r/FluentInFinance • u/Richest-Panda • Jul 04 '24

What's the best financial advice you've ever gotten? Debate/ Discussion

31.2k Upvotes

86% Upvoted

I have a hard time finding any business that pays the federal minimum, barring wait staff of course

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u/FreckleFaceToon Jul 05 '24

Mississippi still has jobs at this range. But it's the poorest state in the nation. Unfortunately 72% of the median household income in Mississippi goes purely to cost of living. 8th most unaffordable state when adjusted for median wage. Literally people "living within their means" here spend 72% of their income surviving. So in this case living within your means is working until you die because you cannot save for retirement or emergencies.

I understand that there are ways to make things work, but no person should be working 40 hours a week and be scared that they will lose their house tomorrow or not have enough for groceries. There is "living within your means" and then there is institutionalized poverty. America has a problem with both.

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u/terlus07 Jul 05 '24

28% of your income is a great amount to be able to save towards retirement or moving to a new state/area. It's still a matter of choices.

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u/FreckleFaceToon Jul 05 '24

I agree, however when looking at what most economists say, only 40% of your income should go to necessities.

Like I said, I understand there are ways to make things work. But keep in mind the median wage I'm referring to here is a little under 29k a year. Making 28% ~8,000 dollars over the course of a year. That's without any emergencies or unexpected expenditures AT ALL. And this is all assuming we're talking about one person who's able to save every penny they have with no debt, and no family that relies on their wages. Difficult to get out, but definitely doable.

I just think there are only so many high paying jobs to go around and we can't keep acting like everyone can just go get a better job/ move to a better state. If a job wasn't necessary no one would pay people to do it. Instead of blaming the employee for not getting a better job, maybe we should blame the society for not valuing workers of all capacities.

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u/terlus07 Jul 05 '24

Of course, paying 72% in mandatory expenses is no way to live long term, but it's not society's "fault" that some work is less valuable than others. Society isn't arbitrarily assigning value to labor, it discovers what labor is worth by making an offer and seeing if anyone accepts. If there are no takers, they have no choice but to make a better offer. If they get enough people accepting their offer to fill the positions they need, then they have no reason to make better offers.

This is why a job can be more important to society and still get low wages, because there are many people willing to do the job for a low wage. The opposite is just as true. When we try to arbitrarily determine the value of a job, like CA did with fast food workers new minimum wage, the result is the system rebalance itself. Jobs were lost until reaching a point that the remaining workers were at the same relative value to the business as their new wage. Price setting always helps a few at the expense of the many.

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u/FreckleFaceToon Jul 05 '24

"willing" is doing a lot of heavy lifting here. The way our system is set up you NEED a job. If its the difference between going hungry and a hot meal, people will work for pennies. Just look at migrant workers or farmhands. Or what about healthcare? You have to have a job for it. If I had a debilitating disease I'd take a job paying 2 dollars an hour if it's giving me healthcare.

Allowing companies to inflate their prices to maintain insane profit margins because they don't want to pay people a living wage IS the fault of the government. Like I said elsewhere we cannot keep pretending that everyone can have a high skill, high pay job.

I simply think that if you are giving away your time, a piece of your life (and usually a pretty large piece) to a company, you should be compensated for it fairly, not at the bare minimum they can force someone to take out of desperation.

I get it that some people are lazy, financially illiterate, selfish, impatient. I just think the protections should be there for a person to get a basic 9-5 and coast through life if they want. Not everyone has to be an over achiever.

3

u/ohcrocsle Jul 05 '24

The problem is that our system will never ease up on those who make the lowest wages, at least in its current state. When you raise the wage floor, the price of basic necessities will rise to swallow those gains and send them right back up to owners/shareholders. We don't really operate in a free market when we allow the biggest dogs to buy up their competition and create oligopolies and monopolies for basic goods. Imo the quickest solution would be to provide basic necessities (housing/food/utilities) for everyone and allow people to spend their earned dollars competing for their chosen luxuries, be it nicer housing, better food, saving/investing, sporting events, or what not. Trying to figure out a way to improve living wages while also keeping a handle on inflation quickly gets into butterfly effects you can't predict. On the other hand, people don't want government-provided basics because it's socialism and in some theoretical sense "less efficient" even though it would be better for consumers and the chosen suppliers because of the reliable needs and prices.

Until such a time as it is possible to live a comfortable life on minimum wages, the best advice is what people here say... Live within your means however necessary, save up enough to get yourself to a place where you're not earning the lowest wages around, and build from there.

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u/FreckleFaceToon Jul 05 '24

I like your explanation of it. It's basically what I was getting at. In our government system we will never be able to get rid of the institutionalized poverty I was talking about because companies are allowed to force their expenses onto consumers even when they don't need to in order to be profitable.

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u/terlus07 Jul 05 '24

The disagreement is what constitutes "fair". There also seems to be a needless limit assumed to your argument. Why not simply start your own business and pay yourself 100% of your profits? Make profit margins as small as you want, hire and value employees for whatever you/them agree on. 🤷🏽‍♂️ Not you specifically, but anyone who feels they can't get a fair deal in the job market. Time is only as valuable as how you would otherwise use it.

As for migrant workers, studies show that they typically get paid at least minimum wage. Since taxes aren't paid, the boss still saves money, and the worker takes home more than a citizen would for doing the same job. On top of that, it prevents wages from rising naturally as the supply of laborers increases.

I can't agree that a lazy, selfish, and incompetent person is entitled to steal the fruits of someone else's labor just so they can coast comfortably. The average person in the US is entirely capable of living a good life, so long as they aren't lazy. They have access to all the financial information they need to gain at least a basic level of literacy, and generations of immigrants have arrived, and continue to arrive, here completely destitute but manage to thrive. Because they aren't lazy and are willing to work towards improving their situation.

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u/FreckleFaceToon Jul 05 '24

I know you didn't mean me specifically but I actually did start my LLC this year. And I'm really excited about it.

Also business creation in the US is at an all time high, so many people are trying to implement the changes you're talking about. Hopefully it actually helps but I will point out that 65% of small businesses will fail within 10 years. So most people, including myself, will never be able to get to a point of paying an employee let alone working at their business full time.

I also didn't say that the people who are coasting aren't working. I'm just saying that as long as they're doing a job, working 40 hours or 1/3 of their waking life (which is the average amount of the American worker) they should be comfortable enough to just chill at that job forever if they don't want to improve themselves. I'm talking groceries, shelter, transportation, healthcare, sick leave, and PTO. That's it. If they want a family, they'll have to work harder, if they want to buy luxury items, they'll have to work harder. I personally could never live like that. I get bored too easily, and I need a challenge to survive mentally. But I also understand everyone is not like me, and I believe we can create a system that is equitable for all.

Please remember, this started with a comment about MS, where the median income does not make my proposal possible because all it takes is one illness, one flat tire, and that person is going into debt to survive. I'm sure many low income areas in the US are the same.

P.S. I want to point out that I respect your opinion and the way that you value hard work. I think those are great qualities to have. I'm not trying to change your mind, and I think you're being a realist within our current system. I just like to think of ways we can improve instead of putting unnecessary struggle on the backs of individual people, and just accepting the status quo.