THERE'S NO TRICK; IT'S JUST A SIMPLE TRICK!

Posted in Rants on April 2nd, 2017 by Ed

The state of the world today has us all doing double takes at every news item that seems like it can't be real. As we are learning, the line between what can and can't be real these days is getting indistinct. But when someone posts an infographic called "Build Wealth on Minimum Wage" on March 30 – just before the official day of things that Aren't Real – well, a man could experience an existential crisis trying to figure out if it's serious or next-level satire.

Since the website that posted it has since removed all reference to it after a torrent of mockery, let us assume it was serious. Fortunately it is cached here and I uploaded the entire (large) infographic for your viewing pleasure as well. I wanted to make sure you realized I wasn't fabricating this.

Since these aren't ideal reading formats, let me summarize the key points.

1. Move to a cheap city. The author helpfully lists the 10 cheapest, highlighting places like Buffalo, Fort Wayne, Amarillo, Akron, Jackson MS, Detroit, and Shreveport.
2. "Find a place that costs less than $600/month for rent" – preferably "with utilities included"!!!
3. Eliminate your commute by getting a used bike (to ride to work in the winter in Buffalo or Detroit I guess)
4. Cancel cable
5. Don't eat out – "Elon Musk once ate on less than $1/day"!!!
6. Maintain a catastrophic health insurance plan to avoid being medically bankrupted
7. Shop at thrift stores
8. Do things for fun that are free
9. Invest your Extra Money
10. Make money in your "spare time" driving Ubers and whatnot

Some of this stuff is, admittedly, not horrible advice. When I lived on a very low income, paying for cable and eating out were the first two things I eliminated. I also put a moratorium on buying clothes, which is a bigger expenditure for most of us than we realize. But this is the kind of "financial advice" people get everywhere they look. Some people follow it, some people don't.

The basic premise of this Advice, though, is so stupid that it's hard to believe that any editor, even of a minor Financial Infographic purveyor, would sign off on it: Move somewhere it is cheap to live. Uh. A couple things here.

1. Moving is very expensive. I have done it probably 15 times in my life. Even loading the truck myself and unloading it myself on the other end, moving costs at least several hundred dollars for anyone who doesn't own a large moving van. Starting in a new location requires a lot of up-front cash as well: security deposits, "activation fees" for utilities, and so on.

2. His list of cheap cities are places with rampant unemployment and crime problems. It's a list of America's Crappiest Big Cities. Perhaps he should go check out the $500-600/month apartments in Jackson and Buffalo and see how livable they are. And how close they are (biking distance!) to anywhere one can work full time. Those cities are cheap because there are no jobs there and nobody wants to live there. People are leaving, and they are leaving for a reason. Why would anyone move there and expect to find work?

3. The assumption that anyone can get 40 hours per week of minimum wage work makes sense to someone who has never worked minimum wage jobs. I suppose you could cobble together multiple jobs to equal 40 hours, but you're not getting anything close to 40 at one job. In a dying city with a bad economy.

4. There are maybe two or three big cities in this country with sufficient public transportation networks (and weather suitable for biking at least some of the time) to allow residents to get by without a car. Going without access to a car in 99% of this country is close to impossible. You'll give back whatever you "save" from jettisoning a car in the jacked up prices you pay at Convenience Stores in food deserts where one finds things like $500/mo. apartments.

5. Cutting back on spending is good, albeit patronizing, financial advice, but the "budget" here assumes a person's spending is literally zero. That simply isn't realistic. Sure, a disciplined person can cut out the Meals Out and Costly Entertainment (movies, bars, etc.) but the idea of going years on end with nothing happening in one's life that would require spending money is quite stupid.

6. Even living this to-the-bone lifestyle recommended by the author with no spending and a mythical full time minimum wage job enables one to "save" a grand total of something like $3500 per year. Managing the infinitely unlikely feat of repeating this performance for five consecutive years, then, would result in saving up something like $17,000.

OK. That's not nothing. But it's hardly "wealth." Your five years of spartan living in a probably-dangerous apartment in a shitty place has left you with enough cash to buy a decent used economy car, pay maybe 1 or 1.5 years of tuition at a real institution of higher education, make a down payment on a really cheap house that will probably be in an area with a depressed economy, or something equally underwhelming. Maybe the real moral of the story is that no matter how ridiculously strict a person is about financial habits, $7.25/hr just isn't enough money to allow an adult American in 2017 to do much of anything except survive paycheck to paycheck in the very best scenario. And that's if you get close to 40 hours on the regular, which you won't.

Americans are terrific at learning the wrong lessons from looking analytically at poverty. Were this a satirical effort to show that someone earning minimum wage is in a no-win situation it would be brilliant. Instead we have yet another example of how clueless the Silicon Valley Thought Leader types are and how willingly they ignore the reality that the system they exploit so well is not sustainable in the long term.