Is Better Education Really The Key To
Solving Income Inequality?

thwTwo interesting articles popped up over the weekend. One article looks at how the trucking industry is having a hard time finding people to take their driving jobs even at $50,000 a year plus benefits.  The other article basically blames most of a persons bad luck and poor choices in life on their parents.

First let’s look a little closer at this Truck Driver shortage…

Because of increased government safety regulations truck drivers are not allowed to drive as many miles as they did a few  years ago hence their income has been capped a bit. These weekly maximum mileage regulations are probably good for any of us who drive on our nations highways because they certainly help reduce driver fatigue and make the roads safer. The downside is that drivers just can’t earn as much money.

Truck Driver GraphThat said… The starting annual pay for entry level long haul truck drivers is around $50,000 plus benefits. Not a bad paycheck and definitely will get a person on their way to a middle class lifestyle.

What kind of education is needed to drive a truck?

Trucking employers do not require a college degree. I don’t even know if they require a high school diploma. To drive a truck you will need to attend a several week driver training course paid for by the trucking company then you are ready to go. No college debt to worry about.

I wonder how many June college graduates wish they had a $50,000/year job waiting and no college debt?

TDI-truck-keys-to-office-rev-DSC00948So this is an example of how piling more public money into education may not really get the desired end result. Unfortunately once someone earns a four year degree they seem to think they are above anything that even looks like physical labor. Unfortunately their high priced college education may have forgot to give them any marketable skills.

Truck driving may not be the most glamorous job you could have but if you can stay sober, don’t have a nasty arrest record, and can read a map it could be a way onto the rolls of the productive Americans earning a solid paycheck. Sure you might have just earned a degree in Political Science, Psychology, or Fourth Century Latin Literature but what’s better, living in your parents basement or a life on the open road?

bad-decisions-tatOn to the second article… The New York Time’s Nicholas Kristof makes the journey back to his childhood home in Yamhill, Oregon and sees so many people with drug and alcohol problems plus long prison records so he comes to the conclusion that no matter what you do if your parents took the wrong path it is pretty much a done deal that your life will be hard.

All you will have to look forward to is addiction, crime, unemployment, and prison.

Not a pretty picture. and it’s sad to think that with all the public money spend on education, according to Mr. Kristof, if your parents had a hard life you are in for more of the same. And your children are destined to repeat the painful cycle.

Prison-barsMaybe it really takes more than a good education system to move up the economic ladder. Educational opportunities could really be just like the cover of the book. Those school buildings, yellow buses, high paid administrators, rows of shiny new computers, and libraries are only part of the story. The part that can be bought with tax dollars.

The difficult part is getting the kids motivated for the hard work of becoming productive citizens. But that can’t be solved with a fatter government check book.



Is Obama Missing A Simple Fix To
The College Debt Crisis And Income Inequality?

NYTCOver6-20-2014A recent article in the New York Times brings a lot of solid information together related to the College Debt Crisis we have been hearing about for some time now. The article has the wrong title (It’s Official: The Boomerang Kids Won’t Leave) but the facts the writer lays out are pretty grim and have some serious implications for the future of Income Inequality in this country.

The bottom line is that tens of millions of young adults have taken on over $1.2 Trillion (yes, that’s with a “T”) in debt and they just don’t have the jobs to pay that debt off in any reasonable number of years. Some of these people owe over $100,000 and are earning barely a minimum wage.

Somewhere someone got this rumor started that people with a college degree are guaranteed a future of high paying jobs.

Well… They, and by “they” I mean probably the colleges and universities that have profited the most from that false rumor, left out an important little caveat to that secure future myth of nice paychecks. While you are at college you need to pick up some skills that companies find valuable.

So here’s the basic scenario…

1) An eighteen-year-old kid itching to move out of the house gets accepted to the college of his/her choice.

2) This newly accepted kid has no idea what to major in so picks something fun like English, Latin, Physiology, Political Sciense, Art History, Communications, etc…

3) The kid finds out that it will cost $100,000 for four years and since mom and dad are struggling to save for retirement they can’t write a $100,000 check right now.

If you major in French you can read this menu.  Unfortunately, you will probably also be the waiter.

If you major in French you can read this menu. Unfortunately, you will probably also be the waiter.

4) The college has a nice office where kids sign on the dotted line and get a loan. Boom! Four years of freedom, parties, casual sex, and even a little learning. What kid wouldn’t sign up for that package?

The biggest problem here is that the college gets their money no matter if the kid even graduates and the funny thing about student loans is that the only way to get out of the payments is to die. Bankruptcy will not wash this debt away.

So you’ve been hearing about this College Debt Crisis for a while now. Smart people even say it is affecting the housing market since this generation of kids have to pay this debt off before they get on the home buying ladder.

Then Obama gets up there and in his smooth fashion throws an “executive order” out to allow these borrowers to cap their payments at 10% of their income and he is supporting a plan to refinance the loans at a lower interest rate.

Very nice indeed but that is what I would call “lip service”. They still have to pay off the huge debt while working at a minimum wage job.

These people are in a hopeless situation and over the next few weeks the next wave of college freshmen will be signing their lives away on the dotted line adding to the huge problem.

This needs to stop now!

And here’s a simple way to actually stop this College Debt problem from getting even worse.

When you take out a consumer loan for house, car, boat, computer or what ever, the lender is obligated to show you a truth in lending form that spells out clearly how much you are borrowing and what it will cost you to pay the loan back.

Why not an Obama “executive order” that forces the colleges to include a paragraph in the loan paperwork to be signed by the new student that clearly shows them their future income potential. These statistics are easily available for each possible major a student might select.

Here’s an example college loan full disclosure paragraph….

I, Joe College, has elected to attend Party University and major in Political Science at a cost of $98,252 for four years. After graduating I will be paying approximately $1,042 per month for 10 years to repay this loan. The latest statistics show that those students who major in Political Science have a 2% chance of getting a job in their area of interest at an average after tax monthly income of $2,983 so if I am one of the lucky 2% to land a job I will be spending over on third of my take home pay to retire this F#&@ing loan. and if I end up in the 98% of people who do not get a job in Political Science I will probably be in a minimum wage job that did not even need a college degree. In that case I will not even have enough take home pay to make this monthly loan payment and provide for a basic life style even close to what I have living at home with my parents right now. 

college-partySo… If that new college student signs this he/she will know right up front what they are really in for so when they can’t make the loan payments later they can’t say they were not warned.

Of course the “College Loan Full Disclosure” paragraph would read differently for Accountants, Finance Majors, any of the many variety of Engineers, or other majors that deliver people to employers hungry for people with real skills.

And what about the tens of millions of people already caught up in crushing student loans?

They better treat their parents well or find somewhere else to live.



When Robert Reich Speaks It’s Always Scary…
What’s The Latest He’s Saying About Income Inequality?

111229_robert_reich_ap_328I’m always ready to listen to a smart economist. They usually have some great things to say that can help make things a little clearer.

I have listened to many Robert Reich commentaries on NPR and its seems that about half of what he says makes a lot of sense. It’s the other half I worry about. Unfortunately that may be the half that some people believe the most.

In Mr. Reich’s latest article he tries to debunk the biggest myths of Income Inequality and what he says is just scary. Like most of the politicians in D.C. he has probably never tried to run an actual profit making business and this shows in his systematic explanations he uses. They hard firmly founded in some other world than the actual one we live in and the same one real people have to establish and operate businesses to make profits.

Has Mr. Reich actually Walmart_USforgotten that without business making profits there will be no taxes for the government to collect to pay for the essential services needed to keep the country moving.

Let’s look at what he claims are “lies” why his income inequality positions just wont work in the real world….

Lie number one:
The rich and CEOs are America’s job creators.

Mr. Reich says “The truth is the middle class and poor are the job-creators through their purchases of goods and services. ” But he forgets that without the companies to provide jobs there will be no place for these people to work.  And without the proper profit incentives those companies will go elsewhere as many of them already have. But Mr. Reich may be partially correct on this one since the US Government is really the largest single employer. China’s army comes in number two followed by Walmart in third place.

Lie number two: People are paid what they’re worth in the market

P1-AW426A_EXECP_G_20100726194903He says… “The facts contradict this. CEOs who got 30 times the pay of typical workers forty years ago now get 300 times their pay not because they’ve done such a great job but because they control their compensation committees and their stock options have ballooned.” That’s right, in effect the CEOs are the owners of the companies and in a free society like ours the owner gets to set his own compensation along with the compensation of the people who work for him or her. If the company does not choose to pay enough then they will have a hard time finding employees. But as long as qualified people are standing in line outside the company’s employment office door at the current pay rate then why pay more. I would like to see if Mr. Reich doubles the pay for the person who washes his car, or serves him a meal in a restaurant, or starches his shirts. I doubt it. He lets the market determine how much those workers are paid. And that’s the way we do it here in this country.

small-businessLie number three: Anyone can make it in America with enough guts, gumption, and intelligence.

Now this is really an insult to everyone who has landed on our shores over the last few hundred years. Plenty of people have started successful businesses here with little more than guts, gumption, and intelligence. Everywhere you look you will see individuals who have perceived though many hardships to start their own businesses and eke out a good living for their families. That is really what this country is about. How can he forget that? Take that away from the next generation, make them believe that they will never achieve their dreams for what ever reason, and you will have poisoned the well for the future. And that is just what I am afraid could happen. If you tell someone enough times that they will not make it on their own (for what ever reason) eventually they will start to believe it.

What’s the better foundation for building a stronger America? Telling people they can’t make it on their own or getting out of their way and telling them that with enough guts, gumption, and intelligence they can do what ever they want. Keep telling them that and they will certainly start to believe it. Especially with all the great examples out there.

Earns McdonaldsLie number four: Increasing the minimum wage will result in fewer jobs

On this one Mr. Reich says… “In fact, studies show that increases in the minimum wage put more money in the pockets of people who will spend it – resulting in more jobs, and counteracting any negative employment effects of an increase in the minimum.” Then he goes on to give some details on studies in adjacent counties in the country and how no one lost their jobs.

Again Mr. Reich is missing some of the practical aspects related to raising wages above market rates.

Unfortunately if all these fast food restaurants and the like raise wages the owners will need to raise prices. And those higher prices get passed along to the same people who just got a pay raise. And… As I have discussed in previous posts on this subject, the person who has that fast food job at an $8/hour wage will not be the same person $14/hour. When the annual pay for fast food and other low-skilled jobs starts tp get closer to $30,000/year watch how fast those college educated unemployed zombies living in their parent’s basements come out of hiding and finally get jobs. That’s right, if the minimum wage is artificially increased instead of set by the market the exact people who need those jobs will be unemployed. The new educational minimum will be a college degree for those entry level jobs. And at a higher wage those people will be required to work harder than ever.

Robert Reich is one of the smartest guys in the world. But before he can scare anyone else I wish he would go run a corner hot dog stand for a few months so he can see what the real world looks like.

Could The Latest Income Inequality Data Be Lying To Us?

mouth moneyTwo interesting Income Inequality stories seem to be bouncing around.

One story from The Atlantic claims that a shorter life could be the unfortunate fallout from Income Inequality. That means a shorter life for those with less money. I’m sure the story would have been buried if  it showed the opposite was happening. If a life of champagne and caviar was prematurely killing the members of the 1% club we would probably not hear about it.

The other story covered in the Huffington Post and many other places is about how French Economist Thomas Piketty seems to think that Income Inequality will just keep getting worse unless we impose a Global Wealth tax to redistribute income. And do it fast!

It’s amazing what people will say to create a hot headline when they are on a book tour. And how they bend statistics and common sense to get a little time out in the light of day.

And… These are normally pretty smart people. Is this like yelling fire in a crowded movie theater ow what?

First lets look at the story in The Atlantic about how richer people just seem to be living longer…

BN-CK785_income_G_20140417175313The data and pretty charts seem to say that if you are not part of the wealthiest one percent you should probably buy a big life insurance policy because you will have a short life.  They are trying to say that less money causes a shorter life.  This is like gathering some numbers and finding out that people who use Macintosh computers live longer so the U.S. Government  should  distribute Macs to everyone so they can all live longer healthier lives. It it was only so simple.

What this study fails to point out are the thousands of other factors that could be at work shortening peoples lives beside their Income level or if they own a Mac Computer.

The choices made by someone in some backwoods West Virginia county compared to a Washington D.C. one percenter could be very different and profoundly influence each of their lifespans. Simple choices like drug and booze consumption, what they eat, how they exercise will make the difference not so much the size of their bank account.

I would propose that someone earning very little money but making good health choices will always live longer. And… It does not cost much more to make clean health choices does it?

If you think I am wrong then tell me why the five place on earth where people live with the longest lifespans do not seem to be populated by rich one percenters?  Yes… These are places like Okinawa, Japan and Ikaria, Greece.

wealth tax2How about what that French Economist has to say…

Basically his concern is that the rich will just keep getting richer and the poor will keep getting poorer.  And his briliant solution… A global Wealth tax!

When I hear this stuff I start to think people have been living in some subterranean cave and just poked their heads out for a few minutes to look at the world.

If this economist would have looked around a little longer before spouting he would have discovered that the stock market has had a great run up since it crashed back in 2008. This is how things like the stock market have worked since the beginning of time. They go up and they go down. When they are going up like they have been people who take risks get rewarded. At least on paper they get rewarded.  I say that because much of this wealth he is talking about is “fantasy wealth”. Bill Gates and Warren Buffet’s vast riches mostly exists as numbers on some computer somewhere. As soon as the stock market heads down, and it will, that wealth disappears. It’s “fantasy wealth”!  Just like monopoly money.

And… If a global wealth tax is put in place a portion of all this “fantasy wealth” will need to be turned into real cash. So what do you think will happen to the stock market if most of the people sitting on shares of stock, where this wealth is located, need to sell some stock to pay a global wealth tax?

marketcrashWhat happens when there are more sellers than buyers in any market?

That stock market will crash right along with any market like Gold, real estate, or Bennie Babies when there is a rush to sell.

And.. As we hopefully all know crashing markets don’t help anybody.

The smartest thing I saw was a New York Times article that smartly points out that how all this 99% and 1% class warfare talk is pure nonsense since the 1% and 99% are not any people in particular. They are just buckets and people move in and out of these classifications all the time. According to this real research 12% of the U.S. population will move in and out of the top 1% bracket over a ten year period.

And… 39% of Americans will spend a year in the top 5% of the income distribution, 56% will find themselves in the top 10%, and a whopping 73% will spend a year in the top 20% of the income distribution.

When you start looking at real numbers this Income Inequality story starts to make more sense.

What Does It Mean When Academics Give Up On
Income Inequality Assumptions?

Harvard1An article in yesterday’s New York Times Business section may say it all when it comes to trying to blame Income Inequality for all the ills in the country.

Some smart people would like us to believe that there is a solid causal relationship between income inequality and things like life expectancy and the odds of a poor child climbing out poverty in the future.

But Christopher S. Jencks, a professor of social policy at Harvard, has abandoned his 10-year-old project of writing a book about the consequences of income inequality?

Why would Mr. Jencks do such a thing?

Simply because the hard facts and statistics coming out of Mr. Jencks extensive research  just were not proving out basic assumptions of how income inequality was the definite reason for negative effects on the nation’s health, opportunity, and crime.

income-inequality-99-prtest-occupy-wall-street1When this accomplished researcher dug deeper he kept finding that other factors may really be acting on those people traditionally at the wrong end of the income inequality spectrum.

Basically all the data and research just did not backup the basic assumptions…  One problem with these analyses is that they are based on correlations between levels of inequality and variables like life expectancy or the odds of poor children climbing the income ladder. But such correlations can’t prove inequality causes social ills. They can’t disentangle inequality from the myriad things pushing American society this way and that.

Example… Life expectancy in the USA probably lags other developed countries because we don’t have universal government provided healthcare. Until ObamaCare totally clicks in if you are not working at a higher end job you probably don’t have adequate healthcare insurance. And judging from the trouble HealthCare.gove is having with signing people up for the program this problme may go on for many years.

Another example…  People in Scandinavia, a country with less income inequality, may have higher upward mobility than the United States because governments in Sweden, Denmark and other Scandinavian countries invest a lot in early childhood education and the United States does not.

Both of these examples could be related to income inequality but there are obviously other factors at play.

Lane Kenworthy a sociologist at the University of Arizona has been researching income inequalities effects and has also been forced to change his tune because he could not find solid correlations.

Can money alone be the solution?

Can money alone be the solution?

To try to avoid misleading correlations and find a better way to isolate income inequality’s impact, Mr. Kenworthy studied its evolution over time, comparing how changes in income concentration across the world’s industrialized nations related to changes in a whole set of social and economic outcomes, from growth and employment to health and educational attainment.

What do you think he found?

He came up mostly empty-handed… “My tests suggest it seems to be a small player in the overall story,” Mr Kenworthy said.

Some people might like a simple solutions to the woes that visit upon those that feel they are victims of income inequality. But the answer is not just to redistribute cash from those at the upper end of the spectrum to those at the lower end. Money alone will not solve these problems.

Another Lottery Winner Turned Ultimate Loser.

Another Lottery Winner Turned Ultimate Loser.

If money was the solution then every single person who has won the lottery would be living wonderful happy lives. But as this article and many others detail, that just is not the case. Divorce, family estrangement, Suicide, murder, kidnapping, poor health, drugs, and alcohol shortened many lottery winners lives. More money may have actually helped these winners lives unravel because as these two income inequality researchers  have found… There are other things influencing peoples lives beside money.

What do you think? Can simply putting more money in the hands of people solve the Income Inequality puzzle?

The Post College Income Inequality Problem… Is it the Economy, the College, or the Student?


But… I had an interesting conversation with a University career office today and I have to say I feel enlightened. Now this is by no means an intensive study so let’s just call it a data point. An interesting data point.

First of all… this college career office was at a leading second tier private University. Not Harvard or Stanford but about the same tuition cost and just a bit lower on the national rankings.

I was curious why even graduates of this fine University were not finding the employment they dreamed of when they started their college adventure four short years ago.


Did the career center offer workshops and seminars on finding jobs?  YES!

Did the career center offer one-on-one career counselling? YES!

Does the career center offer a database of job opportunities? YES!

Did the career center offer on campus interviewing? YES!

Did the career center blame the weak economy? NO!

The what was missing? Why are so many students not finding jobs?

Here’s what I learned…

HiremeThe university offers many resources for students to find summer internships and post-graduation full time jobs. They have a team of people on staff to help educate people on how to search for, interview for, and get the best jobs possible. They maintain huge databases with opportunities and extensive research on hiring companies. University students and graduates can access a huge database of alumni. Many who probably work at just the company the student would like to work for.

But… (and here is the big revelation for me) With all these resources far too many students do not put in the maximum effort required to land their dream job.

MortarBoarddollarsJob finding workshops and seminars are sparsely attended. Online Opportunity databases gather dust. Career counselors are not busy. Alumni eager to help are not contacted. Do I need to continue?

The complaint from this career center is that students and prospective graduates do not seem to be taking advantage of the vast resources offered.

So if you have a student who is nearing college graduation or looking for a pre-graduation summer internship you may want to ask a few questions:

1) How many programs offered by your university’s career office have you attended?
2) How many hours a week do you spend searching the career office opportunity database?
3) Do you directly contact prospective employers or just impersonally heave resumes at them over the internet?
4) Have you used your networks like past graduates and professional organizations to seek job opportunities?
5) Do you have a dream company you would like to work for and what have you done to contact that company?

Careers signIn short…  Do you realize that finding the job is hard work? And… Most amazingly that the good jobs don’t necessarily go to the best qualified people they go to the person who works the hardest to get the job.

And do questions like these seem relevant for all job seekers looking for a better job to get to the next rung up the career ladder? Are people willing to do more than the minimum to ge the job they want?


What Could Gap Stores Be Hiding About Their
Minimum Wage Stunt?

gap2Gap stores made a surprise move this week and has informed its employees that over the next year their minimum wage would move up to $10/Hour. The company said that this would raise pay for 65,000 of their 90,000 U.S. employees, including those at Banana Republic and Old Navy.

How can they do this?

It seems like businesses are fighting Washington tooth and nail to keep wages as low as possible then these guys at Gap come in and voluntarily raise wages.

Are they just being nice guys?

No… They are being shrewd business people.

Lets compare your neighborhood  Gap Store to your neighborhood Walmart store… You go into Walmart and fill your cart with stuff them check out at one of the cash register. When you go to a Gap Store (or Old Navy or Banana Republic) and pick out a pair of slacks you can bet you will not get out of the store without at least one salesperson suggesting a shirt (or sweater or socks) to go along with those slacks.

Could you ever imagine checking out at the Walmart and the cashier asks, “would you like a flashlight to go along with those batteries?”  It will never happen.

And that is a fundamental difference between stores like Gap and stores like Walmart. If Gap can attract higher skilled and more motivated store employees they will sell more product.

Yes… More skills and talent will mean higher wages for those Gap employees. And… more revenues for the company. And… if the Gap computers show an employee is not generating more add-on sales for a store you can bet it will automatically print out a pink slip and that employees will be out on the street again.

This higher skilled employee resulting in increased revenues model just doesn’t work for retailers and fast food businesses like Walmart, McDonald’s, or your local grocery store.

But how will Gap pay for what could be hundreds of millions more in wages?

gap1That’s easy…

Not only is Gap counting on more revenue from a whole army of higher skilled and motivated workers but, for Gap, every dollar that hits their cash registers results in more profits going to the bottom line. That’s what is called “Operating Margin”. And what drives the CEO’s annual bonus.

When you look at Walmart’s and Gap’s operating margin you will see that Gap makes 131% more profit for every dollar of revenue compared to Walmart. That means Gap has more than enough cash floating around to pay these higher wages as long as revenues rise. If revenues and the bottom line don’t go up you can be assured that the next story you will hear out of Gap will be about mass layoffs.

Unless…  Gap’s CEO decides to take a cut in his own pay package. But I don’t think that will happen in our lifetimes.


Will Raising The Minimum Wage Help or Hurt
Income Inequality?


I learned a long time ago that it can be a big mistake not to listen to your accountant. Sure, accountants may not be the coolest guys in the room but rest assured they know their numbers. Ignore what they say and you will certainly hear an “I told you so…” at some point in the future.

A report in the New York Times details how the smart accountants at Congressional Budget Office determined that raining the minimum wage from $7.25 and hour to $10.10 and hour will most liking push 500,000 workers into unemployment.

cbo - seal

That increase from $7.25 to $10.10 represents a 39.13% raise. When was that last time a business could pass out a 39.13% wage increase (not to mention all the other tacked on tax increases) without something else being affected. And I can guarantee you that if the cost of a Big Mac increases by almost 40% more people may take up the gentle art of cooking at home. Or eating a bowl of cold cereal for dinner.
To hold price increases to a more rational level you will see a significant drop in the number of employees behind the counter and in the working at the grills.


The good news from the Congressional Budget office is that at the $10.10 per hour minimum wage 900,000 families would be lifted out of poverty and increase incomes for 16.5 million low-wage workers.

500,000 people lose their jobs while millions see higher wages. Seems like more  Income Inequality to me.  And it’s all sponsored by our fine people in Washington D.C. I thought they wanted to fight income inequality.

And… There are surely two other serious unintended consequences from a 39.13% minimum wage increase…

U.S. Fast Food Worker... "What-a-ya-have?"

U.S. Fast Food Worker… “What-a-ya-have?”

1) Expect that at this higher wage rate a whole new crop of job applicants will be knocking on the doors of your neighborhood fast food restaurant. At this higher wage I would bet  some of those low skilled college graduates now living in mom and dad’s basement could learn to love flipping burgers. All those hard working people with only a high school diploma who may be rough around the edges may be the first of the unfortunate 500,000 to go. And if these newly motivated college educated minimum wage workers can get more done faster expect that 500,000 number to go up. If yo don’t believe this then take a look at who works behind the coffee or burger counter in places like Belgium or Ireland. Higher minimum wage higher quality workers. Where else can you get solid insights on 18th Century French literature along with your morning caffeine fix? It could happen here!

Belgian barista - "Would you like some Poetry with that Latte?"

Belgian barista – “Would you like some Poetry with that Latte, kind sir?”

2) At a lower $7.25 hourly wage an employer can take a chance on someone who with less than stellar experience.  At $10.10 an hour and more qualified people knocking on the door the days of a first job at McDonald’s are gone. Where will people get on that first rung of the employment ladder?

For years we have been hearing about the perils of huge minimum wage increases. When even the accountants at the Congressional Budget Office sound a warning may we should listen.

Or… Get ready for a big “I told you so…”

Income Inequality Is One Thing…
But What’s With This Bus Inequality?

googlebusThe recent New York Times article about the San Francisco shuttle bus service offered to Google, Facebook, and Yahoo employees was an eye opener.

But I guess this is California and things are very different out there…

So… These tech companies with offices a good drive from San Francisco were looking for a way to reduce traffic, lower emissions, and probably improve safety for their employees who might be a little beat at the end of a join us bustwelve hour day coding the next great thing.

But… All there good intentions have sparked a little conflict with some of the fine people who live in San Francisco. They are picketing, protesting, breaking windows and even targeting certain mild mannered employees with nasty banners out in front of their houses. And just in case you don’t see the banner these concerned citizens are passing out leaflets in the neighborhood. “Do you know your neighbor is a coder for Google?… What dangers lurk among us?”

scum1The problem seems to be that the busses that pick up all these well paid high tech employees are using public bus stops and blocking that space for up to thirty seconds.

But there is more…

Even worse, these high tech interlopers are buying up and renting all the available housing in San Francisco.   Many restaurants, coffee shops, and boutiques are going upscale to serve these more affluent customers. And all this seems to really be pissing people off.

Bus1Let me get this straight… Some guy who was picked on back in high school because he was a “nerd” goes out and gets a Computer Science degree, lands a high-paying job with a leading tech company, moves into an expensive San Francisco apartment with his Nerdette and little Nerdlings then… out come these bullies from high school to pick on him again.

Is this the next step?

Is this the next step?

Get it… That’s all this really is. Bullies picking on people who are different. It’s not religion and not race. They are being picked on because they make more money.

I’m afraid we have not seem the last of stories like these. Stay tuned….



Who Has The Strongest Income Inequality Case?
Why MyRA Really Won’t Help Much

Money bowlI know there is probably a lot to talk about when it comes to last night’s State Of The Union Address but how many people will be fooled by this MyRA thing?

I don’t think many people will debate the fact that people who are north of 65-years-old and have retired must be one of the most disadvantaged groups over the last few years when it comes to income.


Back in the old days you could count on a nice 5% or more return on money left in a good old fashioned bank Certificate of Deposit. And that money was 100% safe because of our friends at the FDIC.

roth-ira-11So… If you were retired and had a million dollars money in the bank you could be assured of a nice $50,000 a year income. And don’t let the prospect of squirreling away that million dollar nest egg scare you. Assuming you have forty-five working years you only needed to save about $6,000 a year. That assumes a 5% return on your saved money and that you started 45 years ago in 1969.

The story now and going forward is much bleaker for anyone who doesn’t plan on staying employed and dropping dead at their job when they’re ninety-seven.

Problem number one: Now you can only get 1% interest on those super-safe bank certificate of deposits so you would need closer to $5 million to generate that same $50,000 a year income. Thus instead of saving $6,000 a year you would need to save over $31,000 a year. Big difference and all because of these low interest rates.

Why are the interest rates so low and virtually starving people who need to live off their savings?  Thank your friends in D.C. for that. These artificially low interest rates have been a boom to the economy basically on the backs of retirees. Making them some of the most unequal when it comes to income inequality.

Cost-of-LivingProblem number two: Let’s say your crystal ball told you back in 1969 that you would only earn 1% income on your retirement nest egg. Then you would need to save much more money to actually retire some day. But the only way to save more would be, unlike IRAs and other retirement accounts, with money that has already been taxed at least once. This reduces the amount you can put away and every year you would have the awesome wind resistance of paying taxes on any earnings. A good part of your earnings every year over that forty-five years would go straight to the IRS.

The big question is… Why doesn’t Uncle Sam let us save as much money as we want in our retirement accounts? Right now ROTH IRAs are limited to a maximum annual contribution of $5,500 or 6,500 if you are over 50. Not nearly enough.

And this MyRA thing seems like just a distraction. The amounts I have heard are still too small to make a real difference for future retirees.

IRA coinsLet people save as much money as they want for retirement. And let that money grow tax free. That is unless there is some kind of guarantee that when a working person retires at a reasonable age like 65 there will be enough Social Security money to reasonably house, feed, and clothe a person.

But no one in D.C. would dare make that guarantee. And even now they are cheating Social Security recipients with a wacky inflation/cost of living index while they come up with plans to cut benefits for future retirees.

The big message here is that you better save as much cash as you can because when you get to your Golden Years you will probably be largely on your own.

And this MyRA will probably not generate enough money to pay the rent you will need to pay to live in your kid’s basement.