Problems with the American Dream or Part 2

Today I'm going to talk about some sensitive issues that affect a lot of young families (as well as others) and are major concerns when it comes to how I see kiddo's future.

Last night I posted my story as an example (or at least an indicator) of some of the structural problems that plague America and thereby affect American families (I know this sounds academic and horrible, but bear with me. It's important). In that post I mentioned the following issues:

1. Large student loan debts (with little practical relief)
2. Oversupply of educated labor in the market
3. Low real wages (even in skilled positions)
4. The high costs of health care (with and without insurance)
5. Structural problems with eligibility of government benefits (and the clear need for benefits with the above mentioned conditions)

So let's unpack these one at a time.

Student Loan Debt

Lately there's been a lot of news about student loan debt, in part because the interest rates on loans were allowed to double. It was, at least when I was in high school, that anyone who wanted to make anything of themselves needed to go to college. So, millions signed promissory notes gleefully, as this was the only way we could pay for schooling. Now, of course, with the high debt amounts (and higher interest rates from that period) combined with poor job prospects, student loan debt is absolutely crushing.

Remember what I said in my last post? Our student loan payments are 30% of our income (well our previous income). That's the rent of a nice studio apartment in Oakland, or a mechanic's special off Craigslist, or maybe even a haute couture stroller (because that's my main concern right now - if I'm as fashionable as moms living in the Presidio). Needless to say, the money coming in isn't enough to cover the required money out.

And are there options for relief? Not really. Not for the average person. And that's a big problem.

Oversupply of Labor

This brings me to the first problem relating to job prospects - too many educated people vying for the same jobs (many of them dinky jobs). I explained in my last post how there were too many people like me in the Bay to allow me to get a good job. Pretty much everywhere else (a.k.a. podunk towns, small cities, and medium sized cities) I'd be able to find something that used my skill set, but in large cities and those with multiple colleges and or universities, the prospects are bleak.

The result is a ton of overqualified employees in stupid jobs which don't pay enough to pay off student debt...or anything really.

Low Real Wages

This gets into the fact that real wages have decreased in recent years, even in skilled jobs. Though productivity has increased, wages stagnate, and when combined with inflation - purchasing power decreases. Instead of companies and high networth individuals letting go of a few million here or there (and really, after a certain point, can you even tell if it's missing?) to allow the economy to stir up and people like me to well, live (and pay off crushing debts).

High Costs of Health Care

This one is a doozy, especially when considering the lack of jobs and our decrease in purchasing power. Health is apparently a luxury (wait...what?!). Because the government doesn't set prices for health care, this allows business interests to drive up prices and default care to the most expensive options.

I'm starting to feel like there is a trend here... business interests...shafting the average person...cycle of poverty... middle class shrinking. Hmm.

Eligibility of Government Benefits

I'm not sure who it was who first started talking about people "gaming the system." Maybe in other countries this is possible. Here you would need to make it your full time job, and frankly, I think organized crime pays better for less work.

The eligibility requirements for government benefits is staggering. In Alameda County, where I live, you have to have documentation for everything you put on your application. You have to report everything you earn - and I mean, everything. You also can't have like any assets whatsoever. A retirement account basically renders you ineligible for benefits.

So let's review. You get minimal support. You have to work really hard to get that minimal support. Oh, and by the way, you have to own nothing.

I'm amazed there are even 47 million Americans getting assistance. Oh wait, those are the extremely poor - not the working poor who are working pretty hard to become extremely poor...

Conclusion

The whole situation reminds me of something I saw yesterday. Christian and I walked down to the estuary and stopped to gaze out at the water. Probably 200 yards down was a tandem kayak with a father and child. They were paddling in the center of the estuary where the current is the fastest. The tide and wind combined would take a little effort for even experienced paddlers to get anywhere, but these two were not experienced. Their strokes were inefficient. The current was too strong. All their efforts to move forward simply held them in place. If they stopped for even a second, they lost progress. As we watched, they slowly drifted nearer.

I wanted to call out and tell them to paddle closer to the edge where the current was weaker... but I wasn't sure. Maybe they didn't care. Maybe they were just having fun...

I am in that kayak.

Like the kayak in the estuary, these economic factors all work together to make the situation worse. There maybe people on shore who see the situation, but they do nothing to change it. They let the boaters flounder, making assumptions that may or may not be true. They comment on what the paddlers could do better, the type of boat, the type of paddle, but the reality is, the whole situation could be solved by a few choice interventions. The situation really isn't that complicated. Solutions could be implemented that benefit everyone (after all, a healthy economy IS good for everyone).

It just takes some people on shore to notice and take action.