The economics of our lives is ever present, yet too often ignored. As a nation, America is persistently insufficient in the simple concept of savings. And that failure comes to roost periodically when the tomorrow we expect is supplanted by the tomorrow that we get.
This week, WEARTV reported that evacuating from a storm like Helene can be an economic challenge. Paradise is a normal vacation destination, but last week it became an evacuation destination. People streamed in here for the hotels, camping spots, and other rentals. The traffic was noteworthy, and likely brought significant business revenue.
Some noted spending $1,000 to escape. Others claimed that "hurricane evacuees could spend $1,200 to $5,000 to ride out the storm." That is significant. The Red Cross suggests a lower figure, $400. Even if that is accepted, the Red Cross representative is quoted as saying, "Ninety percent of our clients are at a level where even just the $400 expense, they don't have that in the savings account."
These discrepancies are likely products of the family size, the distance evacuated, and the duration of stay. There are many variables that might affect the $400 versus $5,000, and some may be about personal choice, the type of accommodations or meals, etc.
For many of us, having $400 in the bank or available on a credit card does not seem that unlikely. Unfortunately, there is some population of people that are not able to scrape together the minimum to drive out when ordered (it is difficult to know what portion of the evacuee population is in that "Red Cross client" population that is measured above.
I was pondering the implications of such a challenge when I ran across Hollywood's Boom has gone Bust by the British Broadcasting Corporation (BBC). This notes the effects of the strike that the creatives engaged in 2023. This "lasted multiple months and marked the first time since the 1960s that both writers and actors joined forces. The labor market joined together and shut down production. The result was a deal that they welcomed. Or, was the result a deal that is unsustainable?
The exemplar in this story is among those persistently unemployed since the big strike. Business has not returned to pre-strike levels. Concededly, the whole entertainment business was impacted by the Great Panic of 2020, and the closure of theaters and other entertainment venues undoubtedly impacted many facets of both production and distribution.
But, the exemplar notes that he has lost his California housing and moved to Nevada. He complains of the lack of work, his dwindling savings, and laments the economic challenges. He notes that he was unconcerned before the strike "about going out to dinner with my wife and kids and spending 200 bucks," and more recently he is concerned "about going out and spending $5 on a value meal."
This is an instance in which the labor pushed its collective issue, and the result appeared a "win." Nonetheless, employment has shrunk in its wake. Will the outcome be better for the machinists who recently went on strike turning down a 30% pay increase or the longshore workers who turned down a 50% increase to strike?
As I read, I was drawn to workers' compensation. As a side-effect of my decades in this space, everything reminds me or workers' compensation. First, I have been historically surprised at how many injured workers had zero savings when an injury happened. I recall years ago a worker needed prescription orthotic shoes (medically necessary).
The doctor also recommended a particular sock (not medically necessary). The injured worker explained to the nurse case manager that he would forego the socks because he could not afford the $12.00 three-pack. The employer bought the socks. Months later, when he arrived for a deposition, I was astounded to see he drove a much newer, much nicer vehicle than my own.
We would all love to have a bright, shiny, new car. Some would even like to own a 70-foot yacht or a Bentley. But, we make economic choices and largely strive to live within our means. We don't borrow money that we can never hope to pay back. We budget and conserve. We keep something in a savings account for when the air conditioner fails or the car needs repair.
According to World Population Review, the United States ranks 109 out of 172 countries, with a savings rate of about 18%. These statistics are not static, and the comparison is therefore less than ideal. Nonetheless, if one assumes that the number one country on that list is equivalent to a 100% "A" grade, we are barely above passing with a 63% "D."
This is not a new phenomenon. Savings comparisons have long faulted the American efforts. Why is there such a distraction from saving? Why are there so many for whom a $400 unexpected expense is insurmountable in the face of some urgency?
Some will say it is because the world is not fair. Others would say it is the government's fault, or at least that it is the government that should pay for everything, including storm evacuation. Others may point to poor economic choices and wonder if the fellow in the sporty SUV might have an easier time evacuating if he had a simple, affordable sedan instead.
In both macro (the economy writ large) and micro (any one of us) terms, earning, saving, and spending money are choices. When we make sound ones, we remain self-reliant and responsive to urgencies. When we make unsound choices, that can lead to potential moments in which we are not so ready for the unexpected storm, strike, or sock recommendation. It is something to ponder.