A Maria Antoinette moment

[timelets]

Wilbur Ross, a billionaire and the current Commerce Secretary, doesn't understand why federal workers who don't get paid can't get a loan from a bank.

"Wilbur Ross 'Doesn't Understand' Why Furloughed Workers Need Food Banks | Hallie Jackson | MSNBC" (Watch on YouTube)

Comments

[(Anonymous)]

Well, imagine that you had an income of 35,000 dollars a year (pretty common among the low-level employees of agencies such as TSA) and a near iron-clad guarantee against being fired, plus a decent insurance and a pension. Would you save, and, if yes, what for? Their precautionary behavior was taking such a job: it pays a bit less under normal circumstances, but is, pretty much, the safest job you could get in the US (other than a tenured professorship). If anything, ex ante, their behavior was much more risk-averse than yours, and showed above-average level of foresight. True, they had a trust in the US government, which was fairly well-justified on historic grounds (this is the first time even in a shutdown that more than one paycheck is missed). This trust, BTW, has allowed that government to pay its employees less (and, consequently, tax you less). And, actually, if not for some residual trust, these guys would not be showing up for work now (meaning that next time you would want to fly to Europe you would, possibly, need to drive to Tijuana to take the plane).

As for "relying on somebody else" - we all do. Do you have right now in your house sufficient cash and food to survive for 2 months? Are you relying on the bank to give you your money when you need it? If that is the case, you are relying, effectively, on a guarantee from that same government that has failed to pay those guys. If that government goes just a bit more nuts than it has done already, there may be a run on the bank, and, then, who knows.... If I were you, I would consider stocking up.

[timelets]

I agree with most of you points, except that people just don't have a habit of saving money for an emergency, e.g. getting sick. It's just a part of the culture. I know a number of people who live from paycheck to paycheck without a budget or a savings plan. They rely on credit cards to shift debts.

[gomberg]

I am afraid, there is no amount you could save on a 50,000 dollar sallary in the US that will be enough if you fall seriously and truly sick to the point of losing both the job and insurance - unless, of course, you are not planning to be treated and are only planning on feeding and clothing yourself for a few months until you die. In fact, you might be better off if you could become indigent as fast as possible. Taking a federal government job seems like a good solution to this particular problem.

[timelets]

Well, that's how most of them think. Unfortunately, you can't have a savings conversation without a budget, even for a %50k/year salary. There are plenty of Chinese US residents who manage to save for their children education on that income.

[gomberg]

True. But, then, these people, arguably, live very peculiar lives. I mean, there are many Latino immigrants in the US who work three jobs at minimal wage and manage to send substantial money to their families back home. They also sleep 6 hours a day four men to a room. You also might call it "culture", but I do not like to overuse such words.

The key thing is, would those people whom you are marking as "overconsuming and lacking in foresight" be happier in expectation had they changed their behavior and saved for their children´s college by refusing themselves daily pleasures of life. I, for one, strongly doubt that.

[timelets]

Actually, it would be interesting to see whether the workers' behavior is going to change because of the current shutdown. We already know that at TSA absenteeism is up to 10% now. Maybe these people are already working other jobs intend to rebalance their employment portfolio, so to speak.

[gomberg]

I believe this has already been documented. Of course, they are already working other jobs - though, at this point, it is more to deal with current liquidity.

More generally, it would be interesting to see if in the future US government would have to pay more to hire (to compensate for the increased perceived risk). That would be the best evidence of changed worker behavior.