How far will $10 an hour stretch in 2016?


Earlier this week, just as media reports pointed out that America’s wealthiest 1 percent did better in 2012 than almost any other year in history, Gov. Jerry Brown came out in favor of a bill that would raise the state minimum wage to $10 an hour by 2016.

Last night, the Assembly approved the bill on a 51-25 vote, sending it onto the governor’s office. The development is almost certain to provoke howls from pro-business interests claiming it will wreak havoc on the economy. But what will it mean for minimum wage earners, whose take-home pay currently totals less than $300 a week for a full-time job?

Here are some statistics to put into perspective what it means to be a minimum wage earner in a world of rising costs and a widening gulf between top income earners and the rest.

  • The National Low Income Housing Coalition notes that a household must earn $25.78 per hour to afford fair market rent for a two-bedroom apartment without spending 30 percent of their income. Couples earning California’s current $8 minimum wage can muster only a combined $16 an hour before taxes.
  • Based on this map illustrating San Francisco’s gaping rent affordability gap, a minimum-wage earner (making the 2012 minimum wage of $10.24 an hour) would have to hold down at least 3.4 full-time jobs to rent a two-bedroom apartment at fair market rate – even in the city’s less expensive areas like the Bayview or the Excelsior.
  • Fast food workers around the country are aiming higher than the $10 per hour Californians may have to look forward to by 2016 – organized food service employees have been rallying to be paid $15 an hour, a rate they see as an actual livable wage. According to this nifty calculator created by the Daily Beast, using data from University of Massachusetts economists Jeanette Wicks-Lim and Robert Pollin, the cost of paying McDonald’s workers this much could be recovered by charging 22 cents more for a Big Mac.
  • Finally, it’s worth considering the growing wealth gap between the wealthiest one percent and the rest. From 2007 to 2009, average real income for the bottom 99 percent fell by 11.6 percent, the largest two-year decline since the Great Depression, according to to an analysis by UC Berkeley economist Emmanuel Saez. Meanwhile, the top 1 percent lost an even higher percentage in that time. But then, during the economic recovery from 2009 to 2011, the one percent saw their incomes increase by 11.2 percent, while incomes of the bottom 99 percent shrunk slightly. Then, in 2012, the top one percent scored a 19 percent increase, their collective earnings accounting for 22.5 percent of total U.S. income. As Matthew O’Brien writes in The Atlantic, “it's the one percent's economy, and we're just living in it.”


Democracy Now posted today a far ranging interview with Robert Reich, former Secretary of Labor:

Inequality for All: Robert Reich Warns Record Income Gap Is Undermining Our Democracy
Sept 13, 2013

"85% of Americans support a minimum wage increase. If you just kept the minimum wage we had a 1968 steady, adjusted for inflation, it would be $10.40 right now. If you adjusted the minimum wage or the productivity improvements we have had since the late 1960s, the minimum wage would be over $15 an hour. Martin Luther King in 1963, that was a march for jobs and justice, and one of the planks was moving the minimum wage to two dollars an hour, which, today’s dollars, would be well over $14, in fact, by some measure about $15 and hour. So, this is not out of our tradition. This is not a radical notion. This is what it would be, all other things being equal, and if you put more money people’s pockets, they can turn around and buy stuff, which means more jobs, not fewer jobs."

One point missing from the interview is that regressive payroll taxes have gone up substantially on lower and middle income workers since the 1960's. So not only have wages declined over time caused by inflation, but after tax take-home pay has declined caused by higher payroll taxes.

Reich made another important point later in the interview:

"Contrary to popular mythology, mobilization and technology haven’t really reduced the number of jobs available to Americans. These transformations reduced their pay. It is not just that wages are stagnating, but, when you take into consideration rising cost, the rising costs of rents or homes dramatically increasing costs of health care. The rising costs of childcare and also the rising costs of higher education, rising much faster than inflation. Take all of these into consideration and you find it is much worse than just stagnating wages, it is basically middle-class families, often with two wage earners, working harder and harder and harder and getting nowhere."

Posted by Guest on Sep. 13, 2013 @ 10:37 pm

Here's an idea. If you don't have enough money then change your job, relocate, work harder, learn some new skills or otherwise take some personal responsibility instead of whining and demanding that others subsidize you by paying you more than you are worth.

Posted by Guest on Sep. 14, 2013 @ 7:21 am

Inequality keeps rising and rising. You have to ask, where will it end? Will there come a point where those at the top will say, "Ok, that's enough. We're satiated now. Now let's enact some policies that reduce inequality."? Somehow I doubt it. The way things are going, the 1% will always cry "MOAR!!!" But there is a limit to how much inequality people can take.

Even if it were true that a rising tide lifts all boats, and the rich get get richer but everyone else benefits too -it's not true -but even if it were, it doesn't matter. Because people have an *innate* sense of fairness and equity, and when conditions are perceived to violate that sense of equity, you get rising discontent.

Experiments have actually been done with toddlers to demonstrate how innate this is, but you don't need an experiment. Anyone who has a 4-year old knows this. If you have a couple 4 year olds, and you tell them "be good and you'll both get a treat." Let's say they behave, and you give them each a cookie. Fine. All is well. Then the next day you do the same thing. Except this time, you say, "Today I have 10 cookies. Jimmy can have 2 and Johnny can have 8." Well, you'll have a little rebellion on your hands in no time.

But why? Aren't they both getting more than the day before? Shouldn't they both be happy? Well that's just not the way human nature works. And it's not "envy" that Jimmy feels when he throws that tantrum. Envy is a terrible metaphor, because had you given them both just one cookie a piece, it would've been fine. So no, envy has nothing to do with this. What this triggers, is the *innate* feeling of a profound sense of injustice.

Adults are no different. Oh sure, we understand that not everything is going to be 100% equal, although some communities do function on that basis. For the most part, however, people will accept the premise that those who contribute more to society should get back more. If you're doing something harder, more risky, etc., well that's fine, you should get more. But... 1000 times more? Really?

And you can spend years educating people that capitalism is the end of history, that it's the god-given right of the 1% to accumulate as much of society's benefits as they can; you can make it risky to dissent, you can shut dissenting voices out of the media, you can set up a society that makes it difficult to go against the system (lose your job, no longer be able to pay your mortgage), worst comes to worst you can institute repression... you can do all of those things -and the oligarchy does. But in the end, you simply can't beat out of people their innate sense of justice, because it's human nature.

Right now, the best case that the staunch defenders of the corporate classes can hope for, ironically, is that someone like an FDR comes to power to save them from themselves. But the ruling classes are doing all they can to limit the space for even that kind of debate and make that escape route impossible. Well, in the end, they're just making it worse for themselves. When the breaking point will come, no one can say. But it will come. "MOAR!" can't go on forever. People have a limit of how much of this they can take.

Posted by Greg on Sep. 14, 2013 @ 7:23 pm

Greg why do you post all of this long important content on a bogwater blog where nobody is going to see it but trolls.

Publish your own commentary page and spread the word about it so that people will read it.

You've got a lot of good thoughts.

Make them official somewhere.

Posted by Eric Brooks on Sep. 14, 2013 @ 9:09 pm

Draw too much attention to it, and the trolls will come and crap all over it.

Seriously, the thought of a blog has crossed my mind. On the other hand, how many people will read a blog? They're a dime a dozen. But thanks for the vote of confidence. 90% of the time I agree with you. PS... glad to see that I'm not the only one who's read Wilkinson and Pickett. It's profound stuff, and should get a lot more play than it does.

Posted by Greg on Sep. 14, 2013 @ 10:22 pm

read it than if you post here. Maybe 10 instead of 20!

But at least you'd be able to censor and suppress commentary, which is always a popular tactic of the left.

Wouldn't you always want to get the last word as well as the first word?

Posted by anon on Sep. 15, 2013 @ 8:55 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 15, 2013 @ 10:24 am

answer that much of it goes on trying to censor and suppress free speech on a meaningless anonymous online forum?

Your parents must be so proud of you.

Posted by Guest on Sep. 15, 2013 @ 10:42 am

You assume that both kids behaved the same, and therefore they should get the same number of cookies. That is quite correct, but you assumed that the parent dishing out the cookies had no reason to distribute the cookies unfairly but then did so anything.

What about this? Johnny does his dishes, doesn't misbehave and helps Jimmy out whenever he can. Jimmy is selfish, screams whenever he doesn't get more cookies, makes a mess and doesn't tidy up. Shouldn't Johnny get more cookies? Wouldn't that be a good way of rewarding good behavior and motivating Jimmy to change.

That is a better analogy here. The guy that invests in an education works 12 hours a day, takes risks and gives the customer what he wants gets paid a lot. A high-school dropout who takes a government job so he can cruise through to an early expensive retirement gets paid less. That's not "inequality" or "injustice". It's rational decision-making.

Posted by Guest on Sep. 15, 2013 @ 9:06 am

Of course the analogy was simplistic. But the analogy illustrates basic human nature. For the obtuse out there, I did specifically spell out that equality doesn't mean everybody has to make the same, but clearly some people are incapable of comprehension even then.

The basic point is that humans desire fairness. That desire is innate. Doesn't mean that everyone has make the same. Doesn't mean that every single person will even agree on what constitutes fairness. But across all walks of life, there is surprising agreement on the kind of distribution that people would consider fair. Those who say there can be no consensus are flat out wrong:

Posted by Greg on Sep. 15, 2013 @ 8:42 pm

prove you are right here, because we could endlessly debate what is "fair".

If Warren Buffett creates 100 billion in shareholder value then it seems entirely fair that he should have accrued 40 billion in wealth - IOW he gets less than half of the wealth he has created and the rest goes to us. We'd all be worse off if he hadn't done that so why begrudge him that prosperity? He deserves it and it's fair.

And in fact he has done what nearly all super-rich folks do and give it nearly all away to charity, so it ends up helping the poor anyway. Same with Gates.

Fairness is simply getting a share of what you create and I'd argue that keeping up to half of that excess for yourself is perfectly fair, and certainly more fair than mugging him and mindlessly redistributing it to folks who make no effort.

Posted by Guest on Sep. 16, 2013 @ 6:02 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 16, 2013 @ 9:04 am


And some people detract value, so they should get nothing. Or less.

Posted by Guest on Sep. 17, 2013 @ 6:11 am

"contribute to society". Partly because that metric is very subjective - you and I would probably disagree about who contributes value anyway. But mostly because the real world doesn't work that way.

For instance, a burger flipper gets minimum wage, even though feeding people is very important, because there are so many others who want that job and there is no need to pay more.

A hedge fund manager (who I feel sure you'd say contributes nothing to society although I'd argue otherwise) gets paid a lot because he generates a lot of money and because it is a rare and valuable skill.

Point being, pay isn't set by a panel of experts determining true value. It's set by the market.

Posted by anon on Sep. 15, 2013 @ 10:07 am

is pseudoscientific gobbledygook. The truth is that there is no such thing as the free market. There are people who have the lion's share of the wealth and power, and those people make rules that suit themselves and facilitate their accumulation of more wealth and power.

Fund managers are a perfect example of this. Studies have shown that fund managers pick stocks no better than chance. You and I or a random burger flipper could do their job with just as much success. They are failures. They have no real life skills. They contribute nothing. But they make enormous amounts of money.

The rules are set so that these parasites are allowed to skim huge amounts of investor money. Then they pay taxes on those kickbacks as if they are capital gains rather than income, even though they themselves took no risk with their own money. They risked *your* money if you're an investor, and they get paid enormously whether they win or lose your money. The "market" didn't make those rules. The barons of Wall Street made those rules.

Posted by Greg on Sep. 15, 2013 @ 8:51 pm

funds for IRA's, 401-K's etc. They couldn't do it if you made different investment choices. Those fund managers are not bending the rules, and you could buy a super-cheap index tracker if you wanted, but you don't because you want that chance of out-performing, just like people who buy lottery tickets.

If you think fund manager is such an easy and lucrative job, then obviously you should take up that profession. Except of course that it is highly competitive, and requires many skills that you do not possess. That is why they are paid a lot, but they also have little job security. One bad year and they get replaced.

The market may not be a perfect determinant of value, but I trust it more than (say) a commitee of government bureaucrats deciding what people should be paid. I'll take my chances in the private sector, thank you.

Posted by Guest on Sep. 16, 2013 @ 5:57 am

Both make the SF average wage of about $40 an hour.

One day, Greg invents the most useful gadget ever - 10 times more useful, fun and popular than an iphone. Greg becomes the world's first trillionaire as a result.

"Inequality", as a result, becomes increased. But how does that change Eric's situation? Is Eric:

1) Worse off because of the greater inequality
2) No difference because he is still making 40 bucks an hour
3) Better off because Greg offered him a better job, or because Eric invested in Greg's company, or otherwise benefited from the spillover of Greg's trillion?

Either (2) or (3) could be true, but there is no way (1) makes any sense. Inequality is a terrible measure of the prosperity of the average person.

Posted by Guest on Sep. 15, 2013 @ 12:30 pm

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 15, 2013 @ 12:45 pm

Greg becoming wealthy did not disadvantage the much poorer Eric at all.

Perhaps inequality really doesn't matter?

Posted by Guest on Sep. 15, 2013 @ 1:06 pm

The example above is contrived. The fact is that the rich are getting richer while the poor are in fact getting poorer. The standard of living for the median American is going down, not up.

But let's set that aside. My point is that *even* if it were true, human nature is such that people can't tolerate inequality. Make all the rationalizations you want, but that is a fact.

Wilkinson and Pickett, to whom Eric alluded on another thread, proved this. They demonstrated that for all manner of seemingly unrelated social ills -obesity, crime, infant mortality, teen pregnancy, school drop out rates, life expectancy -it is inequality that matters. Above a certain level, it is *not* overall wealth, but inequality. Worldwide, that level is about 20K per capita income. Furthermore, this effect is consistent not only from country to country, but state to state, and even city to city.

Yes, inequality matters. It may not matter to you, but as a whole it matters to humanity. Ignore human nature at your own risk.

Posted by Greg on Sep. 15, 2013 @ 9:04 pm

getting poorer, it does not follow that the one causes the other. Causation is not correlation.

And your use of words like "unfair" and "unjust" are just weasel words for envy. It genuinely doesn't matter to me that Warren Buffett has 40 billion. I don't think it is unfair or wrong or anything else negative. In fact I think it's great that someone can achieve that, create wealth for others, and add such value to the nation.

Not everyone is obsessed with what others have, and you'd be happeir if you focused only on what you can achieve rather than trying to punish others for their success.

Posted by Guest on Sep. 16, 2013 @ 5:53 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 16, 2013 @ 9:06 am

Median household income is about $73,000/year, for all members of the household not for individuals.

Posted by Guest on Sep. 15, 2013 @ 2:00 pm

is a multiple of 10 over the average income. could have been "family income", you're right, although many families have only one working adult so the difference may not be that significant. Call it 70K if you prefer, which is one-percent territory.

Also note that even an income of 50K puts you in the top two percent globally, so any which way you look at it, SF'ers are not poor.

Posted by Guest on Sep. 15, 2013 @ 2:18 pm

I think that happened to me once back in the early 1980s ;)

Posted by Eric Brooks on Sep. 15, 2013 @ 8:20 pm

number of one-parent families and single households.

SF has less children per capita than any other US city, so the nuclear family of two adults and two kids isn't so common here.

Quite a lot of DINKIES, of course, but if you can live in SF off 15K a year then clearly the poverty issue is over-stated.

Posted by Guest on Sep. 16, 2013 @ 5:49 am

The reason I can make it is San Francisco on $15k a year is that I live an -extremely- austere lifestyle in which I buy almost nothing new (nearly everything I own comes from Goodwill); I take transit everywhere and don't own a car; I'm -extremely- lucky in that my rent is $600 a month; I'm a vegan; almost never eat at restaurants; and I purposely drastically limit my energy use (for example since I'm a vegan I don't need refrigeration and got rid of my fridge 20 years ago). The main reason I live like this is to minimize my environmental impact on the planet, but it also saves -huge- amounts of money.

Most people in San Francisco, especially if they have a family, simply will not live like that, and many -cannot- do so because of the skyrocketing rents in this city.

Posted by Eric Brooks on Sep. 16, 2013 @ 9:20 am

The exception is families, as you note, but then families leave SF for many other reasons as well, such as to avoid SF's schools allocation system.

But yes, poorer people would probably be happier in Oakland or elsewhere in the East Bay.

Posted by anon on Sep. 16, 2013 @ 9:38 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 16, 2013 @ 10:57 am

parts of SF. It is clear that any poor people who are economically displaced from SF can live there and be happier.

Posted by Guest on Sep. 17, 2013 @ 6:10 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 15, 2013 @ 12:47 pm

Some of these harms are very obvious -- and very local.

An influx of buyers and renters in a neighborhood who are uniquely free of financial constraints cause the price of residences to become inflated, forcing those less well-off to move. Moving in itself is a costly endeavor which functions as a regressive tax.

And when heavy money moves into a neighborhood, they attract businesses which cater to them -- such as jewelry and boutique clothing stores, fancy restaurants and so on -- and these businesses compete and displace businesses serving those with less money.

A neighborhood loses its family restaurant; a bargain dry cleaner; the funky grocery store with cheap local produce; a critical mass of transit riders; community parking spaces as expensive driveways are added; etc. etc.

As the increase in high-dollar businesses drive up commercial rents, this has the effect of raising the prices of goods the newcomers do not directly consume.

Be advised there is a troll barrier in effect on this story.

Posted by lillipublicans on Sep. 15, 2013 @ 1:22 pm

I should have guessed as you have admitted trolling SFGate, to the point of being banned there.

Anyway, taking the specific Eric/Greg scenario outlined above, there is really no argument that a poor person is harmed by having a "trillionaire next door".

I can see your point that some mobility may occur, as people migrate towards neighborhoods that make more fiscal sense for them. But that is a healthy natural trend anyway, and has been happening since the birth of this nation.

As the old saying goes, "no poor person ever gave me a job" and if you live next door to Warren Buffett, chances are you'd be better off then if you did not.

Posted by Guest on Sep. 15, 2013 @ 1:39 pm

A poor small town newspaper, and a poor small business owner running a small tropical fish store, gave me my first two jobs.

I'm sure millions of other workers had the same experience of being first hired by small business owners.

Posted by Eric Brooks on Sep. 15, 2013 @ 2:02 pm

poor so you'd feel better. Small business owners, at minimum, have fabulous tax benefits, and can elect to take very little income out of the business, thereby minimizing tax and enabling them to claim to be "poor".

Posted by Guest on Sep. 15, 2013 @ 2:15 pm

In fact most small business owners I know in San Francisco are barely getting by, and are running a business because they love it, not for a bunch of money.

Posted by Eric Brooks on Sep. 15, 2013 @ 8:16 pm

"most" business owners (or any other category for that matter) that you meet are poor because those are the circles you move in? If you make 15K a year, hang out with other poor people, and live in a more ghetto part of town, then you're probably going to perceive "most" people as poor. Just like you probably perceive most people here as being left-wing or green.

Most business owners I know are doing very nicely, not least because of the booming economy and the great tax breaks they get. But then again my statistical sample probably isn't any more representative than yours.

Likewise, much of your information appear to come from left-wing papers, blogs and sources, so there is bias confirmation at work there. If instead you spent all day reading right-wing sources, you'd have different data, but of course you'd never do that.

Posted by Guest on Sep. 16, 2013 @ 6:38 am

I grew up wealthy, and am not operationally poor (when I really need to I can make extra money and spend it). I am perfectly capable of mixing in the elite world, and I often do. And because I am extremely well educated, I'm actually more of an elite in perspective. However there were some key periods in my life when I was extremely poor and did indeed live in bombed out neighborhoods and so I know well what it is like to be poor.

In San Francisco I definitely mix in both worlds and spend time all over the City, not just my own low rent district. Every once in a blue moon I even break my austerity rules and can be found dining at a high end restaurant, bar, or cafe. I purposely keep one toe in elite waters because I need to do so in order to make connections for political influence.

My perspectives on economics, the environment, and social structure have come from decades of intense education, and 30 years as a professional grassroots organizer working deeply in the trenches of making change, not from left wing newspapers and media. In fact, I regularly read and watch both mainstream and right wing news to keep up to speed on what, and how, my opponents are thinking.

So as I said, your assumptions are nonsense.

I'm a progressive and an anarchist because I've spent a lifetime learning that capitalism, neo-liberalism, neo-conservatism, and 'free' market libertarianism do not work, and in fact are rapidly devastating our planetary ecosystem and global social stability; and if we don't act immediately to dramatically change our ways, business as usual will destroy our species.

Posted by Eric Brooks on Sep. 16, 2013 @ 9:45 am

You claim that your anarchist/progressive views derive from decades of experience. That would be fine except that, by your own admission, those decades were spent "in the trenches" of making changes, agitating, as an activist etc. And that means that you were pre-disposed to favor left-wing causes when you made those choices.

What would have been much more convincing would be if you had been something like a hedge fund manager or IB deal-maker who had a "road to Damascas" type conversion, saw the error of your ways, gave away all your money to charity and became an activist.

But the truth is that you've always been an activist, so you cannot credibly claim that your activism is the result of your experience. It's the other way about - your experience derives from your political bias - and that carries the risk of confirmation bias.

I feel sure I am every bit as educated as you, and indeed I toyed with socialism at an age when students do that. But I drew very different conclusions. I now believe that free-market capitalism is the best path to fight poverty. And judging by the relative prosperity of Americans when judged globally, there is much evidence supporting that.

Posted by Guest on Sep. 16, 2013 @ 11:00 am

and his lifestyle and work are honorable.

His world view is correct; yours is wrong.

He is doing something about it; you are just a naysayer spouting hollow slogans.

You use him as an example that poor people can make it in San Francisco, but do everything you can to eliminate rent control that makes his continued residency possible.

Right on, Eric. You don't have to justify your lifestyle and activism to anyone, least of all to these assholes who pollute this website.

Posted by Guest on Sep. 16, 2013 @ 12:29 pm

show or prove that. If you have a left-wing bias, and it sounds like you do, then you're always going to say that anyway, so it's meaningless.

And Eric could continue to be an activist even if rent control went away tomorrow. He'd live in Oakland - just a few minutes away.

The point Eric's critic was making was valid. Eric cites his "experience" as leading to his ideology but the reality is that it's the exact opposite. His "work" merely reflects his political bias.

Posted by anon on Sep. 16, 2013 @ 1:04 pm

troll barrier

Posted by troll barrier on Sep. 16, 2013 @ 1:21 pm

in Oakland plus the additional cost of the commute. BART ain't cheap.

Everybody has a viewpoint. You use the pejorative term "bias" if someone else's doesn't conform to yours.

Sorry to cross over the troll barrier.

Posted by Guest on Sep. 16, 2013 @ 1:53 pm

subsidized home to someone who appears to add no economic value to the Bay Area and, indeed, who seeks to actively undermine attempts to build prosperity.

And I am not familiar with rents but you can still buy a rundown home in Oakland for under 200K and, given market yields, that implies a monthly cost of about $1,000 which, with a tax deduction, puts you back around 600 a month.

Or move further out e.g. Richmond or Vallejo - still all part of our urban Bay Area.

Posted by Guest on Sep. 16, 2013 @ 2:01 pm

or a 40% marginal tax rate and deduction with a $15,000 yearly income for a home that probably needs substantial rehabilitation.

Besides being correct in his world view, Eric is correct about the quality of your math education.

Posted by Guest on Sep. 16, 2013 @ 2:13 pm

probably for as long as he needs to. He cannot survive in Sf except for the kindness of strangers or highly dubious housing policies.

Posted by Guest on Sep. 16, 2013 @ 3:02 pm

loan of $240,000 - even with NO mortgage interest tax deduction. Easily enough to buy in Oakland.

Posted by anon on Sep. 16, 2013 @ 3:10 pm

Interest only mortgages are a bad product, and helped fuel the banking collapse of 2007-8.

I saw that coming in 2002 when people I know started buying such mortgages.

Try again with real numbers, not predatory lending products.

Posted by Guest on Sep. 16, 2013 @ 3:25 pm

the last 2 years, except for 30 year maturities where 3.25% was possible just a few months ago.

So Eric clearly could have afforded to buy a home in Oakland with his 600 a month.

Interest-only is a perfectly fine vehicle in the hands of a prudent borrower, and Eric is perfect for that because his income is low but, as he admits, he comes from an affluent family and so will get a bigass inheritance one day which he can use to pay off his loan.

Posted by Guest on Sep. 16, 2013 @ 4:25 pm

Now you speak in the past tense and speculate about future sources of funds.

Posted by Guest on Sep. 16, 2013 @ 6:28 pm

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