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  • My beef with capitalism: Inequality’s a bitch

    The problem with inequality

    Economics is not my strong suit. Nor can I say I am particularly interested in it. I’m a micro person, not a macro person; a creative trying to get by in a capitalist world.

    But even I can’t fail to note that the wealth gap is growing, not shrinking.  Yep, even here in little old New Zealand.

    I like this dummy proof breakdown:

    “New Zealand, which had the developed world’s biggest increase in inequality from the mid-1980s to the mid-2000s, has seen more economic damage than most. According to the OECD’s calculations, our economy grew about 30% in the last two decades – but it would have grown by 45%, or half as much again, if inequality had stayed at 1980s levels.”

    Inequality matters. It’s a no-brainer. It’s a drag on the economy, and I think the saying that “you’re only as strong as your weakest link” is perhaps relevant here.

    “When families lack the income they need to pay doctors’ fees and keep healthy, or to fix their car so they can travel to a new job, or to give their kids the equipment and clothes they need to succeed at school, it’s obvious that economic growth will suffer. You could argue that these are problems of poverty, not inequality, but really the two are inseparable; the reason some people have so little is that the fruits of economic growth are going largely to our richer citizens.”

    As someone who ostensibly belongs to the middle class, occasionally I feel a tremendous sense of guilt that I have it so much better than many other people, and gratitude to be lucky to be where I am. But the other 99% of the time I spend fretting that we’ll never be able to really get ahead.

    Bridget at Money After Graduation sums up my feelings perfectly:

    “Wealth inequality is a growing, terrifying problem and I don’t want to be on the losing end of the deal. I’d rather we live in a more equal society when it comes to wealth distribution, but so long as we don’t, my singular goal is to get as far away from the bottom as possible.”

    When necessities take up more of your income, you may even need to borrow to afford them. I don’t believe in ‘broke yet happy’. I think it’s something people tell themselves in order to feel better. Nice idea – in theory.

    So, what are we supposed to do? Same old, I guess. Hustle, hustle, hustle.

    A key piece of the inequality puzzle in New Zealand boils down to that most basic of needs: shelter. The way I see it, so much of this hinges on property – stability, security and quality of housing. The status quo is a disaster in financial terms – and in health terms, for renters.

    It’s good to see that our go-to economist for all stories on renting vs buying is finally starting to discuss the pragmatic downsides of renting in New Zealand. While the actual quality of rental housing isn’t a talking point (and thus, the problem with mainstream media and the limited perspectives of the typically privileged people within it) he acknowledges New Zealand has some of the most restrictive rules in the developed world for renters.

    “New Zealand is strangely different in that we have made this almost special provision around renting of residential property versus other types of renting.” – NZ Herald

    “The rental market is designed for students flatters. It is no surprise that it is the young couples with children who are most unhappy.” – Stuff

    But the level of chatter around the state of rental housing is growing.  Research shows that private rental housing is in worse condition than houses that are owner occupied, however, in a tight market, you have to take what you can get.

    “One potential tenant, looking at a property, asked if the holes could be fixed and rodent droppings cleared before she moved in. “[The landlord] said: ‘If you don’t like it, there’s other people that want to live here’.”

    Is it any wonder the typical tenancy lasts only just over a year?

    Amazingly, here’s a rare mainstream newspaper editorial that hits the nail on the head.

    Housing in New Zealand is not only scarce and expensive; for too many people, it is also downright unhealthy.

    “Our national housing stock is of poorer quality than most OECD countries. In particular, too many houses are damp and cold – which means they contribute to our grim rates of infectious and respiratory diseases.

    This is deplorable in an advanced country, and like our other housing problems, it needs to urgently change.

    Extensive work has already been done, so there is no excuse for delay. Most recently, results from a pilot study on 144 rental homes showed 90 per cent failing the warrant. That number needs some qualification – some houses failed for such easily remedied reasons as flat batteries in smoke alarms. But other results were more deeply concerning – like the third of rental properties that lacked any form of fixed heating.

    No-one in New Zealand should have to live in a dog of a house.”

    In order for renting to life to work you need to be able to save and invest what you’re “saving” by not having a mortgage. The problem is, rents are not going anywhere except up and up.

    • Renter demand in Auckland is forecast to increase by 63% over the next 20 years and it is unclear whether “mum and dad” investors will be able to meet this demand
    • Rental affordability is a critical issue for low- middle income households in Auckland, and people who enter retirement renting are likely to face ongoing hardship

    The prospect of continuing to have to pay rent throughout retirement is scary. I can kinda understand why suicide at 65 starts to look like a pragmatic option.

    Recently, an acquaintance posted a photo on Facebook . In it, he and his girlfriend stood on the deck of their new house, all smiles. Of course, like all our other home-owning peers, they only managed this because their parents stumped up cash for their down payment. Heck, if mine offered, I’d swallow my pride and take the offer.

    But is this what the future of our country looks like? Only the well off buying homes for their children and passing the privilege of living in a decent property on down the generations, while everyone else remains stuck in cold, damp rentals and suffering all the ill effects that poses?

    Surely we can do better than that.

  • Surviving a layoff: 2009 vs 2014

     

    Wow. It’s been five years since the dark days of that first layoff. I looked back in my archives to check the dates, and promptly got depressed reading the posts I wrote back then (and embarrassed at my typos etc – I should really fix them up).

    But things are very, very different today than they were back then. Let’s see:

    We have enough to live off

    Today, I’m working full time and can support both of us for now. In 2009, I was a strung-out, neurotic, hot mess of a final-year student barely holding it together as it was, and definitely not earning enough to support two people. I don’t remember what my savings account looked like back then, but I know the balance was a lot lower than it is today.

    We were blindsided

    Well, not totally – the pessimist in me felt like this was all too easy, too good to be true (and kept holding off blogging about his new job, apparently for good reason). However, emotions aside, realistically, this was a shock.  Sales can be cyclical, though, and much like the ups and downs of life on commission, I was aware that stability might be not guaranteed. And logically, the newbies are usually first to go.

    Back in 2009, T’s hours kept getting cut back and the company was clearly struggling;  in hindsight maybe he should have jumped first, but then again…

    The economy is in a totally different place

    Will 2014 be a rockstar year for NZ? I think that’s a little over-optimistic, but things are looking up overall.

    Back in 2009, it was all turning to shit, so even if T had cut loose of his own accord, it would most likely not have done us any good.

    T is in a different place, too

    While he’s changed industries since 2009 and so doesn’t have, say, another 4-5 years of accumulated relevant experience, he DOES have more experience overall – and more confidence. By the time I got home on the day of reckoning (he waited until that evening to tell me rather than upset me halfway through the workday, bless his heart) he’d already applied to multiple jobs and reached out to various people.

    Back in 2009, he had less work experience, fewer contacts, and was facing a tougher economy. It’s definitely a much better time to be job hunting right now.

    How equipped would you be to deal with a layoff (your own/your partner’s) right now?

    A Life in Balance
  • It’s bleak out there

    Following up from yesterday, since we have a water bill to pay and I have at least two (maybe three) weeks off, in which I’m only working two full days, I thought I’d look around for any odd one off type jobs I could pick up. There’s really nothing on Student Job Search though (I remember back in 2007 when there were all sorts – helping out at expos, data entry, etc…) and theoddjob.co.nz is just full of scam ads.

    So I guess I’ll spend it relaxing, being with BF, cleaning the house etc, shopping multiple times a week on the scooter (no longer have access to car as BF’s brother moved out on his own…the car that I originally bought back in 2007 and then got rid of because the transmission died and couldn’t afford to fix..Yeah, I know…) and car hunting. Hopefully we can find one by the end of the month. Like I said, we can’t expect much for $1-1.5k, but I just really need it to last at least till the end of year when I can (touch wood) work full time and be bringing in more. I don’t want to rush into buying a complete dunger, and having this time off will hopefully help us make the best choice we can.

  • You know what’s crap?

    Building a cycleway the length of the country. (For tourism? Really? You trot that one out for whose benefit, exactly? I sure wouldn’t go anywhere to cycle down a strip of concrete in NZ, let alone overseas).

    Not boosting Work and Income eligibility. (If now isn’t the time, well, WHEN is? People need support now, more than ever.)

    Cutting tertiary funding. (You don’t wanna support us, and you don’t want us to further our education to improve our future prospects. Brilliant.)

    I feel totally vindicated by how I voted in the election, and stand by my decision.

    /end rant

  • To a Mr Bitter from Titirangi

    I was merrily eating my lunch yesterday at work and flicking through the paper. I landed on the letters page – which is always good for a bit of a giggle – and lo! a submission entitled Recession victims!

    According to this writer, the members of the “debt embracing, profligate generation X and Y still have their jobs by and large, so their income is intact. With interest rates dropping as a result of the recession, their financial situation has improved significantly.”

    Wahey! Wow. Something I might expect to see from the mouth of an American, but here?

    I think this person is just a LITTLE out of touch. It’s Gen Yers who are (among others, although not exclusively) being laid off. Last in, first out. Unemployment is climbing, and those with less experience and fewer qualifications are more likely to be let go, and to find it much harder to secure any kind of new job.

    By no means is the income of my household intact. And sure, interest rates are dropping, but this only affects savers and mortgage holders. My savings rate has dropped like a rock and is hovering somewhere around inflation level. But you know what? Credit interest rates are exactly where they were before the recession began, if not higher. Prime does not seem to affect unsecured credit, for whatever reason. I don’t know if this is a Downunder phenomenon, and quite frankly I don’t care to find out. I just know that’s the way it is.

    So please, KL Matthews, don’t tell me that my financial situation has improved significantly. And don’t deign to tell me that I will benefit from the recession. I’m going to find it harder to get a job after graduation, probably be taken on at a lower pay than I might have otherwise, and with fewer benefits.

    My partner may be the next spending three years out of the workforce, which we hope will pay off in the long term. If the recession hadn’t happened, odds are he would still be gainfully employed and at a decent living wage. But in the meantime, our “financial situation” has plummeted to depths I could never have imagined last year.

    Unfortunately, like many who started out with nothing, he does have debt. Debt that he was making progress on, and which has now been halted. Not huge amounts by any means. An amount that I compare to MANY other PF blogger and think well, gosh, that really is nothing. Why am I so stressed? Well, I’m stressed because even at a low level, it’s simply not serviceable for a laid-off person. I’m stressed, especially now, because we do not have a functioning car, among other myriad worries. (Great op-ed here about how the recession is hurting low socio-economic areas, btw, and some proposed solutions. I definitely don’t agree with them all but they’re fascinating! Especially about ensuring quality used cars so people can get around. I can’t stress enough how bad public transport is here. How many times have I talked about the bus service? And with the Govt. investing in the Waterview tunnel and a freaking “nationlong cycleway“, that’s not gonna be improving anytime soon. ). How long will it take to recover and get back on top? Neither of us knows. We’re both living in a state of constant uncertainty. I wouldn’t wish it on anyone, not even you, Mr Bitter. Please remove the lemon from your mouth – you’re not the only one unhappy with the way things are, trust me.

  • Apparently we in NZ are the third most indebted country in the OECD.

    Scary stuff.

    No wonder our mortgage rates are so high. No wonder he don’t have 30yr mortgage terms. No wonder the default rate for a Visa or MasterCard is 19.95%.

    It’s definitely reinforcing to me how important it is to save. If BF starts his degree next year, that’s seriously going to impede his ability to beef up his EF, let alone long term savings. I want to go to Fiji or Raro or somewhere in the Pacific for a week. And on a cruise. And round the South Island. But I guess all those things will have to go on hold.

    GAH! Especially when I’m seeing great deals, like take a partner cruising for $1 (plus port taxes and the like). SO ridiculously cheap.

    Someone said, “but what about pirates?”

    I don’ t know, maybe something’s wrong with me, but I’m not too worried. Same with swine flu – I guess right now it’s on the other side of the world and just sounds pretty insane. Still, I can’t forget a spinechilling story I read in the Independent – “The floors were covered in my husband’s blood”, or something like that. This poor woman was tied up by pirates, and came out on the boat to see the decks awash in blood and her husband dead. She was  actually standing in his blood.

    (Yes, I know swine flu seems to have made its way here too, but the odds of me catching it are pretty damn low. Heck, I’ve travelled when SARS was still a concern. Ohhh….imagine how low airfares are gonna go now! Nobody will want to travel, so everything is bound to plunge.)

    Sigh, living within your means is boring. But I guess nobody ever said being responsible was easy.

  • Not looking hopeful….

    Trying to avoid sinking into a pit of total despair.

    Here’s how it’s been. Search through job sites everyday, monitoring anything new advertised. Figure out if it’s remotely plausible to apply for any of the new positions. Spend an age pulling together a CV/letter trying to highlight any relevant skills/experience, then hit send. Or, call the number, only to be toldthe job is ALREADY gone. Or, get no answer, but keep trying. Once you eventually DO get through, are told they stopped taking calls and answering the phone because they were so swamped!

    You can’t win. You can call the same day a role is put up. It’s still not fast enough! What to do, short of sitting at the PC 24/7??

  • Thoughts on a Sunday night

    There have been a lot of op-eds and columns about how 20somethings are being hit hardest by the recession. Last in, first out. Brought up with the idea that if you just worked hard you could get ahead. Thinking you should get a degree, find a job, buy a house. And how that’s just not true, and it’s all falling apart.

    I’m just glad we don’t have a mortgage.

    I know once we get through this, nothing will ever be the same again. I won’t take anything for granted. I’m going to be even more cautious than I was before. Nothing is for certain. Nothing is safe, nothing is assured, and it can all be taken away from you in an instant. Corps have no loyalty to you. All you can do is look out for yourself, be prepared for anything and pick yourself back up.

    I feel stressed a lot, and I freaked out today at the butcher’s because we had to keep it to $20 or less to stay under budget.

    It’s not like my card would have been declined or anything, but it would have been money we didn’t have.

    We got in at $21, and BF came up with a $5 bill from nowhere.

    “See? Now we’re UNDER budget,” he told me.

    Bless him.

    Please, let Work and Income DO something. DO their jobs and give him what he’s entitled to. $10. $25. $50. Whatever.Any little bit would help, and keep us afloat for longer. $100 would be gold. That’s about how much we’re falling short by.

    If this is being a grown up, REALLY realising that the only person with your best interests at heart is YOU….I don’t like it.

    As long as we can get through this.

    One step at a time.

  • I really can’t believe just how competitive the job market is out there. Check this out.

    O-I, one of the companies mentioned, were advertising really heavily online and in the papers. I can’t remember if BF applied or nor, but those are closed now and I think training commences this month for the plant to open next year.

    They received almost 1200 applications for 38 jobs.

    Competition is FIERCE. One of the temp agencies BF spoke to told him that they are FLOODED with qualified applicants, applicants who are coming back to work after being out of the labour force (for what reasons, I don’t know. Quality time at home? Living off the benefit? I don’t know, it’s beside the point really). Which means he’s pretty much screwed in his field, with ticketed and trade certed guys all over the show clamouring for the few jobs available.

    He’s hoping to hear back from a prospective employer this week. He was expecting to go in last week to look around, but there were so many applicants he won’t get a look in till later THIS week.

    This is for an entry level, minimum wage job…

  • Relatively untouched…

    Another little reminder this week of just how little everyone else seems to be affected by the economy. So we were in class, discussing media coverage of the situation and all of the conflicting reports – one minute it’s doom and gloom and doldrums for another ten years, the next the housing market has picked up and it will all be over by 2010….etc, etc. And the statement’s put out there: We’re all relatively untouched, aren’t we? Nobody’s felt the impact personally?

    Well, I sure as hell have! It’s had an ENORMOUS effect on my life – it’s been a driving force behind me and BF’s daily lives since November. That’s a long time. And it’s a lot of stress. So I just couldn’t let that go, and I said so.