property leaves the middle class. If your inheritance tax or property tax (both a percentage of the inflated asset "value"), e.g., exceeds what a middle class income can manage, the property will be sold. If you have used it for a loan to, e.g., start a business and you become ill or your plan fails, you might have to sell it.
Who is going to buy these properties? If a middle class income can't afford property prices anymore, who is left? The middle class can only afford those houses by swapping their property for it.
Therefore, the overall amount of properties owned by the middle class can only shrink. It baffles me that this isn't obvious to everyone.
Now, who is "The Rich" in this scenario?
Those of the middle class who own property will do so because they inherited it, not because they were able to afford it through their income. They might be able to swap it for another property and hope not to make a loss. Their income is still middle class, however. They can't use those inflated property values unless they sell which leaves them without said property.
The rich are those who have enough income to increase their portfolio of assets despite of inflated prices, solely to park their money somewhere. Those aren't your middle class mom and pop who bought a house in the 80s and then a flat in the 90s. And the rich are also not the ones who inherit that house or flat but still earn a middle class income.
There will be a sharp divide between the middle class that was lucky enough to inherit land and the middle class that wasn't so lucky. Reading comments like yours makes me believe that there will be a lot of finger pointing towards the lucky ones. Because those are the ones you can see. The ones who are inflating housing prices by their demand to park their vast amounts of money stay invisible. The ones that will be attacked are the upper middle class, just to pull them down. Like crabs in a bucket.
I think we agree, though I find your use of the term "class" very confusing. The ones who bought cheap are already rich in these high-demand low-supply parts of the country.
The fingers must pointed exactly at the ones who are keeping prices high by suppressing housing supply, namely the rich homeowners who still consider themselves "middle class" or even "working class" despite owning assets that none in the working class or middle class could ever afford. These are the rich people who are controlling the local policy that changes their social class. It is not REITs or bankers, it is the very folks with large assets who work to keep their prices sky high by keeping housing optkons limited.
This is absolutely not anything like crabs in a bucket, with people with less pulling down those who succeed. It is in fact the exact opposite, those with housing assets who work to prevent any more housing from being built have put people into the pot by making the game a finite sum with limited housing.
Unaffordable housing comes from inadequate supply, which comes from older generations not permitting enough housing to be built in the high-demand areas.
Where I come from, you do not become a millionaire by working an average job. If you don't happen to be at a C level position, you will never become millionaire level rich by working for other people. If you have a middle class income, it means you have no more than middle class maneuverability. It isn't enough to become a multi millionaire under your own power. You have to start your own company or repeatedly make very good investments to really move up.
Owning something that suddenly has an inflated value does not necessarily make you rich.
Let's say you own a car. You need that car (maybe to take care of a relative). You can afford your car with your middle class income. Over night it gets replaced by a golden car worth 1 million dollars. If it's the only golden car, you are rich. You can sell the golden car and replace it with a reasonably priced one and still have about a million dollars.
But it's different if in the same night all cars become golden cars, including every car leaving the factory. Even 20 year old cars in dire need of repair have become golden one million dollar affairs. Now you're not rich. You can only exchange your golden car for another golden car.
If you sell your car and use the money for anything else, you will never in your entire life own a car again, because your income just can't provide for it.
That's how people stay middle class with a middle class income even though the house they live in suddenly is worth a million. It's about maneuverability.
> Unaffordable housing comes from inadequate supply, which comes from older generations not permitting enough housing to be built in the high-demand areas.
Unaffordable housing has to do with demand and supply, yes. What many people overlook is that not all demand stems from people wanting to live somewhere.
Land ownership has become an attractive way to park money the last 15 years. And there is a lot of money that needs parking. The last burst of a housing bubble caused one of the biggest ways to park money - lending to other people - to shrink dramatically (mixing subprime loans as a marketable bundle turned out to be a bad idea). Interest rates went down, making it even less attractive. The money now gets put into an equally inflated stock market, some of it into Silicon Valley style venture capital bets, and another huge chunk into real estate. So there are a lot of very rich and influential people who would lose a lot of money if those house prices would start to fall.
And even if you would meet the demand of those people who just want a place to live, you will not satisfy the demand for investments.
Large capital is not controlling the housing supply, though. That's entirely done at the local level by the petit bourgeois, which are the NIMBYs. You can read their investment filings which openly state this, even. Or go to any local government meeting.
On the software side - I'm not sure I'd recommend CS as such, but I know plenty of software engineers that have some alternative kind of technical background and enough CS classes or self-taught knowledge that they were able to be successful. Like physics, electrical engineering. Disciplines like Aerospace eng or Biomedical eng have great systems engineering backgrounds and often CS coverage too.
I'd make a recommendation to hedge one's bets even if they wanted to go into software to see if they wanted thought an adjacent field with transferable skills would be a good fit and offer multiple opportunity paths.
> I think the root of many problems is housing costs
for us, family of 4, it's 1) housing, 2) healthcare (unless you're lucky enough to have a really good employer-sponsored plan that covers dependents or allows them to buy in at employee-negotiated rates, which I don't), 3) education (college for the kids, and the high cost of anything besides public school, I don't mean private schools but even just summer camps etc.)
I look to the future and have a lot of anxiety about how my kids are going to make it
Housing is a massive bomb because for so many people is is the singular investment that their net worth and retirement is held in. This idea has been so deeply entrenched for so long that a reversal will wipe out millions of people's net worth.
At some point the bomb will go off, but there's no incentive to look at the long term of 10+ years out when the explosion will destroy people's political careers in the short term.
I know so many people 20 years ago who "I'll sell my CA house and retire elsewhere" was a majority of their plan.
As of now, I can only count a very few who actually did it, turns out it's hard to leave where you've lived your entire working life to move somewhere you've never been, and the price differential isn't as amazing as it once was (since Covid flattened that out somewhat).
The ones who did end up doing it ended up following their children (who were priced out of where they grew up).
Normally you'd expect measured, predictable, steady inflation to be the method to "defuse the bomb" but so far that hasn't been really tried (if houses keep going up 1-2% a year, but inflation is 5%, you have a 3% drop in value each year even though on paper, you have an increase).
20 years ago is when the bomb probably could have been diffused, but I think the recovery out of the GFC put it on the back burner and then it was too late.
Housing should have been getting built like crazy in places like CA so that those people thinking of selling had a reason to sell. By not building houses property values keep booming, and even if you plan to sell and move somewhere it's easy to endlessly delay that decision when you're getting rich as hell.
CA housing cannot be fixed without across the board reassessment. Otherwise the winner with an old property paying 2% of their 1980s purchase price will never sell. The immediate tax hit for moving to a similar house would be financial insanity.
And reassessing across the board is not going to happen either because it would price out grandma living on a fixed income.
I bought my house (in CA) in 2019, and my property tax bill is ~$30k/yr. My literal nextdoor neighbor's property tax bill is less than $1k/yr (it last sold in the 1960s and has been passed down within the same family).
Tax deferral to the estate for anyone over X age or that has owned a property for more than Y years. Or some gradient on either age or property ownership duration would address some of the issue. Even if you mitigate things with some kind of blanket exemption either of the estate or just to for life for a small set of folks that qualify, you need to stop it from new homeowners getting locked in.
If we have supply start matching demand, we'd get closer to the the "houses keep going up 1-2% a year, but inflation is 5%, you have a 3% drop in value each year even though on paper, you have an increase" approach.
Most metro areas are still not keeping up with demand. Even the ones that are doing better in things like zoning (such as in TX, NC, FL) are getting enough growth from other locations that the induced demand is still outpacing supply.
We need state and federal policies that can override the local NIMBYism. CA's recent experience is both a good start but also provides a bunch of lessons learned on how these policies can fail and should be improved both in CA in other jurisdictions - especially when localities are actively trying to work around them.
What is demand? People who want to live somewhere and people who want to park their money in land or real estate. Prices won't go down if you deal with only one kind of demand.
Technically multiple bombs explode here and there. Here's how:
* Family bought 1 house (assets), big mortgage (cause it's expensive), live until retirement
* Parents sell the house (lost the assets) to either a wealthier family or investors to downgrade
* Parents potentially share the proceeding to the kids to support their Housing endeavor but Kids will be forced to buy something smaller (usually Condos) because detached is expensive and kids wage just starting from the bottom of the paygrade.
You just touched on another one of my big concerns – Condos.
I love condos, but the older generations have no idea what modern condo living is really like and what maintenance is required for these kinds of places. They get talked about like 'starter' homes for young people that can't afford a single family house and so often they nudge younger people to buy them and 'get on the ladder'.
Often they are TERRIBLE investments though. Property tax is relatively high in most cities, ongoing fees are huge, governance is normally terrible, and every now and then something major goes wrong and the current owners are left with huge extra bills.
'Getting on the ladder' in this way, along with student debt really cripples so many people into a life of debt payments while building very little wealth.
The current global realpolitiks shows that unless you have a very heavy industry that you can invest in, to replace the cratering housing prices, no country is willing to blow it up on purpose. China is trying to strategically do it, but they still have so many more people that they can lift up, move around and put to work into different industries. It's just not really the case for developed countries. I'm assuming India will take the same course in the near future, but their challenges are a bit different.
Also, when supermajority+ have the same problem, it's in the interest of the government to do anything possible to delay the problem for the future generations. That's why I have reservations about US, Canada, UK, Australia and others doing the same thing. It also doesn't help when your entire population growth is depended on immigration, as you can, theoretically, keep the demand higher without many complaints, while limiting the supply.
There's also the Japan problem, but it's weird. In Tokyo we're seeing rental prices actually going up, as it's the only region where the population is growing for all the wrong reasons.
Regarding housing the problems are the same everywhere where the same "housing is an investment" policies have been propped up by lending. What an insane idea. We can all get wealthy by buying houses from each other with ever increasing prices. In reality the only winners in this game are a) banks b) early buyers who can cash out, liquidate and move somewhere cheaper.
In my country of origin housing is now so expensive that it takes 2 median income lifetimes to pay for it. Of course you can find cheaper housing in rural countryside or in some deadbeat towns but then there's basically no work either, so at minimum you need a car to commute. For someone making a below median income operating a vehicle is easily -300€ / mo cost.
And the funny thing the country is 93% forest. Unzoned land is plentiful and costs nothing but after zoning the price goes up to 20k € per each m². The townships and counties have a monopoly on zoning and use that to milk the constituents for money. Of course that money is all away from other spending so local communities and small time businesses (such as restaurants, hair dressers etc) are all taking a hit since (with the recent greedflation) people simply have no more purchasing power left over.
In my current country Germany, here in Bayern the situation is exactly the same. In Munich a small unit in is at minimum 1-1.5m € and it'll be bare bones. The cost is insane. At the same time there's a shortage of all kinds of laborers. How does a "bus driver" afford to live here. Well, they don't.
The whole economic system is biased against younger generations and while the older generations live longer they accumulate all the wealth. They are a large representative of the population (due to the upside down age pyramid) and active voters so they of course vote for politicians who will not topple this order.
In the past all empires have fallen when the middle class has fallen. When there's a critical mass of people with nothing to lose and who feel like the system has failed them the heads will roll and revolutions will begin.
> "housing is an investment" policies have been propped up by lending. What an insane idea.
Lending money for housing is not insane. Houses are durable goods where most of the cost needs to be paid up front. The builder of the house is paying for a structure that will house people for 50+ years. This duration mismatch is exactly what lending is supposed to help with.
Lending is not the problem. People were complaining it was when interest rates were at 0%. Now they are at 7%, but housing prices are still high.
Houses are not durable goods. Their value should go down as they get older (this is in fact how housing is valued in Japan for example).
And yes lending per se is not the problem, the problem is using lending to prop up this ponzi scheme that has artificially inflated prices due to constricted supply and then selling it to the citizens as a tool to "create wealth".
The average person needs a commodified asset that's useful to them from the onset - and builds value over time - in order to strengthen their possibility of upwards mobility now, and generational wealth in the future. A 401K does nothing for you in the 40 years you're accumulating it, a car depreciates substantially - as soon as after purchase, the stock market is oftentimes a playsake for the already well-off, there's simply nothing like housing for individuals in most sectors of the status quo "bell curve".
Upwards mobility? But that's exactly what younger generations can't do since housing is completely out of reach for them.
My example from Munich, a condo going for a 1m €. Median software engineer salary is around 66k € per year. Income tax ~40% so your take home is around 40k year.
That means that if you put all your net income towards your home you'd need 25 years just for the principle not counting interest or spending money on essentials such as food or energy.
So how do you do it? You don't. It's simply not possible unless you have exceptional circumstances (top %1 job, rich mom & dad etc).
This also means you now have no chance but to rent and and all your rent money just goes forward to the generations of individuals who invested in this ponzi scheme earlier or to the investment firms and businesses who operate in this domain. Regardless again all the wealth moves up the pyramid to the top.
Also even those older generations, all this "wealth" is imaginary. You can only realize your gains when you actually sell (so you realize the market price you sell on) and in addition you still gotta live somewhere, so to win in this game is to buy early and cash out by selling and then moving to somewhere low cost. (Perhaps retirement).
In summary, expensive housing is only benefiting those who already have amassed wealth and it's obstructing those who haven't from amassing any wealth.
Makes a big difference to your calcs. I worry when I see people quote their marginal rate because it shows a fundamental ignorance of finance. I know nothing about Germany, but in NZ top marginal rate is 39% and actual tax rate is below that.
Houses do go down in value. The value of the land, and the permission to build a house on that land, typically go up (over the last decade an awful lot).
> Houses are not durable goods. Their value should go down as they get older (this is in fact how housing is valued in Japan for example).
Um, yes are you familiar with depreciation of the built structure? Durable doesn't mean immortal. Perhaps you don't know what durable good means in this context.
It's the lack of supply that is the reason why having a mortgage market is a bad idea.
You HAVE to live somewhere. This means any cash you can get your hands on, such as a mortgage, it's going to be used to compete with all the other people who need to live somewhere.
The problem can be solved in two ways. Either you make it really hard to get a mortgage, or you make enough houses that people are not competing over musical chairs.
The only solution is build build build. Preferably with good building (more modern, flame resistant with that in mind) and zoning codes (more like Japan's quality of life impact based ones).
> I have no idea how my kids are going to make it.
Brother, I feel the same way. The education system is broken, public discourse has degraded to illiterate thuggery and madness, and today's children and young adults are facing crushing economic rent-taking.
There are millions of people in the US that are making a lot less than you do who manage to buy houses, go on vacations, save for retirement and put their kids through college.
I’m 50 now, we purposefully “de-contented” our lives two years ago after our youngest graduated in 2020 and after Covid so we wouldn’t have to be in the rat race. I never made a lot as your standard enterprise dev and didn’t hit $200K+ until I was 46 and started working at BigTech remotely and we used the three years I was there to pay off debt, put some money in savings, etc.
I’ve turned down opportunities that would pay me close to $100k more in cash because I didn’t want the headache and definitely wasn’t going to ever be in an office. If you need me to be physically somewhere for a week, put me on a plane.
Even in 2020, I said no to interviewing as an SDE at Amazon because I didn’t want to relocate to Seattle after Covid lifted and I was only making $150K then. The remote position at AWS ProServe was then suggested.
We had the big house in the burbs of Atlanta in the “good school system” in 2016 built when I was only making $140K. True, when we sold it last year it was double the price. But we would have had to move further out if we were buying house in 2023. It would have been doable
Either way, we moved to a condo in Florida that is state tax free, we downsized to one car and now if I had to, I could pay all of our bills including our spending money with just my income and all I would need to make is $140K.
Making around $200k, I max out my retirement + catch up contributions + HSA and we have been on a plane to do something (mostly vacations, occasionally visiting friends) over a dozen times a year since mid 2022 and that trend is continuing for the foreseeable future
For those who don’t know, a new grad going into any of the BigTech companies can make around $165K straight out of college and should be making way more than me in three years. I’m not bragging.
I have no other income besides my job.
I have no worries about “AI”, I moved into consulting working full time for consulting companies in 2020 (well then the consulting department at AWS). I just have to be able to sell and/or guide implementations of whatever the shovel du jour is. Right now I’m leading a Kubernetes + AI implementation.
> For those who don’t know, a new grad going into any of the BigTech companies can make around $165K straight out of college and should be making way more than me in three years.
And more to the point, when I mentioned what I was making, I didn’t want to get the response that “you know you could make $400K+ by grinding leetCode and working for a FAANG”.
I guess I'm confused by your take then, and the evidence you use to support it. You stated "But you move up in your career just like everyone else does" from a 65-75K starting salary as a college grad, when your own figures show that the average household income is oftentimes comprised of two people making even less than that, but have reached the stage of upwards mobility to buy a house, albeit oftentimes "house-broke" and in strife to pay mortgages.
These people didn't move up, as per your assessment. Most people need to combine salaries with someone else to even have a fair chance in this system, to get any upwards mobility.
When I was single until I was 28, I didn’t even want a house. I wanted the flexibility of being able to move. In fact, I hated the maintenances of owning a single family home and as I mentioned in my first reply We downsized to a condo as soon as we could.
If you are single with no responsibilities but yourself in many major cities, you can make it off of $65K. Homeownership is not the only metric of success
People making less than that aren’t homeless and starving.
And the original person I replied to was in the top percentile of income according to him and considered “survival” not being able to live his current lifestyle.
What do you consider “making it” for a single person?
> For those who don’t know, a new grad going into any of the BigTech companies can make around $165K straight out of college
Maybe, if new grad is defined as:
- A remarkable programmer on their own time. i.e. Impressive Github profile, side projects, leetcode expert, etc. Just going through Comp Sci isn't going to get you hired at BigTech today.
- Someone with a fantastic network. Better hope you've got friends in high places or family with connections.
Go to salary.com and select any major city in the US and see what a senior software engineer makes.
Anecdotally, I spent my entire career between 1996- 2020 working local jobs in Atlanta. Which is not exactly a tech hub. Look at the compensation of your standard non tech well known companies that are either based in Atlanta or have a large presence like Delta, Home Depot, Coke, GE (GE Transportation), State Farm.
I’ve never studied a line of leetcode nor have I had a GitHub portfolio my entire career until 2021.
I did a back of the napkin estimate before from all of the sources I could find and the best numbers I could find was that the top paying tech companies employ around 10% of all developers in the US.
On the other hand, the average CRUD developer in any major city in the US can make $140K-$170K within seven years of graduating with strategic job hopping
Warning, just kind of rat-holing on terminology a little. You've used the phrase "can make" twice now. I've always found that way of expressing it kind of weasel-y. Yes, a software developer "can make" $140-170K, by the definition of "can" meaning a non-zero possibility. A new grad "can make" $100K+. A senior software engineer "can make" $1M/yr. All these things are true. I "can win" the lottery, too, and my kid "can be" president of the USA one day. Also technically true. It's more interesting to talk about typical cases, rather than best-case aspirational ones, which I see you are doing in other parts of the thread (great!). I think HN very often mistakes the best case for the typical case, especially when we talk about salaries.
Even using typical case, salary means and medians don't tell the whole story, as the distributions can be wild.
I posted sources at salary.com where you can filter by city and is more applicable to most developers than levels.fyi. I also mentioned what non tech companies are paying like Coke, Delta, Home Depot , etc in non tech hubs.
Median is not “best case”. I’m also well aware of the bi modal distribution of comp in the industry where a “senior” enterprise dev tops out at around what an entry level developer makes at BigTech.
Before the current shit show of the last couple of years in the industry, as a senior enterprise CRUD developer, I could throw my resume in the air and get a “full stack developer” job in Atlanta making $150k within a couple of weeks. This was the norm in Atlanta.
I’ve moved on since then. But the last time I was looking last year, my old recruiters were still saying if I lived in Atlanta I could make around that as just a C# developer. None of those jobs required any more than 5-7 years of experience.
“Enterprise CRUD developer” was my plan B.
I’m probably one of the few people commenting here who has been in both worlds recently and now purposefully on the tip top end of “enterprise” dev and still on the low end of BigTech.
Making $140K to $170k as a senior CRUD/franework enterprise “full stack developer” is the norm. I’ve moved to strategic cloud consulting now making more.
They specifically select against folks like me (on multiple dimensions) so 0 * any-percentage still equals nada. I might be able to swing the second one when the market improves.
I myself didn’t get in through the front door. I got in via the consulting division at AWS (Professional Services). Yes it was a full time direct hire under Amazons usual 4 year offer with base + large signing bonus + RSUs. I am no longer there.
There are all sorts of non tech white collar jobs at all of the BigTech companies that pay top of market. My best friend was hired in the finance department at Amazon Retail. He is now a director at a smaller place and is just now matching the comp of an L6 at Amazon five years later.
There is a better than 50% chance I could get into Google (GCP) doing similar work if I put in the work and learned and could speak about the GCP equivalent of the AWS tech that I know well and where I lead large implementations.
But they only do hybrid and I have no desire to work in an office.
I am in a similar boat. Many of us in similar boats would be very thankful if you can expand on what are the names of these consulting companies and how can we breakthrough?
Honestly, there is no easy way. It was partially strategic and partially luck. I started down this path in 2016. The only actionable advice I can give is start taking on projects with greater scope, impact and that is closer to dealing with the “business”. Work on your soft skills and presentation skills.
My favorite book is “The Geek Leaders Handbook”
2016 - I chose a job that would give me a chance to lead my first green field major implementation from scratch over one that paid more. But I would have just been pulling tickets off the board. I was first exposed to AWS here. But “consultants” did all of the AWS setup. After I started learning AWS, I realized that they were just a bunch of old school operations people. I thought I could be a better consultant since I knew software development and could learn cloud.
This is hugely helpful and one of the most helpful things I read. Thanks for your kindness. This is a very good blueprint on how to think about career advancement at our age. Thanks again
"survive" typically means "maintain this quality of life".
If I were to be displaced by AI, I'm not sure how I'd the mortgage and two kids (that an average college grad doesn't have).
I could sell the house and net several hundred thousand dollars, but if I want to keep the kids in the same district, it's a wash because the township has been fervently fighting fair-value housing.
So your complaint is that because of AI, you might not be able to maintain the lifestyle that puts you in I assume at least the top 5% of earners and make around $350K (https://dqydj.com/household-income-percentile-calculator/)?
The average household is making less than $100k a year (same source) and are somehow surviving, you might have to make different life choices.
As a non American, I've always struggled to understand the "American Dream".
It is about pulling yourself up by your own bootstraps and going from poor to wealthy by using the opportunities that the US provides. Is that a correct assessment?
The problem I have with that is that it doesn't in any way include bringing your community up with you or letting your wealth be reinvested back into the environment in which you were poor. It solves the issue only for that single person without addressing why the issue existed in the first place. It seems to be inherently "selfish", no?
As an immigrant, I define the "American Dream" as "opportunity regardless of social class". I think Atwood also hints at this in his blog post (as this is the reason he called out his upbringing and family).
This is in contrast to the system of nobility and "old money" in Europe and why many immigrants sought to find their way to the New World.
The idea of public education started in the US and for a long time has been one of the key public services that enabled this social mobility. In the US, historically, there were opportunities even for immigrants to become self-made men and women and their children would be better off than they were. Immigrants might arrive in the US illiterate, but their children would at least have the opportunity to be educated and find better paths.
It's still possible, but it feels as if the cards are stacked higher and higher towards those that are already coming from some wealth. I increasingly feel like the chances that my kids are going to be better off than me are decreasing every year because the stepping stones to success are becoming eroded.
That's still possible (and in some cases, plumber/carpenter/contractor is perhaps the best option still available).
What we're seeing is at least partially the result of everyone going to college for something like a few decades.
Deciding to be apprentice to a plumber at 17 is much different than having to do the same at 21/23 because the degree you went into debt for isn't panning out the way you wanted.
You're 4+ years behind, you're some amount of debt in the hole, and you're having to work hard.
(Average student loan debt is something like $37k, which isn't the cost of a house, but is certainly close to a down payment.)
You're right, my nephew bought a shack to fix up in Montana a few years back. But, I don't think that's what most people think of when they say the dream is alive.
> Just fifty years ago you could buy a home by swinging a hammer for a few years. No degree needed. So it was a thing.
Not even that far back.
I can't even match the standard of living my parents (and friends' parents) raised us in in the 90s/2000s. Exactly 0 of the people I'm thinking of were "professionals" or had any high-quality rigorous education at all.
All had condos/SFH with (gasp) a garage very close to where I still live.
Many of the wives didn't work at all, other than perhaps retail type jobs once we were old enough to be self-sufficient.
It's getting worse as time goes on, too. Things like Cooperation, "Common Good" and Community are not merely ignored. More and more they're being actively opposed. Individualism is no longer: "I don't need community and society." It's become: "I don't need community and society, and you shouldn't have it either!" Rugged Individualism has become Toxic Individualism.
Get involved with local politics. Join community planning boards, go to city council meetings, and voice support for relaxing rules around zoning.
One of the small cities close to Seattle (Shoreline) just announced radical changes to their zoning laws! Change can happen. Right now Seattle is going through loud public debates over this, with NIMBYs going to meetings and shouting crazy accusations about what building more houses will do (recently: building dense housing will cause vitamin D deficiency...). Go spend an hour a month shouting back at them, it makes a real difference!
> Get involved with local politics. Join community planning boards, go to city council meetings, and voice support for relaxing rules around zoning.
I think the takeaway from the last few election cycles is that this really isn't effective anymore now that the channels of information and communication are controlled by a small handful of corporations who's objective is to simply make more money.
But even besides that, I feel that defeats the spirit of the American Dream. What good is making just my community better when the kids one town over are falling behind because they don't have the property tax base to fund better programs and wealthy parents that can pay for better early childcare, private tutoring, and more resources? I already live in a fairly well-off enclave; my concern is for the rest of my fellow Americans who are not so fortunate -- the same concern as Atwood; we've "made it", but we want a society that leaves behind stepping stones for others to make their way up.
So I am compliant when it comes to paying taxes and do not shun paying my fair share because in my view, taxes and government -- you know, of the people, by the people, for the people -- are supposed to be used to make all of America better and not just better for some Americans. But we've seen decades of policy bifurcating on this point. You may point out that spending on social programs have increased. Yes, but so has rent-taking on that spend and siphoning and accumulation of those funds in a few coffers.
> information and communication are controlled by a small handful of corporations who's objective is to simply make more money.
Local elections are where that small handful of corporations have zero impact. Even the real estate investment trusts and private equity don't bother with local elections, because its hopeless. Local elections are entirely determined by small networks of highly connected individuals, which is almost always homeowners looking to protect their biggest asset, their home value.
And that's why local politics has resulted in a housing shortage, because the big bad villain isn't a man in a tophat with a gold watch in a corporate office, it's the next door neighbor that really hates the idea of seeing an apartment building when they drive to work each morning, and especially hates the idea of mere renters living nearby and thinks that they'll bring crime and reduce his property value.
I've been doing that for 8 years, and organized into local groups with others (the lone voice has little impact, but a contingent of people that politicians think will vote a certain way and tell their friends to vote a certain way have a much bigger impact). However, it's not been very successful, because there's an even larger contingent of people with more wealth, more time, and more experience. The tide is turning, but it's slow.
Minnesota is an example where it worked really well, and I wish that the people in my California town were as big-hearted and progressive as those in Minneapolis. Maybe we'll get there here some day.
In the meantime, state-level efforts are overriding the local NIMBYs far more effectively than the local efforts. It turns out that nearly every single local politician wants to override the NIMBYs, but can't due to the way that local elections work (small number of highly motivated folks usually determine the outcome). However, when elected to the state level, there's a broader electoral base and the politicians can finally start to force housing into cities.
I still recommend getting involved locally, whether or not it has a big effect. It is rewarding in its own way, and has lots of benefits in areas other than housing too.
It's not no will, it's no incentive, and usually incentivized to not fix them. The same people keep getting voted in. What other message should they hear than their constituents are happy with the job they're doing? Over half of the American people just voted for someone who lied to our faces and promised they'd make things better when they posses a track record that proved otherwise the last time (and also now a felony record, but I digress). If I decided my career was going to be politics, and I kept getting elected, why on Earth would I ever change what was working?
If you think software engineering salaries are low in the USA, try working in Europe. A 'good' salary can be 30K or even lower after tax per year, and electricity costs twice as much as in the USA. In some places, even bottle scavengers earn more than software engineers in Europe.
Yes, but my sense is that in Europe, you can "survive" easier than in the US.
There are several key differences.
In the US, everything is spread out so you absolutely need to own a car in many low cost of living (COL) places; there's no option for transportation. In the US, healthcare can absolutely destroy you and you cannot get quality healthcare at a decent rate without a job that provides it as a benefit. Access to transportation networks is also poor compared to Europe and Asia where trains are abundant, fast, cheap, and accessible by wide networks of public transport. The way the US has been built out is not amenable to that in low COL areas.
So I acknowledge that there are lots of problems world wide in different countries and wages are lower and taxes are higher in general in the EU, but there are more social safety nets compared to the US. The baseline "cost of existing" in the US is simply higher.
Get them a Roth IRA. Put $7k in it each year as long as you can. Invest the Roth in an index fund, dividend fund, or straight up picks. Have them put into the fund as soon as they are able (summer jobs, etc)
If you have enough, buy another property. Your kids can live in it or manage it later.
Put stuff in trusts or be sure they can manage it effectively. The thing you most want (probably) is for them to be secure into their old age, long after you are gone. But they will start feeling secure by middle age, and you will all be happier.
The idea that most people just have an extra $7k a year sitting around to put into a retirement account they won't be able to access for decades seems pretty out of touch. A lot of people are just getting by. Additionally, if you live in a high CoL area, you might be prevented from contributing to a Roth even though most of your income goes to living expenses.
Some of the advice thrown around in this thread is so out of touch.
"Just get a high paying job".
"I never worry about healthcare because of my employer".
"Just put $7,000 away into a retirement account and $10,000 into a 529 every year. What's the problem?"
And even if I'm in a position to do that, the problem is that there are millions of fellow Americans (the majority) that don't have these "luxuries".
I like a quote from Stephen Dubner when he closes his episodes of Freakonomics podcast:
> "Take care of yourself, and if you can, someone else, too."
I'm on HN. I work at a Series-C YC startup. I previously worked at another VC-back SV startup. I've even tried numerous startups of my own. But I'm also a part of a broader community of Americans and I want all Americans (and all people, if possible) to do well.
That's probably why he suggested a roth. $7k might be too much, but you can withdraw your own contributions from a roth without penalty. This makes it a great way to save for people early in their career, especially if they are in lower tax brackets that wouldn't benefit greatly from traditional ira deductions anyway.
Not only that, but even if you could put $7K every year into an IRA, and even if the investment returned a steady 7% per year risk free (HAHA!), in 30 years, it's grown to ~$660K, which, sure, is a nice chunk of change, but at a 3% draw down rate, you'll need to live on less than $20K/year. You'll need to be really frugal. Move to a super low cost of living area and go back to eating ramen. And don't get seriously sick or injured. And don't have dependents to house, feed, and educate...
That's probably why he suggested a roth. $7k might be too much, but you can withdraw your own contributions from a roth without penalty. This makes it a great way to save for people early in their career, especially if they are in lower tax brackets that wouldn't benefit greatly from traditional ira deductions anyway.
The person you're replying to wasn't making a general point, but was specifically replying to someone who said their income was in the top percentiles. So probably not someone just getting by.
You can't put money into an IRA unless the primary holder of said IRA has income, and you cannot put more into said IRA than was earned by the primary holder of the IRA.
My young children earn $0 annually. I wish I could do this. 3 IRAs is cheaper than daycare by about half.
you are me; down parents issues with smoking/etc and current career/age.
> I'm not sure how I can survive in the US once I can no longer find companies willing to hire me
My plan is simple: Retire. Avoid that 1m house when possible.
> I have no idea how my kids are going to make it
Same boat here, but I'm less concerned insofaras I'm doing everything I can to keep as many options/opportunities open to my kids as possible. This honestly significantly dampens the 'retire' plan; but what can you do? My parents would have no idea what I do if I tried to explain it; I expect the world to shift similarly by the time my kids are working. The goal is simply to give every advantage I can and keep as many doors open as possible.
> top percentiles of household income but I'm not independently wealthy and I have no idea how my kids are going to make it
It might not be too late to change this. I also lucked into being in the right place at the right time (interested in computers and programming when graduating in the 2000s). But from the start my goal has been to take advantage of this extraordinary luck and become independently wealthy. My wife (who's not in tech but has a solid $80k - $100k job) and I have lived very cheaply saving more than half of our takehome pay for more than a decade now, investing it in simple index funds.
I, too, don't know what the future will hold for my kids or my career, but I'm relatively confident I've got 10 more high-earning years in me. And my spreadsheet tells me that will be enough to generate generational wealth such that my kids won't have to work if they don't want to.
This obviously isn't a solution for everyone, and I realize much of your post is about US policy. But I just wanted to point out the potential blindspot that you may have from your upbringing where "independently wealthy" people are those people over there, and not me. But with a high income and the magic of compound growth, it's not so unattainable.
Considering your upbringing, you're making some confusing statements. Somebody who was brought up low income but is now wealthy ("one of the top percentiles of household income") should know better. It's called living frugally.
It sounds like you're fearful of losing your luxurious lifestyle if your income changes. Most Americans are fearful of affording clothing, food and shelter if their income changes.
Like Atwood, I understand my good fortune in life and I am ever grateful and humbled that I have achieved what I have starting from a 1 bedroom apartment where my entire family slept in one room.
Like Atwood, I want an America where the path of upward mobility and opportunity is available to all and not so blatantly biased towards the privileged and those that are already well-off.
I'm not concerned so much for myself, but for the two lives I've brought into this world and for the lives of the millions of Americans and immigrants that did not have my good fortune (and I'd say much of my own current status is a result of luck and opportune moments in life).
Like Atwood, I worry that we no longer have the will to create and pass legislation that benefits the masses at the expense of the few because those few now control so much of the channels over which our discourse flows (Facebook, Twitter, Instagram, Fox News, et al).
Atwood's solution and approach is to use his accumulated fortune to donate to organizations that seek to help other fellow Americans. Ostensibly, that's what good policy and taxation should solve instead.
The more I sit with it's long-term policy implications, the more I think it would solve the lack of productivity, progress, and prosperity with modern society. It also has supporters from across the political spectrum because it represents a tax shift rather than a tax increase(even Nobel prize winning economists Milton Friedman(libertarian) and Paul Krugman(modern keynesian) are both fans - and they're pretty far apart when it comes to most policies!)
Wages have been flat against productivity gains since the early 1970s in the US. The only way to make it here is to invest heavily over a long time horizon.
> I walked in and thought to myself "wow, this is a $1m house" ... except it looked just like mine...that I had purchased 9 years earlier for a fraction of the price.
Thankfull, Trump's new EO regarding housing has it covered. The cavalry has arrived.
Like Atwood, I did not come from a well-off family; parents divorced in my early teens and father passed away in my late teens from cancer (smoking and alcoholism) and in many ways lucked into a very good career after attending a state university. My spouse's father -- a janitor in a public school -- and mother -- a crossing guard -- passed when she was in her 20's as well. There weren't any large fortunes passed down.
Some friends recently purchased a house in my township and I visited to drop off my kid for a play date. I walked in and thought to myself "wow, this is a $1m house" ... except it looked just like mine...that I had purchased 9 years earlier for a fraction of the price. It boggles the mind to consider when/how my kids will be able to have their slice of the American Dream.
There are clearly some fundamental things that have to be fixed in the US at a policy level, but there's seemingly no political will to fix them; everyone seems out for themselves and to enrich their own coffers. This is handicapping social mobility through the hostile policy positions towards social safety nets and foundational services (e.g. education, healthcare, childcare??). This is the sentiment that I feel Atwood is also feeling.
As a high earning software engineer (IC), I'm not sure how I can survive in the US once I can no longer find companies willing to hire me either because of AI or because of age (early 40's now so I figure maybe 10 years of high earning as an IC?).