Thoughts On SNAP Reform

The Washington Post has put together an excellent story about Rep. Steve Southerland and his efforts to move a bill reforming the federal requirements to qualify for food-stamps through SNAP. I shared the story yesterday on Twitter and wanted to follow up with a longer post on my reaction. You may link to the story here http://t.co/SlL7peyiFg.

I MIGHT AGREE WITH SOUTHERLAND on food stamp (SNAP) reform if I believed a large percentage of people sit around watching television while eating chips paid for by tax payers. The substantial surge in SNAP recipients – people receiving government assistance to purchase groceries – is a result of many factors. 

Upward mobility is a challenge when the ladder of success appears severed. Those at the top shout down below words of encouragement instead of lending a hand or a rope to help pull others up. The middle-class just above the divide struggles to hold on to oiled rungs. Hard working citizens watch in fear as colleagues are laid-off from good, living wage jobs. They read the stories from life at the bottom of the ladder. Minimum wage workers who cannot afford higher education, thanks to its escalating cost, work multiple part-time jobs to put food on the table. They make ends meet with assistance from the government and in return for their efforts are labeled “free-riders” who don’t take responsibility.

Southerland believes “being dependent makes you more vulnerable,” but how many of the 47 million people enrolled in SNAP choose to be dependent upon their neighbors? Southerland cites data from the Agriculture Department indicating that half of food stamp recipients have stopped looking for work. Logically, he feels taking away food will encourage these discouraged workers. The argument can also be made that the only means of climbing the broken ladder is with assistance from above or below. While I can see the good intentions behind Southerland’s plan, he is proposing to take away both.

Our economy is barely hanging on, attempting to pull up out of the trenches of the Great Recession. Actions must be taken to succeed, but stepping on the hands of millions of people may only cause us to fall further. It takes billions of dollars to fund safety net programs. However, imagine the greater costs to society if we allow a large part of the American population to fall through.

The College Investment

Earlier tonight, the social media peeps over @GOOD posed a question related to personal financial investment in education. They state that the number of adults who say college is a good investment is way down – just looking at the last four years. Of course this would be the case! Four years ago, a higher percentage of ready-to-graduate seniors had job offers lining up. Not only did they receive multiple offers, but those jobs were paying decent living wages. The climate for graduates since 2008 has been drastically different. It takes months, sometimes years, for a person with a degree to find employment. As yesterdays children become adults, they are quickly learning it does not pay well to be among the best and the brightest. All those awards, honors classes, and internships do not guarantee anything these days.

In a sense, adults are feeling less satisfied with the investment in a college education, because the costs have increased rapidly and the benefits have diminished. Ultimately, obtaining a college degree is not the financial value it once was. Take a quick look at this chart I put together. It plots roughly my annual expenses while attending an in-state four year university. The chart also shows my actual income compared with the earnings I could have made had I skipped college and went straight into the workforce.

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Had I started in 2006 with minimum wage employment and gradually increased my salary, I could have expected to earn around $153,000 over the last six years. I instead chose to forgo these potential earnings and invested some $76,500 toward a four year degree. I did work part-time while in school, so I maintained a small level of earnings to pay for basic living expenses. However, a major factor in adults not satisfied with the college investment is the actual versus expected income. When I was approaching graduation, I had a salary figure in mind. This number, around $40,000, was not arbitrary. It was a number professors told me my skills and experience would be worth. It was the number the university highlighted on publicity fact sheets.  The financial goal of earning a degree is to generate more income over your lifetime than you would have without attending college. Presently, the labor market does not put a high value on most degrees. I find that some employers value my skills and education at about two-thirds the rate I had expected and that is upsetting. While the current generation of graduates realize college was not a good investment in the short-term, traditional sense of earning higher salaries, it remains an investment in shaping personality, professionalism, and intellect.

We become very different people through obtaining a college education and we need to consider the value of that education beyond the immediate financials. One day things will suck less than they do currently. When that day arrives, those adults who are well educated will be in a position to not only earn more, but to also live a more fulfilling life.

Let me know what you think. Are you optimistic about your investment in education, or are you pessimistic about its future value?

Big Ambitions

Besides working full-time, I’ve been busy setting life goals. It has been a tough year so far, but there have been happy moments – like this one at the beach the weekend before my birthday. I have big ambitions for life, but right now the real world is putting them on hold.

Big Ambitions

Looking for Work: A Post Recession Art-form

It isn’t every day that you read about a depressed economy, desperate people, and fumbling political leadership…oh, wait. Whether its a vote to maintain low rates on student loans, or a promise to create jobs, many politicians are aware of how many American people are living at the edge of prosperity. We may very well have reached the point in the American dream where we find ourselves falling into a deep abyss. When and where we will find ourselves once we awake from this nightmare is uncertain. 

There are attempts to fix our world. Smart people are creating new companies with brilliant ideas, and established companies have the funds to hire again. My understanding is that a movement “back” to our pre-recession condition is silly to even think about. It is definitely a new direction forward in which the world is currently engaged. Companies posting record profits are supported by reduced workforces. They have little reason to increase their employee headcount without new business in new markets. In the past we relied on growth of sales to keep our economy humming along. Now and into the future, I believe we will rely on the growth of new ideas that inspire people to get up each day and perform. 

Looking for work has turned into a sort of post recession art-form. The moment you find yourself laid-off, you question who you are. When you graduate and move back home with your parents, who question who you will become. And when you put on your best clothes to attend a career fair, you realize those jobs too are gone. Hiring today is done online, where algorithms, not people, review your application and resume. If you find yourself lucky enough to meet with someone face to face, or even receive a phone call, the responses can be disheartening. You’re over qualified or you lack specific experiences.What can you do?

The people who successfully jump back into the labor-force seem to have one common trait. They never, ever give up. They attend job fairs where no one is around to accept a resume. They apply to companies they don’t really want to work for. They shred their lives of the stuff that doesn’t really matter and focus on what they want to achieve.

At the end of the day, our government can only do so much to help ease this transitional phase. As we move from an economy of stuff to an economy of knowledge and ideas, many jobs and industries will continue to be wiped out in a wake of science and technology. This is not a bad situation to be in; it simply means we must transition ourselves and our expectations. If we look to the future and discover it’s empty, you can be sure we will create new goals and new ideas to find meaning in our lives. And that, perhaps, is the greatest dream of all.

Automated Personal Transportation

I would think a gradual adoption of automated vehicles could work since the sensors in place could easily respond to unpredictable human moves. Volvo already builds cars capable of stopping independent of driver action, but it is only effective at lower speeds. Our vehicles would need a lot more computing power and as many sensors as there are airbags these days. Would there be a set transportation frequency for car-to-car communication to be free from interference? Could people ever learn to trust their car as it cruises toward a crowded intersection, like the one in the video above? The politics would be horrific, so it would be a long time before anything like this moved forward. Still it is fun to imagine the possibilities science and technology can bring. We would certainly all be in for the ride of a lifetime.

 

 

Banks We Love

Most companies have an incentive to keep low debt to equity ratios. Banks on the other hand have an incentive to lend greater amounts of borrowed money and increase debt levels on their balance sheets. It has been the nature of the industry, but does it make sense to allow that kind of business practice anymore. Many people see it as too risky. Some financial academics believe corporate banks would have a hard time operating with higher levels of equity because people would choose to put their money elsewhere for a higher return.

You have to wonder, does it even make sense to have big corporate banks in the future if their success is dependent on high volume, high risk lending? This story has me thinking we can do better as a society. Not just shifting our focus to local banks and credit unions, but transitioning larger financial institutions from a for-profit environment, to a more not-for-profit business model. It would be a real challenge, yet the potential benefits to communities nationwide might be worth the effort.

Instead of borrowing large sums of money to be directed out in the form of various loans with different risks, smaller sums of money could be lent with average risk. The overall return might be a lower percentage, but more of those interest collections could be passed on to depositors in the form of higher interest yields because stock investors are removed from the equation. Certainly the keys to keeping consumers with a financial institution include:

  • Making smart loans (which they didn’t)
  • Paying decent interest to depositors (which they haven’t)
  • Providing quality products and services (which they’re getting better at)

Have you recently changed where you keep your money? Do you love your bank?

01_#344_Can_We_Create_Banks_We_Love.mp3 Listen on Posterous

Source: NPR: Planet Money Podcast #344