How Did Living a Middle Class Life Get so Expensive?
A Financial Fire Drill
“Credit card companies have put loan sharks out of business.”
"The American middle class is in real trouble," says Elizabeth Warren, Harvard Law Professor. "American families are smack up against the wall, financially speaking." A middle-class lifestyle, she says, is increasingly out of reach for middle-class families, many of whom are going broke trying to attain it.”
“We discovered that having a child is the single best predictor that a person will go bankrupt," she says. By the end of this decade, one of every seven families with children will file for bankruptcy.
Even more surprising to Warren were the causes of this financial breakdown, which she assumed would implicate the battered culprit of overconsumption of luxury goods. "I thought I would write a story about too many trips to the mall, too many $200 sneakers, too many Gameboys," says Warren.
But stacks of government data on consumer spending, which she combed through as a Radcliffe Institute Fellow in 2002, proved her hunch wrong. Compared with a generation ago, she found, today's middle-class families earn about 75 percent more (all figures are adjusted for inflation), thanks in large part to Mom's entrance into the work force. But after shelling out for four fixed expenses - mortgage, health insurance, child care or education, and car payments - today's median-income family has less left over, in inflation-adjusted dollars, than the single-income family of the 1970s. Get a financial fire drill and more at: http://www.news.harvard.edu/gazette/2003/10.30/19-bankruptcy.html
Consumer Fraud in the United States: The Second FTC Survey, Keith B. Anderson
This study reports the results of the Federal Trade Commission’s second statistical survey of fraud in the United States. The survey found that 30.2 million adults – 13.5 percent of the adult population – were victims of one or more of the frauds included in the survey during the year studied. More people – an estimated 4.8 million U.S. consumers – were victims of fraudulent weight-loss products than any of the other frauds covered by the survey. Fraudulent foreign lottery offers and buyers club memberships tied for second place in the survey, with an estimated 3.2 million people were victims of each of these frauds during the period studied. Fraudulent prize promotions and work-at-home programs ranked fourth and fifth. Complete report available at: http://www.ftc.gov/be/econrpt.shtm
National non-profit group devoted to citizen rights; offers a variety of resources.
ObamaCare Update…Sen. Max Baucus' proposal to create nonprofit insurance plans to compete with those offered by profit-making companies. The proposal by the committee chairman is noteworthy for the piece that's missing: a government-run alternative favored by liberal Democrats. Baucus would impose a fee on insurance companies to help finance coverage for uninsured Americans. Of course, if this were to take place, insurance firms would simply raise their premiums to cover this cost. (See our article on Tort Reform in this issue).
A strong key to lowering insurance premiums is through tort reform; something Congress seems unwilling to do.
Burgerville of Portland, OR has lowered its employee turnover by offering $15 a month health insurance which covers eye and dental too…has improved morale & quality of employees too!
This n That
It’s been noted that many employees, including city and state workers, are being asked to take furloughs or reduced work weeks to cope with budget problems. Why aren’t state and federal politicians taking pay or benefit cuts? Congress votes itself an automatic pay raise each year and few of them deserve it! Of course, few of them, whether at the state or federal level, work their job full time.
>>>If you need consumer assistance (been ripped off) visit the newest page that’s been added to the Poor Man site (ConsumerHelp) where the contact information for Consumer Affairs departments of all 50-states PLUS a federal gateway database has been added. We’ve also added a complete section on your consumer rights under the Fair Debt Collection Act and information on what to expect from a firm engaged in debt settlement practices…DebtorRights: Learn how to stop abusive debt collectors and more.
>>>Parade Magazine has added a new jobs section to their website worth a look see.
>>>More online bargains to be had at the following sites:
www.govsales.gov (or try govdeals.com, gsa.gov) for everything from jets to Gucci bags.
www.narts.org National Association of Resale & Thrift Shops; good starting point.
“When in doubt…Sue! Our National Motto.”
Why America Needs Tort Reform
A neighbor of my parent’s has, at any given time, four or more lawsuits going. It’s how she earns a living and she’s not a lawyer. She sues everyone in hopes they will settle out-of-courts, as they usually do because it’s cheaper. Needless to say, she has few friends in the neighborhood.
A few years ago I was liquidating a medical supply business and tried to donate three high quality wheel chairs to various charities. Not one of the charities I contacted would take the chairs from fear of lawsuits.
I believe the United States is the only western country that hasn’t initiated Tort Reform and it’s a major contributing factor as to why our health insurance costs so much…but little discussed in Washington because the American Bar Association and the Trial Lawyers Association have a great deal of influence among politicians (read-campaign contributions).
I’m sure you remember the famous hot coffee incident where a woman won a huge settlement from McDonald’s because she drove off with a hot cup of coffee between her legs and burned herself…duh!
Because of stupid jury awards like this it’s estimated Americans pay an extra 25% for goods and services, especially to medical providers. It’s also the reason why manufacturers place warning labels on products which insult the intelligence of even average people.
Tort reform refers to proposed changes in the civil justice system that would reduce tort litigation or damages. Tort is a system for compensating wrongs and harm done by one party to another's person, property or other protected interests (e.g. reputation, under libel and slander laws). Tort reform advocates focus on personal injury in particular. Accident compensation procedures, compensation, and reform proposals vary greatly among jurisdictions, with a general upwards trend in compensation.
In the United States tort reform is a contentious political issue. US tort reform advocates propose, among other things, procedural limits on the ability to file claims, and capping the awards of damages. According to Forbes reporter Daniel Fisher, tort reform is "A catchall phrase for legislative measures designed to make it harder for individuals to sue businesses."
Improving the American Legal System:
The Economic Benefits of Tort Reform
The economic and legal condition of America's contemporary tort system has come under increasing criticism for being far too costly and incapable of administering fair and prompt awards. A recent actuarial study by Tillinghast-Towers Perrin indicates that tort costs rose from $67 billion in 1984 to $152 billion in 1994, an increase of 125 percent. Increased litigation costs have burdened American families and businesses with higher auto insurance premiums, reduced incentives for auto safety features, and contributed to higher medical costs. In addition, plaintiffs are often forced to accept a 33 percent toll just to have access to the current American tort system.
The economic effects of such a huge tort burden on the American economy are hard to measure directly, but are nonetheless significant. Individuals suffer from the high price of insurance and the increased cost of goods and services. Businesses are hurt by the higher prices they must charge to pay their insurance costs. The overall economy also suffers when productivity and growth are slowed by excessive litigation, which discourages risk-taking and slows the introduction of new products and technologies. For more on this story, go to:
American Tort Reform Association
Finally, remember 9-11 and the families of those victims!
Yours for better living – Bruce ‘The Poor Man’