Listen to the full episode, here.
Key Points:
- Financial strain is widespread, driven by multiple factors: an outdated official definition of poverty, the real and lingering impact of inflation, rising costs of living, and cultural pressure to “keep up with the Joneses.”
- The baseline cost of modern life has increased. Smartphones, internet access, streaming services, and other now-standard technologies have become practical necessities, raising monthly expenses compared to previous generations.
- Childcare has become a major financial barrier. As incomes rise, families often lose subsidies, creating a “middle-zone” where earning more doesn’t always improve financial stability due to the high cost of care required to work.
- The traditional poverty line fails to reflect modern expenses. Originally based on tripling the cost of food, the metric no longer captures today’s dominant costs — especially housing, childcare, and services that constitute a much larger share of household budgets.
- Young workers face a difficult job market. Entry-level opportunities have tightened due to post-COVID over-hiring corrections, economic uncertainty, and efficiency gains from AI, creating a “perfect storm” for new graduates trying to begin their careers.
John Norris (00:29):
Well, hello again, everybody. This is John Norris with Trading Perspectives. As always, we have our good friend, Sam Clement. Sam, say hello.
Sam Clement (00:35):
Hey John, how are you doing?
John Norris (00:36):
Fantastically. And how about you?
Sam Clement (00:37):
I am doing great today.
John Norris (00:39):
Well, good. I think we’re both doing better than a lot of Americans out there. Here we are in the holiday shopping season and what have you, and I venture to guess a lot of people just feel as though they aren’t getting ahead, with prices going through the roof and all that stuff, and how much we have read over the last several years about the rich getting richer and the poor getting poorer.
It just really all kind of comes together to make me wonder why getting ahead financially seems to be getting more difficult. Is that truly the case, or is it that the definition of poverty is just not absolute any longer?
Sam Clement (01:16):
Well, I think it’s, I guess, yes.
John Norris (01:20):
Well, thank you very much for listening.
Sam Clement (01:22):
I say that I think it is a little bit of everything. I think there’s the official poverty, which is not really the point of what we’re going to get to, but the official definition of poverty may be outdated.
The inflation’s been a real thing. Keeping up with the Joneses is a real thing. Expenses that aren’t taken into account for poverty, those have grown. So it’s kind of a little bit of everything.
It is what I believe to be really the root of that sentiment that a lot of people — when we were talking about coming up with a podcast topic — a lot of people, that sentiment has been rampant really since, I mean for a while, but especially since probably 2022 when the inflation really ticked up.
And I think people just saying, “I do pretty well for myself, but at the end of—”
John Norris (02:11):
The month I shouldn’t be struggling like this.
Sam Clement (02:13):
At the end of the month, I’m living — for some people it’s crazy based on the amount of money — but they’re living what they would call paycheck to paycheck.
John Norris (02:21):
Yes.
Sam Clement (02:21):
And so that, I think, is this sentiment that is rampant amongst — I’m not talking about what the definition of true poverty is, necessarily.
John Norris (02:29):
No, the true definition of poverty, you can go to the Census Bureau and read it and it’s ridiculous. I mean—
Sam Clement (02:35):
Three times—
John Norris (02:37):
Whatever it is, it’s next to nothing. And trying to live, it’s amazing that we have the percentage of Americans under the poverty threshold that we do have, given what the definition is.
Sam Clement (02:46):
Very, very, very low bar.
John Norris (02:49):
Very, very low bar.
But it kind of begs the question though, Sam — I mean, the absolute levels of poverty, whatever the Census Bureau has to say — I’m focused more on people your generation, maybe even a bit younger. I think we’re at the Alpha generation now. Is that what they call it? I don’t know — the ones coming up after Gen Z, I think Alpha or whatever it is.
It seems to me — and I’m not just giving people a cop-out — it seems to me that there are more so-called necessities to life than there were when I was coming around. And it’s not just the eight-dollar coffees from the fancy coffee shop. I mean, there just seem to be more things which are considered “you have to have it,” inelastic goods and services, than there were in the mid-1990s when I was getting married and all that stuff.
So would you agree with that?
Sam Clement (03:39):
I would agree with that, and I think that it’s true that there’s things that may be classified as items you don’t have to have, but really you do to contribute to society. Whether that’s a cell phone — landlines aren’t really a thing — a cell phone, internet, these things that are increasingly expensive and taking up increasingly large percentages of people’s budgets.
You cannot really contribute to society through lots of channels without things like that. And that was just the first two off the top of my head.
John Norris (04:13):
Well, it’s not just cell phones, which I know that you’re meaning to incorporate smartphones, but I mean, it is smartphones. And it’s not just, “Hey, you have one smartphone for the family.”
Sam Clement (04:22):
Family.
John Norris (04:23):
I mean, everyone has one, maybe even two, depending on their jobs.
Sam Clement (04:28):
Family cell phone bills are a couple hundred dollars—
John Norris (04:32):
If not more than that.
Sam Clement (04:33):
You have to have internet.
John Norris (04:34):
You have to have internet.
Sam Clement (04:36):
$80-$100 and it starts to add up.
John Norris (04:37):
And while very few people have traditional cable any longer, you have some form of satellite dish or now YouTube TV; you have to have some kind of streaming device or apps or what have you. All this stuff, if you were to add it up, all these so-called necessities, a lot of them just didn’t exist.
And people go, “Yeah, we used to have a telephone bill and you have long distance and all that stuff.” Even so, I would dare say the necessities which we have now are more expensive in both — certainly absolute — but also in relative terms than what they were when I was coming around.
Sam Clement (05:09):
And I think another part of this is the childcare aspect, and I mentioned that briefly, but it is such a massive expense for people.
Sam Clement (05:20):
And you have some childcare subsidies on that lower end near the poverty line, but as you start to make more, those subsidies go away. And so it starts to beg the question: are you really even better off making more money when you lose those subsidies, and making more money means going to work, meaning more childcare?
So it’s this kind of snowball effect of, to really get beyond to where you are actually getting ahead making more money — where the net of the childcare versus what you’re making — you have to be moving significantly up the ladder.
And that’s, I think, a core root of the sentiment here: that you have this middle-ground gap where you lose things as you gain things.
John Norris (05:59):
Well, I would tell you childcare has always been expensive. Even when Beth and I were raising our children, it was expensive — primarily sort of Mother’s Day Out programs or preschools or something along those lines. All of that stuff was expensive back in the day.
But I will tell you, it seems to be more expensive on a relative basis. It takes up a bigger chunk of the old checkbook, if you will. I mean, granted, it’s always been expensive, and I think a huge chunk of that is due to the fact that I would imagine it just costs more to run a childcare company now.
People are trying to make a profit doing it. You have to pay more to get people to come work. There’s greater insurance that you have to get because of various safety protocols. All these things. Even down at our church, we had to install all this additional stuff after some shooting somewhere.
John Norris (06:47):
All these things just add up the bill and make it more expensive for younger people to get ahead. So I will give the younger generations a little bit of an out — that it is just more expensive to have the necessities of life.
Granted, a lot of the necessities we might not… it’s not food and water and all that, but it’s: How are you going to conduct business? Or how are you going to communicate with people without the cell phone bills? Little things like cable or what have you. All these things are really kind of the basic minimums now, and so there are just more of them and they’re more expensive.
Also, I would note that it seems to me — and I could be wrong, but I look at the CPI data, Consumer Price Index data, every month when it’s released, by the way, Sam—
Sam Clement (07:32):
If it’s released.
John Norris (07:33):
If it’s released. And I look at my own budget and take a look at our bills, and it just seems to me that a lot of the necessities, which we were just talking about, but even more than that, the totally inelastic services and goods, too — which you have to have — those things just seem to be going up in price more rapidly than elastic goods and services.
My September electric bill was 29.4% higher than it was in September of 2024. Things like that. The auto insurance bill — I mean, a big markup there. We all know the price of beef has gone through the roof.
Sam Clement (08:14):
The car attached to the car insurance.
John Norris (08:17):
Without a doubt. And it’s all of these things seem to be going up at a far more rapid rate. It kind of makes you wonder, “My Lord, how does the person making that median income, having that median household income, how do they pay for everything and still have enough money left over to afford any of the sort of luxuries of life?”
Sam Clement (08:39):
And then you add on top of it what I briefly mentioned, the “keeping up with the Joneses” aspect of it.
John Norris (08:46):
I would say it’s going to be impossible for a lot—
Sam Clement (08:47):
It is. But that’s what drives so much of this almost psychosis around it. If you’re saying, “Everyone around me has a new car; I need a new car.” Well, new cars are now 50–60,000 for a lot of ’em — I mean, starting in the—
John Norris (09:01):
Decent vehicles.
Sam Clement (09:03):
And so you’re saying, “Well, $50,000, even if you extend the payment out” — now they do six-plus-year car notes, which is crazy — you’re still paying seven, eight, nine hundred dollars a month for these cars.
John Norris (09:15):
Yes.
Sam Clement (09:16):
And so you add that, you add the car insurance onto it, and so yes, that’s not a necessity. A new car is in no way a necessity. A car is. But then you add that maybe stretching a little more to keep up with those around you, and it just makes it worse.
And it is a valid sentiment. We talked about this with the New York mayor election and just the sentiment of people feeling like they can’t catch up, and inflation just grabs hold of everything and everybody and just vastly changes the sentiment across the society.
John Norris (09:50):
Well, the thing is, I make a lot of public presentations, and I made one just earlier today. I was talking about inflation and I said, “The thing is, when people that do what I do, or we do, Sam, for a living, talk about inflation coming down, we’re not talking about prices coming down. We’re talking about the rate of price increases increasing at a lower rate.”
Sam Clement (10:10):
It’s derivative.
John Norris (10:11):
Of prices. And so when I’m saying prices are coming down, or inflation’s coming down, no one believes me — and for a good reason. We had that really rampant inflation after, I mean, Washington just flooded the financial system with cash.
It wasn’t a question of whether or not we’d have inflation. The question was how bad. And frankly, I think they understated it, even at 9.1% in April of 2022. The thing is that all of a sudden that’s the base, and if we increase 3% from there, we just compound the problem that we had.
Sam Clement (10:44):
It’s a snowball.
John Norris (10:45):
It’s a—
Sam Clement (10:46):
Everything is a snowball.
John Norris (10:46):
So that is what people are finally catching up to. Maybe not the relatively subdued price increases of today, but it’s the price increases on top of the rampant ones, and people’s incomes just arguably haven’t been keeping up because they keep on spending more and more on, again, the necessities.
Sam Clement (11:06):
Well, and that’s a part of when inflation was so bad over the past few years. We talked about the increased savings rate and how that was able to bolster the economy.
John Norris (11:18):
What savings rates? What numbers are you talking about?
Sam Clement (11:20):
These massive savings rates when you were getting stimulus checks and what have you — I mean, numbers we have basically never seen, as far as I’m aware.
But going back to some of these things that are expensive necessities that aren’t necessities — childcare. People weren’t sending their kids to daycare during peak COVID. That’s thousands of dollars back in people’s pockets.
And so you had this change in consumption away from some of these areas that were massive parts of people’s budget. So not only was it stimulus, you were bringing money in while you weren’t having to spend it on some of these massive parts of people’s budgets. And now that is obviously not the case, and the cumulative effects of inflation in all those areas — you have to go back to work, send your kids back to daycare or what have you — and it adds up.
John Norris (12:10):
That adds up significantly. And even all the more so when you take a look at not just the cost of living day in and day out, but then also doing something, little things like trying to attain a piece of the American Dream by having your own house.
I mean, housing affordability is just absolutely through… it’s almost non-existent. I was going to say “through the roof”; it’s quite the opposite of that — it’s through the floor.
It’s just — the average American coming out of school, going to be that 25-year-old, maybe even the 30-year-old, trying to get into that starter home. That’s almost a pipe dream now. I think I read somewhere that the median age for recent homebuyers, first-time homebuyers now, is like 40 years.
Sam Clement (12:50):
The average birth year of a homebuyer in, I think it was 2008, is the same average birth year as a homebuyer now. So it’s like the same people buying these houses.
John Norris (13:01):
So that’s kind of frustrating for a lot of people. You’ve got kids going into middle school that you’re now finally buying your first house, maybe even high school, buying your first house — which means you’ve been renting this whole time.
And as a result, people are going, “Everything costs more, and I can’t even think about buying my own home. I just can’t get ahead.”
And so that kind of begs the question, going back to one of the points that you were making earlier: Is the definition of poverty in the United States just not accurate?
Sam Clement (13:39):
I don’t believe it’s accurate for the way that we’re talking about it. I think if you wanted to define it as what it takes to physically survive, then maybe it’s pretty accurate.
But it’s “What do we mean by poverty?” that I think needs to be answered to have better clarity on what poverty is, because that’s this sentiment. As you lose those benefits, as you make more above the poverty line, you have things taken away from you, to my point earlier.
So they’re not necessarily feeling better off, even though you’re going to work, you’re sending your kids to daycare so that you can go to work. You end up pretty similarly, to some people, that are making much less than you, closer to the poverty line.
And so it’s all a matter, to me, of what’s the definition that we’re trying to achieve with measuring the poverty rate.
John Norris (14:26):
So when we’re talking about people — 14% of Americans or 13, 15% of Americans — living underneath the poverty level, that’s just all based on some median numbers somewhere that the Census Bureau field pulls out.
I mean, not that it’s just that, but it’s a little bit arbitrary because, let’s face it, a hundred thousand dollars in adjusted gross income for a single person living in — I’m going to pick on Enterprise, Alabama — a single person making a hundred thousand dollars in Enterprise, Alabama, can live a heck of a lot better, in my estimation, than someone making that same amount of money living in New York, in any of the five boroughs.
Sam Clement (15:09):
The average one-bedroom, I believe, is close to $4,500 in New York City a month. Very serious.
So yes, you could buy several hundred thousand dollars — I mean, a large house — for a $4,500 mortgage payment.
John Norris (15:26):
Yes, in Enterprise. So the thing is, when we have these definitions of poverty, it’s a little bit different because the cost of living is not static across the United States.
So, I mean, it’s simply going to cost more to live in San Francisco and New York, Chicago, Seattle, Los Angeles — some of our larger cities, more densely populated cities — than what it would cost in lesser areas, many sections of our own state.
Sam Clement (15:56):
To that point, even people’s consumption patterns have changed significantly from when we decided to first measure this. I think it was the cost to feed a family of four.
I believe it used to be a third of your budget was spent on food, so you triple the cost of what it took to feed a family of four, and that was the poverty line measurement. Well, now you have these other things, whether it’s housing, whether it’s childcare — all these things that make up a bigger percentage of the budget and push down food as the percentage of the budget for poverty.
And so that’s where the measurement is, to your point, probably not telling the same story as it used to.
John Norris (16:34):
Yeah. So I would say that if you define poverty as sort of that nebulous American Dream — feeling like you can get ahead, you can save up for a house, you can have a decent meal every now and again, you’re not eating ramen for dinner and having two families live in a three-bedroom apartment somewhere — if you just talk about living what people would say is the good old-fashioned American life, I think it’s harder.
I think it’s much harder to do than it was even five years ago, but certainly 10, 15, 20 years ago. While Beth and I were a little bit late for our age group or our friend group to buy our first home — it was 20… I’m 30, something like that — and a lot of that was on me, just trying to be real stingy and saving up so I could buy into a certain neighborhood, that sort of type of thing.
I think it’s just harder. I mean, just absolutely harder. And it’s not because people are working that much less. It’s not necessarily because people are going out and having that eight-dollar coffee or eating lunch at Chipotle or some other place.
It has to do with there just simply being a lot more so-called necessities in life. Whether or not you want to call ’em necessities in life, they are — and they just cost more than they did. And things like housing are far more expensive.
And then, oh yeah, I forgot to even mention this. Unemployment for people coming out of college now has gone through the roof.
Sam Clement (17:56):
Yeah, we’ve talked about this with AI. We’ve talked about it with COVID. What’s going on with the unemployment rate for young people is a culmination of all of those things.
It’s a culmination of increased over-hiring for a period of time. Things may be slowing in the economy some, so you’re not wanting to hire as much anyway.
To AI creating some efficiencies — and the efficiencies start with the entry-level jobs as well. So you have this over-hiring, slow firing — so you’re really trying to stretch those people out, which means you’re definitely not hiring new people — and then efficiencies and all these things.
And you almost couldn’t come up with a better perfect storm for an economy our size to make it hard for entry-level jobs.
John Norris (18:44):
Well, entry-level jobs have virtually dried up in the U.S. economy. If you take a look at the most recent BLS data for people with college degrees — and even non-college graduates — between the ages of 20 and 24, it’s up over 9%.
I mean, it’s very difficult to find a job just coming straight out of college, let alone those jobs that pay what they were paying two, three years ago when, I mean, corporations were throwing money at college graduates because, I mean, shoot, you’re fighting for them. And now it’s the complete opposite.
So you compound all these things and you have a lot of young people just feel as though there is no light at the end of the tunnel, and maybe the American Dream is dead.
However, I would tell you that perhaps it’s, “Hey, we’ve just got to redefine what poverty means and try to do something about it.”
Sam Clement (19:42):
The definition has to match up with what you’re trying to accomplish, right?
John Norris (19:46):
Yeah. Because if we’re just worried about getting food in the bellies, I think we’re doing that.
But if we’re trying to have people where they can live a better lifestyle than their parents — which is what always the goal kind of was — I don’t think we’re doing that right now.
Sam Clement (20:00):
Maybe missing the mark a little bit.
John Norris (20:01):
I think so.
Well, guys, thank you all so much for listening. We always love to hear from you. Also, if you have any comments or questions, please, by all means, let us know. You can always drop us a line at , or you can leave us a review on the podcast outlet of your choice.
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John Norris:
Sam, anything else to say on this exciting topic, at least for today?
Sam Clement:
That’s all I’ve got.
John Norris:
That’s all I’ve got today too. Y’all take care.
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