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Class mobility only works if there is some viable means to achieve it and in today's modern society that way is typically through higher education. Unfortunately, with the skyrocketing tuition coupled with high student loan interest rates, we are continuing to push forward a system that will have the net effect of keeping the bottom income earners at the bottom. This may be the intent, but at least we shouldn't pretend that pulling yourself up by the bootstraps is an easy task that only the laziest in society are unable to achieve.
Working your way through college may have been possible for the truly motivated in the 1970's and 1980's, but today that job at Burger King is not going to pay your way through a decent community college.
Even a college education may not provide class mobility. Especially if one majors in something that isn't too marketable. I know countless college grads working at Walmart, convenience stores, etc.
This is true. But there's a complementary observation: if one has already achieved this, or nearly so, and remains unmarried (or has divorced and recovered) - it becomes prodigiously difficult to find, attract and marry a partner who's comparably successful. Take the case of our $5M 65-year-old physician. Suppose that he or she is single. How will he or she go about finding a potential wife or husband, who's available and also has $5M?
The 65 year old physician worth $5 million is already there. With a prenup, they can marry whoever they want. It's the 30-year-old earning $40K who can make or break their long-term financial outlook by marrying the right person or the wrong person. If they marry someone who also makes $40K and who believes in saving & investing, and if they stay married, they'll have a good outcome. If they marry someone who makes less than they do, who doesn't save a penny, maxes out their credit cards, and ends up divorced, they're doomed.
I'm divorced twice. My mom is in assisted living with severe short-term memory loss issues and I manage all her affairs. Every time I visit, she asks "why aren't you married?" several times. I explain that I've been married and divorced twice, it was very costly, and at age 58, I'm 100% focused on creating the wealth to retire comfortably. Getting married & divorced again would be catastrophic. I'm fairly high income and fairly high net worth but not that $5 million physician. There aren't many women at my income and wealth level and I can't afford to subsidize the lifestyle of someone else.
So I agree with what you're saying but disagree about the specific example you selected. $5 million net worth at age 65 is pretty bomb-proof. They don't need to find a spouse also worth $5 million. Divide by 10 where it's $500K net worth with no pension and only Social Security coming, it would definitely matter.
Class mobility only works if there is some viable means to achieve it and in today's modern society that way is typically through higher education. Unfortunately, with the skyrocketing tuition coupled with high student loan interest rates, we are continuing to push forward a system that will have the net effect of keeping the bottom income earners at the bottom. This may be the intent, but at least we shouldn't pretend that pulling yourself up by the bootstraps is an easy task that only the laziest in society are unable to achieve.
Working your way through college may have been possible for the truly motivated in the 1970's and 1980's, but today that job at Burger King is not going to pay your way through a decent community college.
I agree about the viable means issue but the problem isn't college cost. The problem is in lousy parenting, lousy peer group, and failed K-12 public schools once you get outside of the affluent suburbs. If you're 18 with a good education and a good work ethic, you can be economically viable with relatively inexpensive state schools. If you hit 18 and you can't write a coherent paragraph, read with comprehension, do pretty basic arithmetic and beginner math, and think critically, college could be free and it wouldn't matter. Welfare kids can and do go to Harvard on full scholarship. If you're good enough and well enough prepared, money isn't the problem.
Today, we have a huge number of people attending college at great expense who have no business being there. Even worse, they're doing it with borrowed money. They get their 4 year certificate of attendance at some degree mill receiving college-lite education and have no particularly useful job skills that provide any kind of return on investment on all that education debt.
I think the focus needs to be on insisting on good parenting and good academic performance in K-12. That's what is causing all the socioeconomic class mobility problems.
Even a college education may not provide class mobility. Especially if one majors in something that isn't too marketable. I know countless college grads working at Walmart, convenience stores, etc.
Education is not a guarantee of success but the correlation is certainly there and your general odds off upward mobility are far greater (especially if you start out at the lower to lower-middle-class) if you have a college-level education.
I agree that not all college degrees are created equal in the marketplace and students should be given accurate numbers relating to post-graduate job prospects. Likewise the student needs to take responsibility for pursuing a degree that has actual earning potential. Finally, lenders should base financial aid off of degree marketability - i.e. lending six figures to a lower-middle-class 18 year old for a degree in Art History is simply taking an advantage of a bad decision for purposes of collecting on the high interest rates when the student defaults.
Quote:
Originally Posted by GeoffD
I agree about the viable means issue but the problem isn't college cost. The problem is in lousy parenting, lousy peer group, and failed K-12 public schools once you get outside of the affluent suburbs. If you're 18 with a good education and a good work ethic, you can be economically viable with relatively inexpensive state schools. If you hit 18 and you can't write a coherent paragraph, read with comprehension, do pretty basic arithmetic and beginner math, and think critically, college could be free and it wouldn't matter. Welfare kids can and do go to Harvard on full scholarship. If you're good enough and well enough prepared, money isn't the problem.
Today, we have a huge number of people attending college at great expense who have no business being there. Even worse, they're doing it with borrowed money. They get their 4 year certificate of attendance at some degree mill receiving college-lite education and have no particularly useful job skills that provide any kind of return on investment on all that education debt.
I think the focus needs to be on insisting on good parenting and good academic performance in K-12. That's what is causing all the socioeconomic class mobility problems.
Agree, but I think we need to look at what 'relatively inexpensive' means today when it comes to state schools. I think it is not unfair to say that most students paying sticker prices (as we have to face the fact that there are not enough scholarships to go around) even with resident tuition rates are looking at close to six figures in debt to obtain a bachelor's degree at most state schools once you factor in tuition, interest capitalization over the life of the loan. Scholarships cover some but not all of this, except for the fortunate few. And yes, while some students on welfare can go to Harvard, they are 1 in a million. I think we need to shift the conversation to upward mobility for the average student who has good grades. For the vast majority of students, a scholarship spot at Harvard is not realistic.
Federal lending has made it possible for most students to obtain loans without much or any credit history, but we're still setting them up for disaster down the road as it is hard to expect a graduate to pay off 100k+ in loans while making starting wages. The days of paying a few grand a year in college tuition and working hard at your summer/part-time job are over. The new reality is mortgage-level debt that, unlike a mortgage, has much higher interest rates and cannot be discharged in bankruptcy.
Anyway, bottom line is that it is a complex problem but our system is structured to discourage upwards mobility at the lower income level as it still favors the upper-middle class students whose parents are able to foot the bill for college. Meanwhile, the high tuition rates, interest rates and oppressive lending practices will effectively discourage many poorer students from taking the lending risk to obtain the degree while high costs also ensure that they are unable to earn their education through part-time or full-time employment as well.
We've done a very effective job at creating a barrier to entering the middle class via education and are keeping that door as tightly shut as possible.
Education is not a guarantee of success but the correlation is certainly there and your general odds off upward mobility are far greater (especially if you start out at the lower to lower-middle-class) if you have a college-level education.
I agree that not all college degrees are created equal in the marketplace and students should be given accurate numbers relating to post-graduate job prospects. Likewise the student needs to take responsibility for pursuing a degree that has actual earning potential. Finally, lenders should base financial aid off of degree marketability - i.e. lending six figures to a lower-middle-class 18 year old for a degree in Art History is simply taking an advantage of a bad decision for purposes of collecting on the high interest rates when the student defaults.
correlation is the backwards to me, people who are smart enough to be successful go on to get college degrees because they use them as tools to help progress themselves. the degrees won't make them successful in the future, they would have been successful regardless, it just helped speed up the process. successful people seek information, college is just one way of getting it, a good way since a lot is packed into a small space, but not the one way.
thinking that you'll be successful just for having a degree and no other "plans/goals" does not make someone successful
This thread is really about socioeconomic class mobility. The data is irrefutable. If you're born to the bottom 20%, you have very slim odds of escaping. There's a lot of movement in and out of the top quintile. Most born there at least remain in the top half.
The Economist did a set of articles about this about 6 months ago. Socioeconomic class mobility in the US is now near the bottom of the first world countries. It's pretty easy to explain when you look at the way public school systems work in the US and the whole single parent problem. A child in a single parent household received an express ticket to a life in the bottom-20%. This problem needs to be addressed but it's probably not by flinging money at failed school systems. It's by insisting that all children go to school to learn. If you're a barbarian disrupting the classroom. You get segregated to a completely different campus so you don't disrupt the children who want to learn. Focus on education, not sports. Probably lengthen the school day and school year to use the schools as child care for the working class. Teach things like "American business English". I shouldn't be able to guess your socioeconomic class over the telephone. Insist on proper grammar. Insist on being able to write a coherent paragraph. Don't promote students until they have mastered the required skills at that grade level.
I view "high net worth" as top-5%, not Bill Gates. Anybody mildly above average with good work ethic and a focus on saving/investing instead of spending can get there. It's tough to achieve it for most without being married to someone at a similar income level so getting married and staying married is a big part of the puzzle.
Come'on GeoffD, I know you've been repeating this mantra until it hurts. But Jeff Bezos came from a single household, and I believe his mom was, maybe on welfare. Same with the WhatsApp guy. They are both became billionaire recently, as in the last 20 years.
Although I think that is about to change in the coming decades. Automation and whatnot. We're not there yet. But that's a discussion for a different thread.
I think my point still stands about the "growing of the pie" in certain areas (the non-basics) not necessarily translating to a better salary:COL, as they do not produce any more land, and rent is usually the largest number in COL. Do you see where I'm coming from? It's kind of hard to explain, I'm not exactly clear on what I'm trying to say.
I do worry about automation, but that is another discussion.
But the basics are still the basics, and a majority or a large minority of Americans aren't doing the basics. A pretty large chunk will argue that the basics are impossible, outdated, etc.
I see where you're coming from. Where I'm coming from, the typical American lifestyle is still an exploding volcano of wastefulness. People don't have to have as much square footage of living space as they think they need. They don't need as much car as they think they need. They don't need as good a cell phone or cell phone plan as they think they need. They don't need cable TV. And, as I already mentioned, when you have a 40% out of wedlock birth rate, is it really any surprise the middle class is shrinking? Too many are simply not doing the basics.
I just don't care for this idea that there's little to nothing people can do to improve their lives. There's TONS of room for improvement and so many spend so much time and brainpower making excuses instead of taking control of their lives in areas where they have the ability to take control.
I save a lot more than 10% and I only make 50K in the high cost SF Bay Area.
It's like Mr. Money Mustache says....the typical middle class American lifestyle is an exploding volcano of wastefulness.
Post your budget, then, and prove it.
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looks like the loudest voices are "struggling" vs the rest of the forums that aren't
