An Open Letter to Congress: How You REALLY Help the American People During the CoronaVirus Crisis.
I have written a lot of articles with regards to Google, Tech, and SEO. However, today I am writing as an American Citizen — an American citizen who is angry. What do I do when I am really angry about something important? I write articles, but unlike my other articles, this is personal.
Today, I am writing this open letter to Congress because it has become apparent too many of them have no idea what it is like living in the United States today.
Let’s start with a few facts.
Living in the USA!
- About 80% of Americans live paycheck to paycheck.
~CNN - 29.9% of the population — or 93.6 million — live close to poverty ~Poverty.USA
So if 29.9% are close to poverty that leaves almost 50% still living paycheck to paycheck, but who are they?
Ok so let’s take a look at that.
This is the distribution of American wages from the statistics site Statista. If 80% of people in the US are living paycheck to paycheck, how does that break down?
This means well, 20% are comfortable. If we assume that 20% is almost certainly at the top of the income bracket, where are the other 50%?
This chart shows that it would likely be people making around $135,000 a year or less.
So the $75,000 cut off Congress proposed to give full benefits to today eliminates a large number of people who are also LIVING PAYCHECK to PAYCHECK.
Anyone who makes next to nothing may wonder how could that be? How can you make $135,000 a year and be living paycheck to paycheck? Well, it is not as difficult as it may seem.
Health Insurance.
Many people in the higher wage brackets are also paying for their own health insurance.
Mine is $670 a month — for JUST ME with a $3,000 deductible and a maximum out of pocket of $7,200. However, with medications, co-pays, and other items my doctor prescribes for me — like shots that are not covered by insurance — it comes to between usually $15,000 and $20,000 a year.
That means that while technically I make good money, I drop down 20,000 a year AFTER TAXES just from medical costs.
Average Cost of Non-Employer Health Insurance Premiums.
From eHealth
“The average cost of individual health insurance premiums is $440 for an individual and & 1,168 for a family, in 2018 according to eHealth.”
Not to mention that these plans all have deductibles, so let’s add that in as well.
“In 2018, the average deductible was $4,328 for an individual and $8,352 for families.”
So that is a minimum of $5,280 a year without deductibles or co-pays or items that fall outside insurance coverage — like my shots.
Rent.
Now if you look at the rent across the US we are talking about nearly $1,500 a month — on average.
The average for rent or mortgage for the top cities is deceiving at $1,471 a month. Why deceiving? Look at those “apartment sizes”.
For those that are not familiar with room size? The only one larger than a small-to-medium-sized hotel room is in Philadelphia. So this average apartment cost is really just for a single individual with no roommates, family, or children. A person who is willing to live in a space smaller than a room at a Motel 6.
This means that if you are married, have children, a pet, or a person who needs more than 342 sq ft to you know — move around — your rents would be much higher.
But this is the average cost in those cities using the smallest apartments you can find. What about the real costs for a real person who needs more than a closet to call home?
Big City Realities — Example San Francisco.
San Francisco is representative of the largest and most costly cities in the country, so let’s break that down.
We can also see that 94% of all apartments in this city are OVER $2,000 a month.
For someone making $75,000 a year, this means an assumed minimum rent of $24,000 a year.
However, how realistic is that $2,000?
Using the data at Rent Cafe, the real average rent in San Francisco is $3,700 a month. Nearly double the unrealistic $24,000 a year shown in the first chart.
If we are realistic, the average rent in San Francisco would cost you $44,000 a year.
If you are only supposed to spend 33% of your income on housing, then that $135,000 a year does not seem like a lot of money now does it?
In fact, it is almost spot on — the suggested 33% of your income.
What About Families? The Two Bedroom Dream.
We can assume by the 474 sq ft. average size of the San Francisco apartment, these are mostly one-bedroom, if they have a bedroom at all.
Let’s take a look at how much you would need to make an hour to have a two-bedroom apartment — by state. These are the averages.
In order to compute the average salary, the general rule is to take an hourly wage, multiply it by 2000 hours, which is the average hours we work a year.
So in Hawaii, that means to just afford a regular 2 bedroom apartment you need to make $74,000 and year. In Oregon, it is $46,000. This is IF your rent is only 33% of your income.
The average American is paying much more than that 33% of their wage for housing. Remember that 33% is computed BEFORE taxes.
Housing Costs in 2020.
According to USA.Today, Millennials spend up to 45% of their income on rent on average.
“Millennials spend huge amounts on rent, using up 45% of income made by age 30” ~ USA.Today
This means that those people making $135,000 are likely getting a large portion of their income eaten up by rent/mortgages and health insurance costs.
I think then it is easy to see how people making this level of income are also living paycheck to paycheck.
We All Need Help — Now!
At the lower end of the wage scale, there is far more help when it comes to the costs of living. The middle class and upper-middle-class lose all this assistance.
Of course in a normal year, this is more than fine!
We make more money. We do not need that assistance normally. Those who make unlivable wages deserve that help.
However, when the economy — IS LITERALLY SHUTTING DOWN — the people who do not usually get assistance will also need that help to replace their incomes and this cannot be means-tested.
I repeat — THIS CANNOT BE MEANS TESTED! NO CAVEATS!
Why? Because living paycheck to paycheck is similar at any level of income. Your expenses may be different. You may have more “stuff”, even better “stuff” but they are still your expenses and you still have to pay those bills.
Right now, no one can decide for people that they do not need help. They need to decide that for themselves.
The Six Figure Income Illusion.
Many of the people I know making 6 figures, at even higher salaries than the $135,000 we mentioned here, live paycheck-to-paycheck because they have paid for their children’s college.
This is a privilege to give their children a free education, but they also do not qualify for assistance here to help pay for the loss of their wages.
Even if they lose their jobs, there is nothing to help them.
You are assuming savings and the ability to cover that loss, but you cannot make that assumption.
The stock market has killed their 401k’s. If 80% are living paycheck-to-paycheck, they don’t have savings — or not enough savings — to cover much (or any) of their loss
A truth in America is as you make more money, there are fewer opportunities to cut those costs with the help that is offered to people who make less.
Do not get me wrong! This is how it should be normally.
We do not have big enough safety nets for the people who earn at the lower end of the wage scale. This will need to change, but not just now, for always.
NO ONE SHOULD HAVE TO WORK THREE JOBS to SURVIVE!
While we definitely need to INCREASE help to everyone who falls into the lower-middle and poverty class. We cannot treat the middle to upper-middle as though they should be fine without any help at all — because that is just not the reality we live in, in 2020 America.
In times of crisis, we have to change how we view who gets help and who does not. This model of how we give out assistance must change and not next month, but NOW!
That model was based on how we lived in the 1950s.
Today, my friends making 6 figures do not have summer houses or boats. They use that money we once used for luxuries to pay for healthcare and their kids’ colleges. They are as leveraged as anyone else living paycheck to paycheck, just differently.
And these people making over $75,000 are not all salaried people.
In Las Vegas, a person can make that much off of tips, not salary. They cannot survive on unemployment any more than the white-collar professional can live off unemployment.
Unemployment is not based on their real wages and most will not qualify for the assistance the government is offering because they make “too much”.
If the solutions offered by Congress are so insufficient, then what do we do?
What I propose…
CONGRESS You Are The Issue Right Now!
These are not normal times. Everything is connected to everything else these days. As mentioned, I live in Las Vegas and we closed the strip — CLOSED THE STRIP.
The closing of all those strip casinos, all our restaurants (we have 3,500), and every non-essential business affects more than the wage-hour workers.
Every professional person and tipped worker will be affected as well, the ones you are excluding from full benefits.
You cannot assume that everyone making over $95,000 a year does not need any assistance and you cannot assume everyone between $70,000–$95,000 does not need ALL the assistance you will offer those to those wage workers in the lower brackets.
Our expenses are simply larger.
I make good money, but I do not own a fancy car or live in a big house. My medical costs mean I have a 2005 Hyundai Sonata and live in a 2 bedroom apartment. I work from home, so I need a home office.
That is my luxury — a home office. There are many like me.
So I have a proposal, I hope Congress will read.
- YOU WON’T GIVE MONEY IF SOMEONE HAS TAX LIABILITY?
What the actual (you can figure out what word goes here). That is simply cruel. There should be absolutely NO RESTRICTIONS on who GETS HELP WHEN THE ECONOMY has literally been SHUT DOWN.
SIDE NOTE: The wealthy often make only a small salary and if “income” by wage is all you use to determine eligibility, then they will get that money too. I know one 1%er that makes $45,000 a year but is worth over 8 billion dollars. Hopefully, you have put in stopgaps for that.
2. ZERO PERCENT INTEREST and THIRTY-YEARS REPAYMENT.
The government can borrow money right now for thirty years for nearly 0% interest and that can be paid back over 30 years, so borrow — borrow — borrow! Not for the government, for the people.
3. Borrow for the workers! ALL THE WORKERS.
“GET THE MONEY INTO THE HANDS OF THE WORKERS
— ALL THE WORKERS!”
No means tests. No restrictions.
In the US 80% live paycheck to paycheck, so Congress, you can then assume 80% will need help — maybe more.
This is NO TIME for diving out piecemeal little bits of aid.
We won’t make it.
Capitalism needs workers. They need workers to buy things. If Capitalism needs workers to buy things, and unlike in the past, the market has nowhere else to go? You have to get money in the hands of those who can put it into the economy. This means the workers — ALL THE WORKERS.
You need to stop deciding who will get the money.
They need to tell you.
But how do we do that?
4. GIVE THE WORKERS MONEY.
Disclaimer. This post is not addressing massive corporations just workers and small to mid-sized businesses with business losses that force them to layoff or fire workers, not items like sick leave that are more immediate and being addressed.
We can use small businesses and help both small businesses and individual workers at the same time to help each other make it through this very difficult time.
Where do we start?
So, remember the 0% interest loans with 30 years of repayment?
Keep that in mind.
- Method 1. Give Small Businesses their operating capital losses for at least 6 months. Reassess at that time to see if we need to extend it another 6 months. Use the 0% interest loans and the 30 years the government has to pay that money back — then pass it along to Small Business with those same terms. This way when the world economy comes back online, they can be up and running in weeks — not months. Plus then they have workers to utilize for other projects during their downtime. Downtime can be used to innovate their business models or operations. No pesky work to bother their creativity. Win-Win!
Note: this money MUST be used for operating costs, taxes, and maintaining current employment rolls. They cannot fire anyone during this time or change their wages or benefit,s like health insurance, without exigent circumstances. Any failure to follow this directive would result in fines and loss of the 0% interest loan.
- Method 2. Many workers fall under classifications outside “normal” employment. We are the workers who are underemployed, part-time, gig workers, or self-employed. Most of the workers in these classifications would not qualify for help strictly directed at wage earners. They file w-2s most in this category file 1099s. Earnings are also very inconsistent. This makes tax returns a very poor measure of income needs. Yes, this makes this type of worker compensation even easier. These workers would just be given monies to cover all their basic monthly living expenses*.
Okay not given, they would be able to however take out 0% interest/30 year repayment plans. No one would need to take out a full loan, but you would be offered one.
How would the loans work?
- We allow all non-traditional workers over 18 to borrow up to 6 months of living expensive — ALL LIVING EXPENSES — from the government for 0% interest and a 30-year repayment plan.
But how would we pay for this?
- If the worker makes over $75,000 a year — the amount where the government says you do not need full replacement funds right now — they would repay what they borrow over 30 years.
- If they make less than $75,000, they do not have to pay it back at all. Though you would be asked to pay the loan if you can — you do have 30 years after all.
*This means ALL LIVING EXPENSES rent/mortgage, utilities, internet (up to $150), phone (up to $100), transportation (up to $350 a month), health insurance & any monthly medical costs insurance does not cover, groceries ($25 a day people with special needs need special foods), plus a daily per diem (the government has this data for when employees work outside the office locally for food and travel — use it here) etc. etc. Anything not already defined here can be determined easily enough by the entities that receive payments and pulled in by APIs to the application document online.
This would cover all workers and all small businesses.
The best part of this plan is workers could immediately start putting this money back into the economy on money the government would owe no interest on for 30 years. This way both workers and businesses will start creating tax revenue almost immediately.
But how would we pay for this?
Yes, this would be very expensive. It is a bailout of an entire country: business, the people, the entire economy — everything.
However, shutting down the economy of a country means we do not have any other choice.
If people feel safe, not terrified. If the people feel taken care of by their government, not thrown to the wolves? Then we make it. Capitalism continues another day and life will return to some kind of normalcy with much less pain. If we do this, we can and will emerge stronger for this catastrophe.
And you can bet the stock market would take off like a rocket the minute this was passed and monies were handed out.
What about those workers that don’t repay their loans or don’t have to?
Where would we get the money for those that are not required to repay their loans or who simply never do?
There are two places we can get $3 trillion in monies with little pain.
- Repeal the tax cut for the 1%. This needs no explanation or justification. However, it would not be a hard sell. The stock market rebound would surely be worth more to them than the tax cut, which given the extraordinary nature of shutting the economy down, can’t last anyway.
- The Military. No, I am not suggesting we take money away from the active military. Any bill would have to pass the Senate and moving money from the active service, never would. However, most in this country don’t know this, but we waste $3+ trillion maintaining military equipment that is not used. Even the military wants to get rid of it. So, get rid of it! DONE!
There you go $3 trillion saved.
The rest we can get back over time as most people will pay those loans off early because the payments will be so low, they won’t have an issue doing so.
Assuming a person who makes $75,000 a year would need about $5,000 a month x 6 months = $30,000. Now $30,000 sounds like a lot, but over 30 years? They would only pay $1,000 a year and anyone that is a high wage earner in a normal economy can do that with little worry.
I am not alone.
- By the way, I did not come up with Method 1 myself. Robert Reich and Mark Cuban have both suggested this idea in one form and another and I have to admit — it was really good — so I added it with a little of my own thoughts added in.
You can watch Robert Reich explain his plan here.
2. You can read my original post on Method 2.
I outlined it on Twitter early this week.
Though it seems I found myself in well-known company, Billionaire Bill Ackman has a similar idea but tied to closing down the country for a month.
The only issue with his idea, it cannot be limited to one month. The wage coverage would need to go at least 2 months past the reopening to be successful. It will take businesses a month to fully get back online and at least another one for sales to return, so workers would need their wages sustained through that time.
And that’s it. Maybe this is not the right plan, but what the Congress is doing will cost as much and do much less, leaving massive gaps of coverage and that means we as a country? We fail at a time when failing is not an option without years of devastating consequences.
We must do better. We have to do better. People’s actual lives depend on it.
Thank you for coming to my TedTalk!
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Personal Note.
If you have your own suggestion or proper academic critique, please add it to the comments. I would love to hear your thoughts.
If you are only here to criticize or troll, please don’t. I am only trying to help throw some thoughts into the mix, while I sit here with borderline pneumonia wondering how all of us are going to survive the next year or even two.
I don’t have the time or energy for negative just to be negative tonight.
Remember were are in this together.
Thank you!
