The Restless Project

Restless LogoWe need drugs to sleep at night.  Nearly half of us don’t have enough in a bank account to cover next month’s expenses, let alone any real head start towards retirement. We buy homes with mortgage payments our parents couldn’t fathom, or we make student loan payments almost that large. We are digitally tethered to work by gadgets that constantly let us down with bad directions or dead batteries. We almost never take vacations, but when we do, we read email every day anyway. We chug Starbucks and Red Bull to try to keep up, but we feel like we are letting everyone down all the time anyway.

America, land of the Restless.

But why?

I have a simple question I ask when I try persuade people that there’s something very wrong with the way we live in America today.

“Can you think of any friends with children who are secure they will be able to pay for their kids’ college?”

There’s always an uncomfortable chuckle, as if I’d just asked if they knew someone who could weave straw into gold. Then there’s usually a discussion about how everyone feels like they are working harder, and perhaps even making more money than they’d ever dreamed, but yet falling behind anyway. So they run on the rat-wheel faster and faster.

Restless.

Today I am announcing a new long-term effort, an on-going series, called The Restless Project.  I plan to unpack the root causes of this Restlessness. I believe they are paradoxically both more subtle and more obvious that most busy people realize. And I think it’s such an important discussion — I think it is the story of our time — that I am interrupting my career to shine a spotlight on it.  Along the way, together, I hope we can explore ways to jump off the Crazy Train.

Trina Foster-Draper. No one should have to undertake a Fourth Act.

Trina Foster-Draper. No one should have to undertake a Fourth Act.

I will talk about humble Americans like Trina Foster-Draper, a 56-year-old single mom of four who will be proudly writing her last check for her kids’ college this year.  She was recently laid off by CenturyLink in Logan, Utah, where she’d worked in customer service for nearly six years.  What will she do now? Go back to school for information technology and begin her fourth career transition.

“Everybody has to keep changing, keep reinventing themselves now,” she said to me, sitting in her apartment she shares with her father – a brand new building adjacent to a massive Walmart. “There’s no choice.”

Despite the occasional catcalls from folks who casually argue that today’s adults are just lazy and selfish, for the most part, there’s general agreement on the problem — the creeping sense that life is somehow spinning out of control.  It is.  Today, we all live under pressure from a diabolical combination of economic dis-ease and technology disruption that keep all of us, not just on our toes, but on the edge of a cliff.  Second Acts are fine, even romantic. Fourth Acts? That’s insanity.

The reasons for Restlessness that I will explore in this series are myriad:

1) It’s an economics story. Just 50 years ago, an American household with one decent job could afford a decent home.  That math is now horribly broken. Today, it takes two incomes, and even at that, a much higher percentage of household income to buy a home. That’s why you never feel like you have enough money.

2) It’s a work-life balance story.  Since you are insecure about having enough (what if one spouse loses a job?) you work too hard. Fear is an excellent, horrible motivator. People don’t take proper nights and weekends any longer, instead putting in hours over remote corporate networks, in large part because they feel like they have to. Forty hour work weeks took hundreds of years to evolve, which is an interesting history I will share soon. Smartphones took them away in five years.

3) It’s a technology story. Smartphones haven’t just wrecked our ability to disconnect from the office.  Pick your favorite restaurant: How many people are staring at phones while half-talking to each other?  Step back from the scene for a moment. We all look like rude idiots doing that, always more interested in people somewhere else than the ones we are with.  Sure, you could be better about phone etiquette. But billions of dollars have been spent figuring out how to make you addicted to these things. You didn’t stand much of a chance.

4) It’s a broken social contract story.  America’s social contract, always part-myth and part reality, has broken down entirely, in a way that doesn’t make sense. Today, people with regular jobs in regular cities can’t afford regular homes there.  That should be impossible. After all, the price of most homes should settle roughly into what most people can pay for them.  But not when the value of those homes is propped up impossibly by a credit system built like a pyramid scheme.  The math, you see, is against you.

5) It’s a disappearing middle class story. A quick thought experiment: What is a solid middle class job that would let someone comfortably own a modest home? Teacher? Cab driver? Bike mechanic?  Today, workers are driven towards high-income, lottery ticket-like professions such as information technology. Of course, a decent home in an IT-friendly neighborhood near Silicon Valley costs $1.2 million. Better work hard and get that big bonus. Meanwhile, not everyone can write computer code or be a physical therapist. What are the rest of American workers supposed to do?  This isn’t a minimum wage story. This is an average wage story.  By every measure, the economic “recovery” after the Great Recession has done nearly nothing to help the middle class. Sure, unemployment is shrinking, but that’s a misleading stat. Here’s the truth: Low-wage jobs represent nearly half of all jobs created as part of the recovery.

6) It’s a marketing story. What do you do when you feel scared of the future?  Well, you drink Red Bull, for one, so you can work all night and impress the boss. And maybe work yourself to death. Or maybe you pay $250 for a new pair of shoes, just so you can put aside for a moment those hopeless feelings that you’ll never, ever, pay off that student loan. Or maybe you’ll hand over your finances to that lovely man in the white shirt who tells you he can help you pay for your kids’ college, even though all he’ll do is suck out a percentage of your money in fees every year. But he does make you feel better.  The cycle of Fear and Consumption, as we all learned in the movie Bowling for Columbine, is powerful.

7) It’s a where-to-live story.  NYC dwellers have always been restless, always with one eye looking out for an emerging neighborhood where it might be possible to afford a dreamy 3-bedroom apartment in relative safety.  All of America lives like this now.  As I travel the country, everyone with a second or third kid on the way is trying to make impossible math work – where are the wages higher and the housing costs lower? North Dakota? North Carolina? Florida’s west coast? Oregon? So-called “second tier” cities are gaining steam and migrants as the recession’s recovery drags on, but these moves bring on other problems – like proximity to meth houses.

8) It’s a hacker story. Sure, computer criminals who might empty your bank account in ways that you didn’t even know possible is enough to keep you up at night. But that’s barely the beginning of the story.  Behaviorists have hacked you and now desperately try to deliver just the right ad at just the right moment so you can’t resist buying your product.  Huge firms with names you’ve never heard of collect data on you by the hard-drive-full – Axciom admits having 3,000 data points on nearly every American.  Heck, folks are hacking your genetic code.  What are your right to all this incredibly important, personal information? Basically, you have none.

We’re restless, and I want to explain why.  I’m certainly not alone.  Brigid Schulte, a Washington Post reporter, recently explored the complex life of American woman in her excellent book “Overwhelmed: Work, Love and Play When No One Has the Time. You’ll recognize some of the concepts about the relationships between two income homes and housing costs from Elizabeth Warren’s classic, The Two-Income Trap.

Since I’ve spent 20 years writing about ripoffs and the dark side technology, I think I have a unique perspective on the problem of restlessness. For the past year, since I left my job at NBC, I’ve been chipping away at stories in this area. Here’s a few examples:

 

I plan on covering the hell out of this topic.  (There’s already 27 stories in my special “Restless Project” section, which you can find here.) And don’t worry, I promise to write about hopeful trends, too, such as the explosive growth in yoga, or the technology tools that really do make our lives easier, or what folks in other countries do to stay sane in our digital world, or the members of the “Resistance” who are fighting for worker rights or simply promising to turn off the cell phones for the weekend. I hope you’ll follow along, you’ll criticize me, and you’ll make suggestions to help bring this story the attention it needs. The best way to make sure you don’t miss a post is to sign up for my email newsletter by clicking over to this form, or just fill out the box on the upper-right hand corner of this page.

The journey is personal. As I look around at my own career, I see the insanity of journalists trying to do an honest job and raise families in world where everyone is judged – not just by Neilson ratings – but by Facebook likes and ReTweets.  That’s a popularity contest which no one can win.  And I see my friends, who are increasingly incapable of having fun without having their faces in a phone or a video game, and I fear the lonely future that seems stretched out before me. I love a good chat.  I hope you will, too.

Sign up for Bob Sullivan’s free email newsletter here. 

 

 

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Levittown, on New York's Long Island, new starter homes were plentiful in the late 40s and 50s. Click to visit the Instant House blog, a tribute to manufactured homes.

Levittown, on New York’s Long Island, new starter homes were plentiful in the late 40s and 50s. Click to visit the Instant House blog, a tribute to manufactured homes.

I had a depressing conversation recently with someone who does big housing construction deals for a big bank. There’s only two types of deals that work, he said.  1) Building pricey, premium granite countertop homes for well-off folks or 2) Building affordable housing with government subsidies. Roughly speaking: construction for the rich or the poor. Nothing in between.

Most important, nothing for that apartment-dwelling couple with a toddler and a baby on the way.  That’s the lament I hear from all my urban friends around the country. Where can I start my family? Where is my starter home?

It’s gone. Builders and banks just can’t make money off humble homebuilding, or at least they think they can’t.

If he’s right, my banking friend solved a riddle that has been at the heart of The Restless Project: why do middle class folks feel so lost, even if they have decent jobs?

I set about trying to confirm my friend’s sentiment, and it was harder than I thought.  There’s little agreement on what a starter home is.  He blamed demanding millennials, who refuse to live in a house without granite.  While that’s partly true, I think the problem is much deeper.

In fact, you could argue (and I will) that starter homes are basically disappearing.  They aren’t being built and those that exist are either falling into functional disrepair (they are old), or more likely, being snapped up by investors to rent to young families.

First, a little housing lesson. Back in the post-War boom, America’s housing industry was on fire. Single-family housing starts jumped an incredibly 400 percent during the decade.  According to this great housing history, in 1950, the average price was $11,000. For perspective, median income, in real dollars, was about $3,300.

But here’s the number to watch: the average home was 963 square feet. A majority of homes had two bedrooms and one bathroom.

By 1972, prices had jumped to $30,000 while family income was nearly $10,000.  Homes, which typically had three bedrooms and at least a bath and a half, now averaged 1,600 square feet. That kind of house can pretty comfortably shelter a family with 2.3 children.

Today, families are smaller — from 1970 to 2014, family size shrunk by about half a person.   What’s the average square footage of a home? About 2,500.  More space, fewer people.

That’s progress, of course. Now homes have central air and finished basements and man caves and spa tubs and yes, granite countertops.  But all those things are useless to young families who have no idea where to find the $500,000 they have to pay to live in a place with decent schools that’s within 50 miles of their workplace.

A healthy housing market would provide a wide spectrum of housing – the $200,000 tiny place, the $400,00 step-up home, the $700,000 dream home. I promise you that plenty of my apartment-dwelling friends would love a two-bedroom starter home on a cozy lot. But they don’t seem to exist. Why?

This BuilderOnline.com story, “Are new starter homes history,” offers a tidy explanation.  For now, let’s peg $200,000 as a starter home price.  (For a fun fact, $30,000 in 1970 has the spending power of $185,000 today. But I’m going with round numbers). It begins with a tale I’ve told in other places — if a builder can construct homes that cost 2.5 times median household income in a neighborhood, the homes will sell like hotcakes. Two-and-a-half times?  Median household income is roughly $50,000 in America today.  See a lot of $125,000 homes sprouting up?

No. You don’t even see $200,000 homes sprouting up. In fact, only 46,000 new sub-$200,000 new homes were sold in 2014. Anywhere.

And here’s why, according to BuilderOnline.

Making a $200,000 home work as a home builder is junior-high–level arithmetic. Solving for profit—say, 20%—land and building direct costs can not exceed $160,000. Problem is, a 20% margin on a sub-$200,000 house has become frighteningly elusive in the past decade.

The lowest build cost is around a $50 a foot,” says David Goldberg, a home building and building products manufacturers analyst for UBS, New York. “If you do a 2,000-square-foot house, which is what you’d have to do to compete with existing stock, that leaves you with $100,000 of sticks-and-bricks cost. The maximum cost on the land would be $60,000.”

The catch to all this is that it’s not just one problem. No single culprit is killing the new starter home. A stream of factors—land, operational risk, labor, material costs, entitlement fees—converge at a single, all-too-real vanishing point where affordability becomes unaffordability.

Even if land can be secured at a reasonable cost, cash-thirsty localities heap fees upon fees that weigh more and more heavily on final home price tags. Chris Cates, co-owner of Fayetteville, N.C.–based Caviness & Cates Communities, estimates that regulations that stipulate he has to convert stormwater ponds to permanent ponds and bond items such as street lights, sidewalks, landscaping, and retention ponds have doubled his development costs.

So the numbers just don’t work. But left unsaid in another obvious factor, typical in all industries — every business strives to sell premium, high-margin goods.  Your coffee shop wants to sell you pour-over brews at twice the price.  You bar wants you to buy microbrews.  Your car dealer wants you to buy an Ford Escalade, not a Ford Focus. The low end of the market is for suckers, or Walmart. At least until demand becomes overwhelming in that segment. But even then…housing isn’t like hamburgers.  Even if builders today decided America needed 5 million new mid-range affordable homes, it would take years for projects to take shape, get approvals, get financing, etc.  Housing is very slow to react to demand.

But that’s why there’s “used” homes, right?  Young families are supposed to buy a needs-TLC place in their 20s, fix it up, and trade up to their dream home later.

The problem is cheaper, older starter homes are nearly as hard to find. Here’s one piece of evidence: The folks at RealtyTrac ran the numbers for me, and it turns out that year-to-date sales of sub-$200,000 homes is down this year compared to the last three years. That’s strange, given that sales above $200,000 are up. For example, two years ago, there were 395,000 sub $200,000 homes sold from January to May. This year, there were only 343,000.  Rising prices can’t account for more than a fraction of that drop.

Worse yet, families who would buy cheaper homes are being edged out by investors who buy the homes and rent them out. Non-occupant buyers of single-family homes hit a record last quarter, according to RealtyTrac.

Worst of all — that’s even more true in hot, affordable communities where families are fleeing to avoid NYC and San Francisco prices.

Among metropolitan statistical areas with a population of at least 500,000, Memphis, Tennessee posted the highest share of institutional investor purchases of single family homes in the first quarter of 2015 — 14.1 percent — followed by Charlotte, North Carolina (12.1 percent), Atlanta, Georgia (9.6 percent), Jacksonville, Florida (8.5 percent) and Oklahoma City, Oklahoma (7.6 percent).

Of course investors are buying in those places. At a time when it’s very hard to make money by saving, and the stock market appears fragile, renting to stable families is a great way to make return on investment.

Housing expert and loan officer Logan Mohtashami talks about the “cracked equilibrium” that has led to this state of affairs. Dual income parents with decent jobs shut out of the housing market because there’s just nothing but luxury homes to buy, trying to stick it out in their one-bedroom apartment.  I keep saying that average people with average jobs can’t afford average homes in America, and that’s the source of untold strife.

There’s no law of nature that says buying a home is superior to renting one.  There are plenty of logical reasons that young folks might choose to rent instead of buy, and more power to them. It’s been good for America to shed the idea that housing is a guaranteed investment / retirement plan.  But Mohtashami warns about the potential long-lasting social consequences of an all-renter / landlord society.

“Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners?”

Buying has one huge advantage over renting — fixed monthly payments.  In all but the most unusual situation, that means housing really becomes cheaper as time passes, thanks to inflation. That is not true of renting, and certainly not now.  Rents are rising at record rates around the country.

That puts families who want a place to live between a rock and….no place, really.



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Gary Horcher Facebook page.

Gary Horcher Facebook page.

Two recent stories about America’s underpaid workers and the effort to give them a break remind me just how much more we need to talk about class warfare, and propaganda, and economics…but most of all, what’s going on at dinner tables around the country.  (That’s the point of The Restless Project.)

A quick review:

1) A bartender was left a “Why I don’t tip in Seattle”   note after a dinner by a patron railing against that city’s new $15 minimum wage law.

2) A Seattle company CEO decided to pay all his employees at least $70,000 after learning the true cost of housing nearby.  Then, The New York Times reported the company, which processes credit card transactions, was struggling. Some cheered the news as new evidence that workers need incentives to perform well.

America has a very real and very serious economic problem. Wages have essentially been stagnant for years….decades…arguably, since a man first walked on the Moon. Really.  Young people can’t afford homes and they aren’t buying them, instead choosing to live with their parents well into their 30s. Really. In an economy that’s two-thirds consumer spending, this is a ticking time bomb. People need more money.  There’s only three ways to get them that money — the government can give it to them, or they can work for it, or we can lower prices on everything.  I’m sure we all agree that No. 2 is better than No. 1, and it’s a whole lot better than No. 3.

The problem is it’s going to be very hard to get people higher wages in an environment that has become so toxic to the idea.

Just to put the numbers out there for anyone who hasn’t done the math (and don’t feel bad if you haven’t. During a recent discussion with a smart friend of mine who makes about $60,000 a year, s/he said $15 / hour was more than she made. It’s not. Not even close).

Assuming a minimum wage worker scores 40 hours at a job, that’s $600 a week — $2,400 for four weeks. Pre-tax.  Guess what the AVERAGE rent is in Seattle? $1,500 for a one bedroom.

Remember, this is for the new wage that Seattle workers must be paid…by 2021 (for smaller businesses that allow tipping).  So that fellow who left that note instead of a tip? He failed to tip a worker who hadn’t actually gotten a law-required raise yet.

Hold that thought for a moment (I promise a happy ending) as we move to the sad story of Seattle payments firm Gravity and CEO Dan Price, who decided to create his own internal minimum wage at $70,000 annually. The raises are to be phased in during the next three years — a web developer who earned $41,000 was bumped up to $50,000, for example.  Sounds like a good employee retention plan to me.

But The New York Times found a couple of 20-somethings who seemed to vaguely think there was something wrong about this, and you have an Internet sensation of a story.  Three months after the announcement, Gravity is in trouble.  And as you might imagine, folks who seem to dislike higher wages jumped at the Internet chum.

“Note to all CEOs everywhere: Don’t make a move like Price’s without first consulting Hayek, Von Mises, or Friedman,” said Investors.com smugly.  I’m sure your Facebook news feed is full of even more glib comments about why paying workers more makes them lazy.

Price’s poorly-executed publicity stunt no doubt ruffled feathers. Mind you, it also got him a few hundred more clients, which seems to be lost in all the glibness. His real problem, however, is his brother, who is a part-owner. He hates the wage idea, and is now suing.  So what’s the important lesson here: Don’t pay workers more, or don’t change your entire compensation structure without getting buy-in from ownership?

If you really believe that “simple economics” crushed a company within three months because it announced it would lift wages within three years, I have some gold coins to sell you.

My concern is that Gravity’s story, however it ends, will now be used as a bludgeon against anyone who talks about higher wages for workers.  Listen carefully to those who are so violently opposed to the idea, and think about why.

Back to the tip jar for a moment, and that happy ending I promised.  After the bartender’s story went viral, the anonymous notecard leaver apparently had a change of heart.  On Wednesday, KIRO News reported that the man behind the card sent a letter to the station to be delivered to the bartender. In it was a sizable tip, a valuable gold coin and a thoughtful note.

“Thank you for your part in opening a dialogue regarding the subject.  For that you have earned my gratitude and for that reason please accept this gold coin as payment for that service,” it read.

This is what I find so typical: Somebody rages against a vague idea placed in their head (socialism!), but when faced with a real-life human being in real-world consequences, the sloganeering and shallow understanding of the issues melts away. I really do find most Americans are generous, and kind, and – yikes! – agreeable when dealing with people. The problem is the yelling at the moon chatter and echo chamber than dominates our noisy airwaves. I know plenty of people, for example, who will say the most awful, even racist, things about immigrants…but when they discover the immigrants in their midst, the reaction is always, “Well, I don’t mean ‘her.’ ” I know we all want to yell HYPOCRITE when we see this in action, but I think it could actually be a starting point for understanding and dialog. 

It’s one thing to yell SOCIALISM. It’s another to encounter a person who is wildly underpaid and try to use an economic theory to explain to that person why they should just be OK with that.  There are lots of problems with the American economy right now — as I’ve written elsewhere, people with average salaries can’t afford average-priced homes or apartments, and that’s dire. There are plenty of ways to try to solve them.  Let’s talk about them. I for one am not crazy about the $15 minimum wage laws sweeping the nation because I think it’s the wrong fight to pick. It doesn’t help nearly enough people, and it’s not nearly enough to really help. Declaring victory over a $5-or-so dollar-an-hour raise that arrives in 3-5 years is far too much patting-ourselves on the back.  And it doesn’t address the real problem. Wages across the board are terrible. Families can’t buy starter homes because they don’t exist any more (more on that soon).

But knee-jerk reactions against efforts to give workers a break poison the discussion. Is there a better way for a very successful start-up to lift wages so its workers can afford to live somewhere near its office?  Perhaps. Let’s figure that out.  Let’s not babble on about the need for worker incentives and such. Those who do sound like little more than protagonists in a Karl Marx novel.



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Click to read on CNBC.com

Click to read on CNBC.com

In all the anecdotes I’ve run across while working on The Restless Project, this simple scene might be the most powerful. And depressing.  It appears in a story I wrote for CNBC.com recently about a gruesome new trend which I’ll call “work-family multitasking.”

“I spoke recently with a gentleman who works for a state government agency and he told me that he is constantly on Twitter on his phone after normal work hours,” said Russell Clayton, a management professor at St. Leo University.  “He told me that in the evening he will use one hand to catch a ball thrown by his toddler son and use his other hand to scroll through Twitter.”

Sure, you can play with a small child while talking with other adults — happens all the time.  We wrote about the five levels of listening in The Plateau Effect. Half-hearing a child’s blabber while chatting with your spouse is on the lower end of the scale, perhaps 1 or 2…empathetic listening to a friend talk about a sick parent is a 5. All these things have a place in time.

But playing catch and following Twitter?  That just means it’s time to call a time out.

The CNBC story wrapped around a new Career Builder survey showing many employees not only bring work home, they mix work and home in a mutlti-tasking mess.  Here’s the lead of the story, but please read the whole piece at CNBC.com

————–

There’s plenty of evidence that the traditional eight-hour workday has gone the way of the cassette tape with many employees routinely staying past 5 p.m. and remotely checking in with the office well into the night. But now an inevitable clash has arisen—what might generously be called “work-family multitasking.”

As professional and personal lives become increasingly intertwined in this always-connected world, workers and their families are struggling to set boundaries.

A CareerBuilder survey released Thursday found 24 percent of knowledge workers check work emails during activities with family and friends. Nearly the same amount said work is the last thing they think about before they go to bed and fully 42 percent say it’s the first thing they think about when they wake up.

And nearly 1 in 5 people seem to have no ability at all to unplug from the office—17 percent said they have a “tough time enjoying leisure activities because they are thinking about work.”

“The problem is that we have created an expectation in our society that we are reachable and available at all times. The new technology allows that and, instead of putting boundaries on our time outside of traditional work hours, we allow work to bleed into our downtime and personal time and to interfere with quality time with family and friends,” said Tanya Schevitz, spokesperson for Reboot, a think tank that promotes an annual National Day of Unplugging in March.

Read the rest of this story at CNBC.com

Read all my recent CNBC stories



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Read Gallup's smartphone research

Read Gallup’s smartphone research

Half of all smartphone owners check their phones a few times per hour or even more, and most keep their phones by their side all day, every day….yet most think they look at their phones less than their friends.

In the latest “everyone can’t be better-than-average looking” finding, a new Gallup poll shows that 61 percent of smartphone users believe they check their phone less often than others, including 30 percent who say “a lot less often” than others.  Only 11 percent say they check a little (or a lot) more often than others.

We have both a statistical and a social problem here.

The results are self-reported, so who knows what they really indicate.  But it’s hard to read them without realizing that A:) People seem to believe that checking their smartphones a lot is bad and B:) people have unrealistic ideas about how guilty they are of doing so.

“Why Americans tend to perceive that they monitor their smartphone less often than others is not firmly established,” Gallup said. “It’s possible that Americans either misperceive what others are doing, or that they feel it is a socially undesirable behavior and therefore want to believe that they aren’t doing it as much as others. The data show that even among owners who say they check their phone every few minutes, only one-third believe this is above-average behavior, and about half claim that their minute-by-minute monitoring of their smartphone is about the same as others they know. This could reflect the fact that these highly frequent phone checkers are surrounded by family or colleagues who are similar to themselves and engaging in the same type of behavior.”

The survey found that 81 said they kept their phones nearby during every waking hour.

Not surprisingly, younger people look more often at their phones.  Those aged 18-29 were by far the most likely to admit checking their phones “every few minutes” — 22 percent do so, compared to 12 percent for the 30-49 crowd.

There’s no significant difference between Android and iPhone users.  There’s no gender difference. Those with less education are less likely to be slaves to the smartphones they own.

Results are based on 15,747 members of the Gallup Panel who have smartphones, conducted April 17-May 18, 2015. The sample for this study was weighted to be demographically representative of the U.S. adult population.

Frequent smartphone checking isn’t necessarily a bad thing. It becomes bad when it interferes with other things — relationships or work — when the phone “owns” you, in a matter of speaking.  But as I’ve chronicled in The Restless Project, I am worried that smartphones are stealing all the world’s daydreams. Look around at a bus stop, or a coffee shop — if you pick your head up long enough — and you’ll see an overwhelming number of faces buried into their gadgets. You won’t see people staring off into space, which is a vastly underrated part of the human experience.  Daydreams provide the brain with critical time for creativity, and with critical rest. Smartphones fill up all that time with….well, generally with the digital equivalent of junk food.

What’s the most important lesson from this Gallup research? If you aren’t troubled by your own smartphone use, because you think you use your phone less than others, there’s a good chance you are lying to yourself.  Daydream on that a little today.

Click to learn about The Restless Project

Click to learn about The Restless Project



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Folly Beach, S.C. (Bob Sullivan)

Folly Beach, S.C. (Bob Sullivan)

It’s summer – Do you know where your vacation time is?

Yet another study shows Americans leave a lot of their paid vacation time on the table, essentially giving free work to their employers.  The average American donates $500 worth of labor, according to this study.  You also know that even when people do go on vacation, they tend to work at least part of the time — mainly because nearly everyone is afraid of the dreaded “first day back” email pile.

Now comes a bit more clarity on just how much people work while on “vacation.”  Fully 25 percent of milennialls work every single day of their vacations, according to a survey conducted by Alamo Rent A Car.

Every. Single. Day.

It’s easy to blame oppressive bosses for this, and no doubt the continue sluggishness of the economy creates an environment that makes a complete disconnect from the office seem risky. But I’ve made this point many times — workers themselves are often to blame.  Many have an exaggerated sense of their own importance. Many are control freaks. Many are bad at training replacements.  And it turns out that some kinds of people are better at fully separating from their jobs, and the world doesn’t end when they do so.

“Americans who used all of their paid vacation were more likely to unplug while on their trips (54 percent vs. 37 percent) with 40 percent stating they are more productive when they return to work,” the Alamo study found.

In fact, vacations can be good for your career. Last year, I wrote about a study conducted by audit firm EY which found that workers who take vacations are more likely to get promotions and raises.  Maryella Gockel, flexibility strategy leader at EY, said training substitutes is the key.

“When you delegate to others, other people grow while you are gone,” Gockel said. “Vacations can be a very important opportunity for others on the team.”

The effect is broad. Just a few weeks ago, the Harvard Business Review reported on a study by Project: Time Off which had similar results.

“People who take all of their vacation time have a 6.5% higher chance of getting a promotion or a raise than people who leave 11 or more days of paid time off on the table,” it said.

So let’s review: Someone or something is paying you to spend a week at the beach.  And doing so is good for your career, but only if you truly leave the smartphone at home.  And we haven’t even started on the long-term health effects of vacations.

If you haven’t already, stop what you are doing right now and plan a real vacation.  It’ll do a world of good.  And if you are reading this story from a smartphone at the beach, put down the phone and go for a swim. I’ll be here when you get back.

Click to learn about The Restless Project

Click to learn about The Restless Project



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Mark Moz - Flickr (click for original)

Mark Moz – Flickr (click for original)

In many parts of the country, housing prices gave returned to pre-recession levels. That’s good news for sellers, bad news for buyers. But buried within the latest housing data is some good news for everyone — everyone on Main Street, anyway.

All-cash buyers seem to be finally retreating. The percent of homes purchased by all-cash buyers share in May was close to its long-term average going back to January 2000 of 24.8%, and well below its recent peak of 42.2% in February 2011,according to data released Thursday by RealtyTrac. It’s one sign that the housing market is on the road back to a normal, “how do we find a place to live?” market, and away from the “how do I make a quick buck?” market.

(This story first appeared on Credit.com. Read it there.)

What’s an all-cash buyer? Someone — or something — with a lot of money. All-cash buyers don’t need mortgages, they just show up with a check and buy a home. Generally, they are big investors, like hedge funds and foreign entities, who have no intention of living in the homes. They skew the market by soaking up inventory that could be purchased by a young family looking for a first-time home purchase. They also make such buyers look bad. If you were a seller and had two offers — one all-cash, and one that still required financing to be arranged — which would you choose?

“As housing transitions from an investor-driven, cash-is-king market to one more dependent on traditional buyers, sales volume has been increasing over the last few months and is on track in 2015 to hit the highest level we’ve seen since 2006,” said RealtyTrac vice president Daren Blomquist.

The out-of-whack housing market has been suffering from a record level of all-cash buyers for the past several years – well above historical norms, according to mortgage expert Logan Mohtashami. He says the retreat of cash buyers is positive development.

“This is a positive as total sales are rising with less cash buyers as a part of the market place…Less cash means more traditional buyers in the system, which means the supply and demand balance is more correlated to Main Street economics,” Mohtashami said. “(This year) is trending between 24%-27% which is still very high, but this is the first time it’s under 30% in every report.”

Of course, the shrinking number of cash buyers doesn’t mean prices are going down. In Manhattan, for example, the average sales price for an apartment just hit a record high — $1.87 million. And it’s not just New York. Home prices in Dallas, Denver, and San Francisco are positively bubble-icious, rising about 10% last year, soaring past pre-recession levels.

But with more first-time homebuyers and fewer inventory, at least the dynamics of home buying might change a bit.

“The competition in the market place is … different,” said Craig King, COO at Chase International brokerage, covering the Lake Tahoe and Reno, Nevada, markets. “While inventory is tight many investors have dropped out of the market and cash deals are not as prevalent as they were. Even in multi-offer situations much has been equalized. This is great news for first-time buyers.“

If you’re looking to buy a home this year, make sure you know how much home you can afford (here’s a  calculator that can help). And be sure to check your credit, since improving your credit scores can save you thousands of dollars in interest over the life of your mortgage. You can get a free credit report summary every month on Credit.com to see where you stand.



 

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seattle

In Seattle, home prices have skyrocketed (Bob Sullivan photo).

Is renting a home the new American dream? A report by the Urban Institute projects that even after the housing crash and the Great Recession are a distant memory, homeownership rates in America will continue to decline.

The report estimates that between 2010 and 2030, the majority (59%) of the 22 million new households that will form will rent, while just 41% will buy their homes.

The homeownership rate has been falling since 2006, when the housing bubble began pricing out many would-be homeowners — and the recession furthered that trend. In 2006, the homeownership rate was 67.3%; it now sits at 63.6%, even lower than it was in 1990, according the U.S. Census’ most recent American Community Survey.

(This story first appeared on Credit.com. Read it there.)

But even the economic recovery won’t reverse that trend, according to the Urban Institute. It offers six reasons:

  1. Wages. Real wages have declined among adults ages 25 to 34 since 1996. “Even for young adults with good jobs, low vacancy rates and high rents make it more difficult to save,” the report says.
  2. Student loan debt. Total outstanding debt was about $300 billion in 2003; now it is over $1.3 trillion. Long-term debt makes additional long-term debt less appealing.
  3. Delayed household formation. Both women and men are waiting four years longer before marriage than in 1980. “Because of the delayed marriage and childbearing,homeownership is apt to occur later. At a result, people will spend less of their lives as homeowners, placing a drag on the homeownership rate,” according to the Urban Institute.
  4. Lingering effects of the recession. Roughly 7.5 million Americans lost their homes during the recession; most will have a hard time buying a new one, dragging down the homeownership rate.
  5. They’re not that into homebuying. More Americans are consciously choosing to rent over buy. One study looked at “prime candidates” — married couples earning at least $95,000 annually who have at least one child. “Even for this group, after controlling for race and ethnicity, the homeownership rate declined from 87.3% in 2000 to 80.6% in 2012,” the report says.
  6. Higher borrowing standards. The report says that lenders are still “historically tight,” particularly among borrowers with lower credit scores. (You can check your credit scores for free on Credit.com to see where you stand.)

The report also considered changing demographics — a majority of new households formed in the U.S. during the next two decades will be non-white — and while those groups traditionally have lower homeownership rates, the Urban Institute found that will not contribute significantly to overall homeownership rates in the future. That story is a mixed bag, however.

“For at least the next 15 years, whether the economy grows slowly or quickly, the homeownership rate for African Americans will decrease while the rate for Hispanics will increase,” the report found. “More than 50 percent of the 9 million new owners between 2010 and 2030 will be Hispanic, nearly one-third will be other races or ethnicities, 11 percent will be African American, and only 7 percent will be white.”

The shift from owning to renting means that many more rental units should be built, the Urban Institute says.

“This change will create a surge in rental demand from now until 2030 that we are unprepared to meet,” it says.

It also suggests that mortgage lending standards be relaxed to nudge more would-be renters to buy their homes.

That conclusion doesn’t sit well with everyone, however.

Logan Mohtashami, a California-based loan officer, says the notion that lending standards are tight is a myth.

“There remain a number of highly respected housing ‘gurus’ who continue to profess that it is unfairly tight lending standards, not the lack of qualified buyers that are suppressing a housing recovery. The difference is not academic,” he says. “A quick review of the requirements for some of mortgage loans available may surprise you.”

VA loans require no down payment, for example, he notes. And buyers can get other mortgages with credit scores as low as 560, with 50% debt-to-income ratios, or down payments as low as 3%.

“At this point all you can do is bring back 0% down loans and stated income loans for wage earners,” said. “Look who is really pushing the tight lending thesis. People in New York, D.C., San Francisco. What I call economic bubble cities. Main Street America gets this thesis I am saying.”



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MyCreditUnion.Gov image. Click for more.

MyCreditUnion.Gov image. Click for more.

While many Americans are ill-prepared for a financial disaster, women are far worse off than men, according to a new study by BMO Harris Premier Services.  The financial services firm says that men with any emergency savings have an average of $58,061 put away to deal with the sitution, compared to only $33,558 for women.

In other words, women have roughly half the emergency savings of men.  Let that sink in for a moment.

The “rainy day” fund story is a broken record. Depending on how you count, something like one-third to one-half of all Americans have no savings, and are one missing paycheck away from piling up credit card bills and heading toward the financial abyss. But the gender gap in savings puts a new face on problem, and hopefully rings some new alarm bells.

I’ve written nearly 100 stories as part of The Restless Project so far, and read 1,000s of emails from readers. Perhaps the most poignant came from an older, single woman who took me to school about the real problems that keep people up at night.

“How do single people, people who do not have access to another paycheck, survive at all?  Half the country is divorced.  Millions are older and alone. Tons of people are childless on purpose because they couldn’t afford to have any,” she wrote to me. “If you don’t work for a major company, benefits depend upon the kindness of strangers.  It is an unpleasant poverty stricken future that I face.  I will NEVER be able to retire.  I will have to work until the day I die in order to survive…. just survive….   and women of age cannot get other high paying employment because of their age.  Double bind, no exit…. Just the ultimate one, and doing so on the job.”

Gender-based income and savings stories are fraught with statistical peril, which I’ll try to tiptoe through here.  But when looking through other available data I could find about women and savings, this seems undeniable: the financial position of many women in America is shamefully fragile.

First, back to the BMO Harris “rainy day fund” study.  The firm conducted an online survey of 3,000 Americans and asked how much money consumers had available in an emergency.  The amounts that consumers self-reported — which is always a hazard — could have included retirement accounts, though the way the question was asked, it’s possible some consumers didn’t include 401(k) balances, etc., when answering the question.  Also, the figure is an average, which means the amounts could be skewed by very large or very small entries.   So I went looking for other data to round out the picture.

Neighbor Works America released an emergency fund  survey on March 31, and it found that 34 percent of adults in America – more than 72 million people — said that they don’t have any emergency savings.  The figure had grown in the past year, despite the improving economy.  And 47 percent said they’d burn through their emergency savings fund in 90 days or less.

The report broke out data showing that low income and minority Americans were less likely to have savings, but was silent on gender.  Neighbor Works was kind enough to dig up gender data from its study for me, but it was inconclusive.  Women and men reported having any emergency fund at about the same rate, and women were only slightly more likely to say they have little confidence they could withstand a financial emergency (35 percent to 31 percent).

That doesn’t contradict the BMO Harris findings, however, because it makes no mention of dollar amounts.

And Neighbor Works’ Douglas Robinson offered a logical explanation for the dollar gap.

“While a great many women have been in the workforce since they became adults, their workforce participation rate still lags men, and is often interrupted,” he said. “That would mean that their matched 401(k) would be reduced.”

Other research suggests that’s true.  CNBC.com, in an excellent story on women’s readiness for retirement, hit this point on the head: “American women age 55 to 64 with retirement savings have accumulated an average of $81,300 compared with $118,400 for their male counterparts,” according to a Black Rock  survey. The story cites similar reserch on “retirement readiness” by the Employee Benefit Research Institute that claims single  women baby boomers have a savings shortfall of nearly $63,000, compared to single males, who have a deficit of $34,000.

What makes this savings gap more painful is that there is some data to suggest women are actually better savers than men. Fidelity looked at its 401(k) accounts last year and found that women in lower-income tiers put considerably more into their retirement funds than men.

“Women earning between $20,000 and $40,000, for example, have saved an average of $17,300 in their 401(k), as of the year ended Sept. 30, 2014. Men in that income range have an average of $15,200 in their account,” reports Bloomberg, in its story about the study. 

Critically, retirement savings and emergency savings are not the same thing, though they can end up smashed together in surveys and in consumers’ minds.  For younger people, having an emergency fund can be much more important, despite the reality that our our tax code heavily favors retirement savings (actually, our tax code does NOTHING for emergency savings, which is a travesty).

For young adults, there can be understandable reasons to postpone retirement savings — after all, it’s hard to worry about the future when the present is challenging (though it’s unwise, mathematically).  But failing to have a personal safety net is a much greater menace. You can’t stand up to an unfair boss when you fear losing your home.  You might even be afraid to job hunt. You don’t go to the doctor when you are afraid one medical bill could send you to ruin.  Most important, you don’t sleep very well at night when you can’t see even two or three months into the future.

Click to learn about The Restless Project

Click to learn about The Restless Project

Back once more to the Harris report. The average emergency savings for all Americans, male or female, was $46,000. That’s barely enough to handle a single medical emergency, so there is no gender war over these results. Many Americans’ live their lives  far too close to the edge right now, and have been for some time.

But my Restless Project correspondent called my attention to a group she felt wasn’t getting enough attention: “the working poor who cannot get a fair deal….. single women and single women of age.”  And she’s right.  The numbers, rough as they might be, tell a story that can’t be ignored — women have about half the emergency savings that men do, and that’s an emergency we must deal with now.



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Wikimedia Commons (click for original)

Wikimedia Commons (click for original)

Rents are increasing in most parts of the country. That normally nudges apartment dwellers into the housing market — as rents rise, so do reasons to buy a home — but that doesn’t seem to be happening in today’s topsy-turvy housing market.

Instead, many renters are swallowing the increases and staying put, suggests new research by Freddie Mac.

“We’ve found that rising rents do not appear to be playing a significant role in motivating renters to buy a home,” said David Brickman, EVP of Freddie Mac Multifamily. “This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing.”

There’s a simple answer, of course. House prices are rising in many areas, too, tilting the rent / buy equation back towards renting.  According to Zillow, the break-even point at which buying saves money over renting has actually stretched from 1.5 years to 1.9 years in the future, on average.  In places like California, it can take five years to profit from buying over renting.

But since all housing is local, the “should I buy?” question is complex right now.

Rents rose 3.6 percent in 2014 and are expected to rise 3.4 percent above inflation this year. Rents are up even more in cities like Seattle, Charlotte, Portland, and Denver. It’s clear landlords have the upper hand in many places, creating tremendous future cost uncertainty for renters.

Some 38 percent of renters said they’d experienced an increase in the past two years.  Many in this rent-raised group would like to buy a home, but 70 percent told Freddie Mac they can’t afford it, and 51 percent said they’d put off plans to buy a home. In fact, a substantial number of renters are headed the other direction: 28 percent said they were considering or had already begun living with a roommate; the same number said they “need” to move into a smaller rental.

Since Freddie Mac did a similar survey last August, positive attitudes towards renting have even ticked upwards, despite the rent increases.  In the most recent poll, 72 percent agreed with the statement that renting provides “protection against declines in home prices,” compared to 66 percent last year.  And 80 percent like that renting offered “flexibility over where you live,” compared to 68 percent last year. That’s important for young people — anyone, really — who sees very little long-term security in their job.

Renting continues to be an appealing choice to young adults who might otherwise be entering the housing market, which tells part of the story about the up-and-down housing recovery.  The mixed bag of data reports continued this week. New housing starts surged in April to their highest level in seven years, a hopeful sign for those cheering on higher housing prices. Meanwhile, existing home sales sank — in part because of rising prices and shrinking inventories. Stories of renewed local bidding wars and prices selling above list price can be spotted from Boston to Seattle.

High prices, of course, are bad for renters and other first-time homebuyers. More than one-third of U.S. households now rent their homes, and renters account for all net new household growth over the last several years, says Freddie Mac.

“From a purely affordability standpoint, renters who have saved enough to make a 10% down payment are better off buying in the majority of markets across the country,” said Daren Blomquist, vice president at RealtyTrac. “(But) keep in mind that in some markets buying may be more affordable than renting, but that doesn’t mean buying is truly affordable by traditional standards… In those markets renters are stuck behind a rock and hard place when it comes to deciding whether to try to buy or continue renting.”

The chief thing keeping renters in their apartments? That obvious, says mortgage broker and housing expert Logan Mohtashami.

“Main street America simply doesn’t have the income,” he says.

Keep your eye on the rent / buy issue as we move forward in the recovery.  Last year, the National Association of Realtors said first-time buyers represented only 33 percent of the market, a three-decades-long low. It’s possible we’re seeing some kind of fundamental shift in the way young adults set up households.

For more on why renters do or don’t become buyers, here’s an interesting paper on the New York Fed’s website.

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Long vacations being replaced by weekend getaways, and that’s a shame (and unhealthy)

May 20, 2015 The Restless Project

The summer vacation season begins this weekend — by tradition, anyway — as millions of you head out for Memorial Day fun.  Regular readers of this space know that I think the classic American vacation season is under assault, thanks to a dastardly combination of a tough economy and always-on gadgets.  (Americans get less vacation than […]

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