Hello, everyone.

And welcome back to a brand new episode of The Financial Confessions. It is I, your host, Founder and CEO of The Financial Diet, Chelsea Fagan.

I'm also a person who just loves talking about money. And one of my favorite topics when it comes to talking about money, as you guys probably know, is talking more broadly about economics, and how money intersects on a macro level with our personal finances, specifically when it comes to lower income people. There are a lot of ways in which broader, economic, and policy questions have enormous impacts on our day-to-day finances.

And part of the reason it always frustrates me when people will say, because anyone who follows TFD knows that we're quite frequently going off about politics, and we'll often receive comments along the lines of, like, I didn't follow this channel for politics. Like, stop talking about politics. Stay in your lane.

To think, in any capacity, that politics and personal finance are not profoundly intertwined, and that almost every choice we're making on a day-to-day basis is, at some level, a political decision when it comes to our money, is just incredibly naive. And the lower you are on an income scale, generally speaking, the more profound these policy impacts are on your day-to-day choices and the life that you live. Our guest today is an assistant professor at SUNY Albany.

And he also is someone who loves, similarly, talking about that intersection of personal finance and economics more broadly. His main focus is in education policy. But even there, we can see a huge intersection between money, politics, and education.

And there's much to get into there. We actually found him because of a viral Twitter thread he had recently about the ways in which being poor affects how long we have to wait for basic services that all of us need. We often talk about how time is, essentially, money.

And often, the things that people, when they get more and more money will buy themselves, is time. They will literally hire people to wait in lines for them. They will pay way extra for basic services so that they don't have to wait.

They'll get privatized medical procedures, even though they could have it paid through insurance, because it means they get concierge services and, even sometimes, doctors and nurses coming to their home. They basically find every way to buy themselves time. Even when it comes to things like when they board an airplane.

If they're buying that first class ticket, one of the things they're buying is not having to wait in line for their boarding number to be called. All of that is to say, the wealthy among us have a very keen understanding that time is money. And the most valuable thing, arguably, that you can often buy with money is more time.

And so this thread that he wrote was all about the opposite of that. How the most poor among us are often paying way more than the average, or, especially, the rich, when it comes to their time. They're waiting in long lines, they're having to fill out cumbersome forms, they're having to go to multiple offices and speak with multiple people to get access to basic services.

And we see in these very human results just how much policy decisions have a very micro level impact on the lives that we lead. So I wanted to bring him on today to talk about all of these things, about money, about time, about class, about economics, about education. And most importantly, how all of these things impact our personal finances, which we sometimes, naively, believe are apolitical.

But without further ado, I'm excited to introduce my guest, Assistant Professor at SUNY Albany, Stephen Holt. Hello. Hi, everybody.

And thank you for having me on, Chelsea. I'm really happy to be here, and I'm looking forward to our conversation. This is a topic that, as you noted, is both very important, but also something that I do a lot of work on and I think a lot about.

So it's good to be here, to have this conversation. Absolutely. Now, one thing that I've learned through interviewing a few academics in my day is that it's always good to start by clarifying a little bit what your expertise is in, what kind of work that you do on a day-to-day basis, and what your primary areas of focus are.

Right. So my PhD is in Public Administration and Policy. And so a lot of what I think about is government services on an operational level.

So typically, agencies have a lot of leeway in coming up with regulatory policies or operational policies that will also affect the way programs are implemented. And then, in addition to that, they also hire personnel, and manage that personnel, and they have to assess personnel performance, and organizational performance. And so what I spend a lot of time thinking about is how these decisions made by the administrators that run government agencies and government organizations affect the way citizens receive the services we expect government to provide, both the quality of those services but also equity in the way those services are delivered to different populations in the different sub-populations in the country.

So a lot of my research has been in the education realm but not all of it. I've also looked at management practices in nursing homes, which have received a lot of attention in New York, recently. And I've also thought a lot about how the representation of staff in prisons affects prison environments and things of that nature.

So my expertise is thinking about government generally. But in particular, I think a lot about inequities that government programs and government policies create in the communities that they're meant to be serving. Why do people often have the perception that government doesn't work?

That's a big question. So I think that there's multiple layers to this question. So let's start it at the more recent wave of interest.

So the more recent wave of interest on this idea that government doesn't work is thinking a lot about the ways in which individuals interact with particular parts of government. So for instance, most recently, I think it was last year or the year before, Pamela Hurd and Don Moynihan, two professors now at Georgetown, wrote a book called Administrative Burden. And the premise of this book was, when you think about the way government is designing programs, there are a bunch of costs that government can create either through overthinking the process by which people are accessing services and making things too complicated just by overthinking things, or intentionally.

There are politicians that will sometimes write laws in ways that force complications onto the way agencies are collecting information. So you can imagine things like unemployment insurance, which people have gotten very familiar with, recently. The amount of paperwork that you require people to report in order to receive unemployment insurance has a cost.

Not everybody collects and keeps records of their paychecks, not everybody has the ability to take time out of their day to go to the unemployment insurance office live. So if you require an in-person application, it can be a problem. If the portal that collects this information is hard to access or hard to interpret, then low income people with maybe little or no internet access would have a hard time filling out applications.

So all of these things are barriers to accessing government services. And so, if this is your entry point into interacting with government, of course, it's going to create a perception that government is inefficient or poorly run. But in some cases, this is not an inherent government problem, but a problem that is actually created sometimes through politics and political mechanisms.

I want to talk a little bit about all of the various programs that have been either implemented or seriously improved or been better funded in the stimulus bills directly related to COVID. So, obviously, the economic indices that we were seeing during COVID were extreme and severe enough that many people argued, myself being one of them, that the policy response needed to something of that magnitude, and arguably the kind of situation that a lot of Americans were in economically even prior to COVID, is the kind of situation that necessitates a New Deal type of policy response. And obviously, we've seen a lot of that on the table from some of the more progressive Congress people.

But focusing specifically on Joe Biden's response, and actually we can talk about it in kind of contrast with the Trump Administration's response, obviously, it has gone farther in terms of policy agenda to help the working and middle class than most recent legislation has. But a lot of, especially progressive, thinkers argue that it hasn't gone far enough. I'm curious about your perspective on what the successes and failures, or shortcomings, of these bills have been, and what they really mean for at least the, sort of, medium term economy, maybe through the end of this presidential term?

So there's a variety of things. You captured the parameters of the argument well. So let's take, maybe, two steps back, and then I'll get forward.

So the two steps back. When we think about a response to COVID, one of the things that I think was important for policymakers to have in mind that broke down quickly is the sheer opportunity cost. The US GDP on a typical year is around $16, $17 trillion.

Trillion. I mean, it's a huge sum of money. And so the cost to a shutdown is really, really, really huge.

But the cost to a huge public health outbreak that depresses consumption, depresses spending, is also going to be really huge, and in an ongoing way. And so in a certain point of view, shutting down the economy and just paying people to stay home can help divorce individuals' economic incentive from the public health goal of stopping the spread of a deadly disease, right? COVID gives us an easy example.

But you can imagine a more lethal version of COVID. This is just the virus that happened to come. There could be an even more lethal virus in the future.

And we need a response in our playbook that aligns private individual financial incentives with the public health goal. And when you're forcing business owners, landlords, renters, employees, all to consider potentially personal economic disaster or meeting a broader collective public health goal with a maybe vague risk assessment early on, you're going to lose every time. There's going to be a non insignificant share of people that are just not willing to make that kind of sacrifice, especially in the early stages of spread when it's most important to get it under control to avoid long term damage and outbreak.

People aren't going to be looking at the initial data and making correct assessments of risk in their heads. They're not going to say, well, there's been 120 cases and, yeah, it spreads a lot, but I'm not likely to get it. I'm young I'm not going to die from it, et cetera.

So they're going to take their personal economic goals more seriously. So, fast forwarding into the Biden Administration's response, and, to a slightly lesser extent, the Trump Administration's response. The easiest contrasting approach between the two is the Biden Administration is coming in with the memory of the Great Recession.

Many of them, not all of them, but many of them were around during the Great Recession, and trying to respond to the Great Recession in 2008. And for those that don't remember the Great Recession, the response was about $900 billion or so of spending, and it was about 30%, I want to say, was through tax incentives. So a lot of it wasn't even direct spending.

So many people felt that the recovery was a little bit too slow. And part of the reason it was a little bit too slow is that you have a very small political window in responding to crises, and you maybe get one shot. And so if you're operating under the belief that, we will try x and then we'll come back to the table if x is not enough, then you might not be able to get everybody back to the table after doing x.

And this is true in the COVID Relief Bill. We've already seen the infrastructure bill is being put on hold, and there's been a lot of hesitancy to spend more money or do more things, because the size of the COVID Relief Bill was quite large. And so if you're only going to get one shot at a political consensus to get one bill through, it has to be large enough.

That's Biden's approach and reasoning. The Trump Era approach seemed to be responsive to short-run need. So in other words, we're going to do what we can to minimize how much we're spending all at once, we're going to give immediate need now, and then, if it turns out to be continually ongoing, we'll just come back and do more later.

And there is an intuition to that in the sense that you would hope people would come together and be able to quickly pass additional relief. But the legislative process is quite slow. Even under emergency circumstances, you can end up having a lot of hiccups and delays.

We saw, during the Trump administration, there was a delay in extending unemployment insurance that actually delayed checks going out for an entire week. These are all costly, costly delays in the midst of a crisis. And so by trying to respond to short-term, piecemeal approaches can actually be, in the long run, a penny-wise, dollar-dumb game.

So in the Biden Administration's COVID Bill, in addition to responding to the crisis itself and providing relief funds for state and local governments, for colleges that were particularly hard hit, and for households that were particularly hard hit, the Biden Administration saw, look there's also going to be a huge, pent-up demand, potentially, and a lot of people that are still hurting. And in order to get the economy going quickly and get people back into the labor market, we need to also address some shortcomings that the pandemic highlighted in some of our social safety net. And a good example of this is child care and child tax credits for child care.

In addition to everybody being somewhat hit hard by the pandemic, at least from middle class and lower on the income scale, there was a gender dynamic to a lot of the job loss with the economy. And some of this is attributable, probably, through parenthood and gender dynamics of parenthood. There's a wealth of research that shows that even among millennial parents, men still tend to spend a little bit less time on child-rearing tasks.

And women tend to be the ones that have to take the career-- well, they don't have to, but end up taking-- the career step back during loss of child care. So there's been a huge amount of job loss among women in the economy. And one way to help fix this is to create a system in which women have the option to work if they want to.

And the way to do that is you make it affordable for child care. Anecdotally, I remember, years ago when I was working in contract work, one of my colleagues ended up quitting her job after they had a kid because she realized, after crunching the numbers, her entire paycheck would just entirely go to child care. So she was like, well, why work and pay everything to childcare when I can take time out of my career and raise my kid until they're old enough to go to school?

But that's a three or four year gap in development and experience, et cetera. So these are costly decisions. And I think the Biden administration was smart in trying to change some of that so that there's a labor market surge as vaccinations increase.

In terms of it being enough in the medium term, do you think it went far enough? Yeah, I think it went far enough. I think many of the-- so there are two, and there will be people that will quibble with this, there are a lot of deferred priorities, in part because many progressives have a large policy agenda that, I think, has been on quite a long delay because of the dynamics of the Senate, the dynamics of the house.

It's very hard to get legislation passed, or legislation happens so infrequently. So there's going to be a sense that there wasn't enough done during this. However, in some ways, and this is particularly true when we think about things like child care and the child care tax credits that the Biden Administration included, is that it's taking a page from the lessons of the Obamacare playbook in that it's much harder to build a political coalition around taking away popular things that help make people's lives better, especially like a broad swath of the population's lives better.

And so what I think the intuition that the Biden Administration was operating under is, technically, all a lot of those provisions have a sunset clause. I want to say they end in December. Some end in September.

And I know a lot of progressives want there to be A, a permanency to them, and B, for things like unemployment insurance, for instance, just an automatic trigger, which I think is smart and would be a good way to approach this. But I think the Biden Administration's logic, here, is that when things are set to expire, it's going to be very hard, politically, to not extend them, to not negotiate on making them permanent. And so I think they're going to take another bite at the apple on a lot of these provisions going forward.

Now, the sense that they're there wasn't enough done, I think, is driven in part by there's a lag time. You know, this was a $4 trillion package. There's a lag time before that starts getting onto the ground.

I think we'll have a sense for it in September and October and November. On paper, it seems sufficient, at least in my mind. But I think we'll have a more realistic picture come later in this year.

Yeah, it's fascinating how much individual level changes or benefits are completely transformative. Obviously, as a small business, we got in twice on those PPP Loans. Bless up, PPP Loans.

We got twice as much this time because our company grew. And we also realized we could have gotten more last time, but didn't know what we didn't know. Either way, seeing that money physically hit your account was an insane feeling.

Similarly, the stimulus checks actually being real money hitting your account are an insane feeling. And we're seeing that go to a very interesting level economically, I think, with the discrepancy that a lot of people are now experiencing between what they can get with these enhanced unemployment benefits, versus what they would stand to make at these terrible, sub, what should be the minimum wage jobs. And we're seeing, now, a lot of pictures of restaurants that can't hire people, are going viral.

And we're having this conversation, now, because, obviously, and I and I do think it was a mistake to give up the fight on the federal minimum wage being $15 an hour, but we're seeing now that, OK fine, you don't want to raise it and people are still paying people $8 an hour, whatever sure. But people are pretty quickly going to realize, especially with these supplemental benefits, that sucks. And you could just stay home and fucking play games, like play video games all day, and smoke weed, and have a better life, and make more money.

And you're sort of seeing that inherent tension between, because, I think, in America, our policy, overall, has always been to keep people just poor enough that they're stuck in this really terrible tranche of society, and performing all of these underpaid tasks, but not so little that they start burning down cities. But now we're seeing that we're falling under that with a lot of these jobs that don't pay very well. And I'm curious what you think will be the more medium and long term outcome of this.

Do we think that, as these extended unemployment benefits go away, people will just trudge back to their really shitty, underpaid jobs that barely get a subsistence wage? Or do we think this is a time when people are starting to wake up and say, wow, life could and should be very different, now that they're tasting the reality of it being possible? Yeah.

That's both a great question and a great insight into some of the indirect effects of things like a robust unemployment insurance system. So there are a handful of things that I would add to contextualize this before I think into the future. So the first is that when you see employers posting, and this is particularly true of restaurant industry employers, posting well, we can't get anybody to work for us, et cetera, what I think everybody should do in their head, and a lot of progressive economists have pointed this out, and I think this is right, is what they should be doing in their head is adding on the phrase, at the wage we are currently offering.

Right. Because one response, and this is something that economists have grappled with a lot, is defining more precisely what a labor shortage is and what a labor shortage means. And this happens in the education space, too.

So a lot of people talk about teacher shortages all the time. And actually, there's not a lot of teacher shortages, generally. There's specific fields in which there are shortages.

So a lot of STEM teacher shortages and a lot of special education teacher shortages. And in part, this is because if you major in, say, mathematics or chemistry, you have a lot of industry options that pay way more than even the most generous school districts do for teaching. And so even in those circumstances, there is a shortage, but it's a shortage at a given wage rate.

And so with employers they could, arguably, fill many of their positions if they offered a higher wage rate. So in economic parlance, the way economists think about this, is they think about things like reservation wages. So a reservation wage is, essentially, the lowest wage at which you will accept some compensation for an act.

And so, typically, if you look at high risk jobs like going out and being on an oil rig, or going out and, there was that famous reality show about crab fishing and how dangerous it is to crab fish in Alaska-- Deadliest Catch? OK. Go off.

Anyway. Yeah. But those kinds of jobs are relatively high risk jobs.

And what that does is that just increases the reservation wage. So a lot of people aren't going to take on that kind of physical risk unless they're getting a larger wage. So when we think about restaurant work right now, we're in the midst of a pandemic.

You can get COVID. Not only is it a potentially lethal disease, and an uncomfortable disease, but there's also things like long COVID that are poorly understood, but have long-term side effects that we still don't fully know everything about. So it's a relatively dangerous disease to contract, and it's highly tractable.

And so you're asking people to interface with an unmasked public. So the relative risk of this industry has just increased a lot. And so a lot of people's reservation wage has reasonably gone up.

And this is where the point about unemployment insurance and generous government benefits, you add onto it a lack of personal scarcity and personal economic insecurity provided by a safety net. People don't feel the kind of desperation to accept a higher risk without getting more compensation for it, which people can disagree about, I think. But in my mind, if you truly value a freedom of pursuing what's in your interest, I think a robust social safety net that avoids desperation-based economic decision-making is probably the best way to maximize freedom for people to engage in labor the way that they want, and the way that makes the most sense for their lives.

And a lot of people are not necessarily just like, well, I can sit around and play video games because I get all this money. Some of them are using this period of security to rethink the kinds of jobs that are available to them that they can actually, realistically get. And so several people have worked in restaurants and they just found an office job that they didn't have time to do a job search for, because if you've ever worked in food service, and I have extensively, you don't have a lot of control over your schedule.

And if you want to make ends meet, many restaurants means working a lot of unpredictable hours every day, and doing open to closed shifts, and all kinds of unpredictable schedules that makes a real professional job search difficult. And so if you suddenly have this kind of influx of income that gives you the space to just rethink your career or rethink your job prospects, suddenly you might find jobs that you were always able to get, but just never had the time to consider or search for it. And so I think that's at least part of what's happening, as well.

I should clarify that I don't think everyone who's getting those extended UI benefits is just sitting at home smoking weed and playing video games. But I just want to say that if that is you, I see you. Your life is valid.

Your choices are valid. I'm right there with you. I wish I could be doing the same right now, honestly.

Absolutely. I didn't take your position to be that at all. I think it's important to also think about the fact that as we think about, to the second part of your question, where do I think this would go going forward?

If this became a permanent feature of unemployment insurance, and especially if it had automatic triggers for stabilizing the economy, and if it was just more generous and easy to access more broadly, these might be some of the micro decision-making things that people can do, and do better, do better for themselves and for the economy, overall. Yeah. Listen, I'm no policy wonk, but it does occur to me that this is making the unemployment insurance benefits very competitive as a backdoor way of making a lot of organizations that have been systematically underpaying people think twice about that.

Now, of course, I do want to make one clarification to the audience that often gets thrown into the mix when we talk about, for example, mandating something like a $15 minimum wage or mandating increased wages for different types of jobs that, in a lot of situations, what the result of that will be is just further benefiting companies like Amazon and Walmart and things like that, who can easily afford to make those adjustments if it were needed. So I do think, of course, there has to be some nuance in terms of giving credits to certain companies so that they can remain competitive against these big conglomerates. It's clearly not a one size fits all solution.

But when you look at scale at the companies that are employing massive amounts of people and underpaying them to the extent that, for decades now, those employees have been relying on government subsidies to survive. I'm looking at you Walmart. This is where we're seeing that discrepancy of we're letting these corporations, essentially, create an underclass that we're subsidizing either way.

These people are tapping into benefits either way, so why not force the hand. So one thing I did want to talk to you about, Steven. So obviously, as I mentioned, we found you on your thread about the cost to the poor in terms of their time for basic services and needs.

I'm interested to hear more from you about the invisible costs of poverty and the way in which the poor, working or otherwise, move through the world, that many people who are, at least, financially stable often aren't aware of or don't realize. Yeah. So the backstory to what got me thinking about this was that my partner and I were talking, and she had this appointment to get, basically, eyeglasses, an eyeglasses prescription.

So she had to get an eye exam and then she also had to pick out her glasses and things like that. This is something that she expected would be like a 40 minute thing. She had an actual appointment time.

So she went and three hours later was seen. And she realized, in reflecting on it, that everybody else in the shop seemed to be comfortable with this weird, chaotic breaking of the schedule. And she was the only one that was like clearly, growingly, increasingly anxious about this sudden, unexpected, extensive wait.

So she also helps, she volunteers to help low income women access medical services. And she was thinking about this in that context, too, how a lot of the women that she is coordinating with, they have to coordinate entire days out of their lives for medical appointments that many high-income folks just go to their doctor, they get seen in maybe 20, 30 minutes, and they're out. And so I was wondering just how much of this was a systematic thing.

And so that was what led to this. So the Time Use Survey collects time diary data for the previous 24 hours for a nationally representative sample. And this happens every year.

It's something the Bureau of Labor Statistics does. And it's super interesting. I've used it.

The very first paper I wrote in grad school looked at this data to look at gender differences in time spent studying. And girls are doing their homework a lot more than boys. And in the aggregate.

It's a huge skills gap, an academic skills gap, that girls are developing the boys are not. And so I just happened, because I've worked so much with this data I know it very well, and as a result I knew that this had stuff on waiting. So I started looking into this.

And the interesting thing about it taking off is that a lot of people offered really, I think, powerful anecdotes in replies to the thread. Of just their personal experiences with this kind of thing. So the top line gap is it's about an 11 minute gap, on average.

On an average day, a low income person is spending 11 minutes more waiting than a high income person. Now, on a day-to-day basis, everything in the atis, small gaps like that actually add up to a lot of time. So 11 minutes a day is about an hour a week, an hour a week is about 60 hours a year, or so.

And so it's more than a full-time workweek just spent waiting. Just unproductive time. And it's time that somebody else has of yours that you have no control over.

And one of the things that I think is important to think about with this is that part of this story, maybe not all of it, but a part of this story is a story of service quality. So when you think about going to, say, Whole Foods versus going to a low-end supermarket. Here in Albany we have a Price Chopper or, maybe, Hannaford's, or something like that.

And when you go into Whole Foods there's just, almost every lane at any point of the day has somebody working at it. And so your lines are actually, relatively short. Even if they look long, they're relatively short.

And it's just because they're always fully staffed, the service quality is very high. And it always makes the neighborhood quality, also, around it very high. When you go into, say, a Hannaford's or a Price Chopper, you have, maybe, two lanes open, even at peak hours.

And you have a self checkout, maybe. And there's really long lines. And these two different companies are also cited in two different types of neighborhoods.

And that's just one small example that aggregates to a whole bunch of different services. So the medical services and dental services that low income folks end up using are either underfunded, or oversubscribed, or both. And as a result, even if they are quality services, they are time consuming services for the people that try to use them.

And this can also alter behavior in important ways. So if we think about something like shopping, for instance. If shopping is a huge hassle and you know that you're going to have to wait a lot, and you also have all these other things that you have to do that day or throughout the week, and you know that there's any long waits for all of those, too, maybe you try and minimize your shopping by loading up on non-perishable, highly processed foods that are a lot less healthy, but they keep for longer so you have to shop a lot less than if you were to buy fresh foods.

And that's even setting aside the price differential in these things. The same thing could be true for medical appointments. So if every time you go to the doctor you have this really long, excruciating wait, it blows up your day, it's hard to coordinate, then you might put off going to the doctor until things get really bad.

And so there's a downstream cost, too, to where all of these things start affecting health gaps, they start affecting monetary gaps, et cetera. So there's a lot of inequality that's built in to just this one simple gap of time spent waiting at proxies for a lot of inequalities. I have to say, few things make me as truly torch-and-pitchfork angry as people who get on their high horse, and these kind of threads are going viral on Reddit all the time, just like, some sub-Reddits are great, but Reddit overall, you guys got some trouble as a community.

And there are always these threads going around about like, poor people can eat for a penny a day if they eat beans and just like the most, basically one level up from just like the gruel that people eat in Dickens novels. And they don't at all a factor in the time that it takes to prepare food like that, or any consideration about having to do that for many, many people at a time, the storage requirements of things like that that aren't shelf stable, all that stuff. But also there's an underlying perception, and I think a lot of people have this when it comes to lower income folks, that they don't deserve anything good or nice, that they really deserve to have these lives.

And anything that they have that's good, like God forbid they have a cell phone that came out post like 2007, that that is just something that they shouldn't have access to because they should be spending it on something else. And I think the thing that frustrates me the most about it is that the biggest indicator of whether or not someone's going to be wealthy in life is were their parents wealthy? Did they get born into wealth by complete genetic lottery?

And similarly for poor people, we have a very limited class mobility. So really, for the most part, we're just saying because of your genetic lottery, you deserve to have a better or worse life. But I think it's really difficult for a lot of people to remove their quasi moral, quasi libertarian notions that poor people, on some level, are poor because they're lazy or stupid.

Or they are just making consistently bad choices. And that, if they made better choices, they would be rich. How do you feel like people can rid themselves of that mental framing that we're all brought up with in the US?

Oh. Oh man, that's a big question. So it's not clear to me how people can rid themselves of it outside of regularly interrogating their assumptions.

And in part, one of the things that I am a firm believer in, in part because I'm an academic that does research, that I'm a firm believer in the importance of doing research to better understand these dynamics. I'll give just an anecdotal story that I think highlights some of the ways in which not all of this is choice. When I first moved to Albany, I moved here from DC, and in DC a lot of grocery stores are just in the city, in and around the city.

But in Albany, a lot of the like Trader Joe's and Whole Foods are out in the suburbs. And so I was curious about this. And there's actually a very intuitive, and in some ways understandable, reason for this.

When Whole Foods was choosing whether to try and site itself in Albany or go out into the suburbs, it did a market analysis. And one of the things that you consider in a market analysis is median income. But this median income inherently means that a lot of high-end services that provide good produce, that provide fast service, that are convenient, are going to end up in areas with higher median incomes.

And so in some ways, there's limited choices that you can make if, systematically, if you're low income and, systematically, decisions are made that consider income, that leave the services in your neighborhood or in your immediate area lower quality, on average, or more poorly resourced, on average. So in that context, it's really hard to think about, well, if you made better decisions you would be able to not be poor. Because in a lot of ways, people making decisions that are rational and reasonable decisions can lead to these aggregate sorting differentials that isolates low-income people.

So to your broader question of how to think about cleansing oneself of this knee-jerk disposition of faulting individuals, and that's a really tough question. And I think the bigger thing is just trying to have compassionate conversations with each other that reminds each other where our assumptions are coming from, and what those assumptions mean. Another part of it is, I think, interacting with a more diverse both socioeconomically, educationally, and racially communities.

It's just inherently going to broaden the way that you understand people's lives, and what they want, and how they're making the decisions that they're making and why. And those conversations, I think, some people are not comfortable having. And so, really, just working on the skills of interacting with people from very different walks of life and daily lives.

Figuring out ways to do that and build that into your life is, I think, probably the closest route or quickest route to purging some of those impulses. Well, that's a massive issue, and something we talk about on TFD a lot is that people tend to self segregate socioeconomically, and it only becomes more extreme the wealthier you are, which is how you end up with Business Insider Op Eds from couples like, we make $500,000 a year and we're not wealthy. Because they don't feel wealthy, because all their friends make that much or more, and they can't keep up with the lifestyle that they're accustomed to, and they also have no idea what lower income folks' lives are like.

Also, I clocked you as a DC guy, I swear to God. I used to live and work in DC. I can recognize a DC guy from 10 kilometers away.

So I got you. But I would like to say, I love DC. Much maligned city, doesn't deserve it.

But it is one of my favorite examples of the extent to which both socioeconomic stratification and racism are truly just built into cities on a structural level. Now obviously, a lot of people know I live in New York now, about the hash Robert Moses made here, in that regard. But in DC, I'm not going to spoil it for you, Google, why doesn't Georgetown have a metro.

And you will be like, wow, I did not realize the extent to which even the very accessibility and public transportation of a city is built to, essentially, make illegal levels of segregation, both racially and socioeconomically, essentially, built into the city's map. And something that you can't say it's illegal to not have a subway there because, again, and you'll Google the story, but the community didn't want it. But why they didn't want it, I think, speaks a lot to how these things, you know.

And when you also look at things like redlining and other practices like that, you start to see that even the very basic parameters in which people live were made with, often not great, intentions. And the express objective of a lot of this was to keep them in a certain place socioeconomically and geographically. I'm curious, I do think another issue in terms of the gap of understanding and empathy that people have toward people living in poverty, a lot of people might be familiar with the famous Ben Shapiro credo.

So he says you have to do three things to not be in poverty. I think you might know this better than me, Stephen. But it's like one is graduate high school, wait until you're married to have kids, and I can't remember the third.

Do you remember the third, by any chance? I am not a fan of the ecosystem that has built up in the last, I don't know, 15 years or so, where somebody can make knowingly, or maybe just unknowingly, but persistently bad faith arguments. And have that as a route to fame.

And so I just don't pay attention to the Ben Shapiro. I'll pay attention to conservative experts. But Ben Shapiro is just like some random guy that gets angry on social media.

I mean, the extent to which that man is hyped up as an intellectual heavyweight truly is. Yeah, it's wild. I weep for our generation.

I mean, listen. I'm not going to say that William F. Buckley was any kind of real heavyweight, but he at least had some valuable data points to go off of.

And he faced off with people like Chomsky. And I feel like Ben Shapiro wouldn't touch Chomsky with a 10 foot pole. Getting a little in the weeds, here.

Yeah. And I think there's this negative selection. So I think about it in terms of, I don't even know her name, but she was like gun girl or whatever.

And her whole thing-- Kaitlin Bennet. --brought an assault rifle to her campus, and then posted a social media picture. If that's the process by which you are elevating people to be prominent voices in your ideological circles, there's a selection problem in that situation. So I think it's selecting on negative characteristics that, if people want to engage with them and think about them, I just stay out of it.

Which is maybe not the best way to handle it, but it's the only way that I can handle it. Suffice to say, so, basically, work a full time job, graduate high school, and don't have kids before you're married. And I guess, don't get married before 21, which, again, is 4.

But regardless. So even if we take that on its terms, right? And a lot of people use this argument.

It is very popular. Even if we take it on its terms, the underlying implication there is that for anyone who's already messed up on one of these criteria, I guess the stance is just fuck them. They just are going to be in poverty forever.

And so one of the things I think people have a really hard time conceptualizing is the cycle of poverty. And how, once you are in poverty, it is incredibly difficult to get out, especially on just a pure savings and budgeting level. And that's something we run into a lot at the company in terms of our advice can only really apply to people who have a certain amount of disposable income to begin with.

So can you speak a little bit to the cycle of poverty and what happens to people who have already fallen below that line. Yeah, absolutely. So there are so many problems with that kind of list.

I'll just echo, first, your point of at a very basic level, when you're thinking about how you would like society to operate and function, a completely unforgiving pathway through your first 21 years in which no mistakes are made and your parents are able to guide you in particular ways and/or provide resources for you to not make mistakes. Because oftentimes, mistakes are, in part, functions of decision making, and then, in part, functions of resources. It's relatively easy to not make lasting mistakes when you have a lot of resources.

And so structuring a society in a way in which there's just no coming back from any deviation from a very particular path through life is problematic. And also, even on its own merits, such a society would probably be a particularly uncreative society, and innovation would likely go down. I mean, that would be a very stifling society to live in if this was the only way to navigate our economy.

And so building around that list is an odd list to try and build around. But I'll use a personal story, actually. This is a wild personal story.

But it gets at exactly this, how things can build up if you're low income. So I went to college in Florida, undergrad in Florida, and then I moved to DC. And as I was leaving DC, it was like two years before I left, I was waiting for a bus and got on the bus and lost my wallet on the bus.

So I canceled all my cards. It was like a whole thing. But then, it meant I lost my driver's license.

So I had to go get a driver's license. And when I called to get a replacement driver's license, the DMV told me, well, we can't. We have a notice that your license has been suspended.

I didn't drive when I lived there, so I hadn't noticed it. So my license had been suspended, according to them, for some kind of ticket that I had gotten in Florida. So it turns out, I think it was 10 years prior to this moment, I had gotten a ticket in Florida for rolling through a stop sign.

And I had paid the fine and I had taken the online driving class that was required, or whatever. But they somehow never got my certificate of completion. And so that was the source.

Not that I didn't pay the fine, not that I didn't do the things that I needed to do, but they just never got the certificate, and they suspended my license. So this started an entire bureaucratic process in which I had to get my license reinstated in Florida, which had, I think, like a $160 fee. And I had to do it remotely, because I'm not going to fly to Florida to try and do this.

And anybody that's lived in Florida knows that I would have to fly to Florida and Uber 45 minutes to the nearest DMV. Quite the process. So I had to pay it remotely, but then their system was down to process my payment.

So they said, well, we have these contractors that you can call, and they will take out a money order and bring it in, and they'll charge a fee. Well, the fee that they charged was $90. So now we're up over $200, like $270 or $280.

When I called the contractor, this is kind of funny, this gruff voice answers and sounds like some guy in a garage. And he's got it if I have to give my card information to so that he can get a money order to take it to the DMV. So anyway, I get it paid off in Florida, get it cleared, we're good to go.

Then, so my initial license was in Virginia because, for the first year that I lived in the DC area, I lived on the Virginia side. And then I moved into DC. So the license that I had lost was a Virginia license, so I called them.

And they were like, well, there's a reinstatement fee in Virginia, as well, since your license was suspended. So that was another $200. And they also wanted me to take an eight hour class that would cost another $300.

And I was baffled because I was like, I didn't even break any Virginia laws or anything. This is a wild circumstance. So anyway, I was able to talk my way out of the eight hour class and just paid the reinstatement fee.

And then, finally, get my license back from DC. Now, we're up to over $500, maybe over $600 in fees for reinstating my license. I happened to live in an area where, and was, at the time, making enough money that I could absorb this kind of crazy cost and be fine, and, because I lived in an area that was dense, and I could take public transit, I just didn't need my license for anything outside of just trying to resolve this situation.

But you can imagine if you're a low income person, $600 is suddenly a huge barrier to getting your license. And if you live in an area where you have to drive to get to your job, suddenly, you're either at risk of getting arrested and getting even more costs because you're driving on a suspended license-- That's how I got arrested. --Or you are at risk of losing your job because now you can't get to your job because, again, your license suspended. So suddenly you're making trade offs like, well, do I cover rent this month or do I get my license back so that I can continue to work?

And this is assuming that it's not going to be a problem getting to the DMV to take care of this in the first place. And these are the kinds of things that are just built into our system that, as a percentage of your income, if you're a high income person, these small fees seem meaningless, and trivial, and why would you let this hang you up. And they can be devastating for somebody that's making $7.25 an hour and working 30 hour weeks.

And maybe they're working 30 hour weeks because that's the maximum that their employer will let them work to avoid providing health care, or whatever, for full time employees. So this is just one small, anecdotal example of just how the cycle of poverty can trap you from one small segment of our economy. You can think about this in terms of banking fees, overdraft fees.

You can think about this in terms of it is very costly to move through our society with limited reserves of cash. Totally. There's a really great study that came out a couple of years ago that talked about how for the average person to get out of poverty, it takes them something like 10 years without anything bad happening, essentially.

Like, no unexpected injuries, no car breaking down, no unexpected job loss, no getting evicted. Like nothing bad happens to you for that amount of time, and then maybe you'll have a chance. But half of Americans would not be able to cover a $500 emergency.

So you can imagine if one of those things happen, even if you've been diligently putting money away for years and years, that's all gone. And I remember there was, and I referenced this also in a recent episode, too. But my interview with Ashley Ford, go watch, it it's so good.

But one of the things that we talked about in that episode was the extent to which people who have even middle to high income, mistakes get to be lessons, and not a complete derailment of your life. You get to do all of these things that will define the life trajectory of people who are at lower income. And you're just like, well, I'm glad that that happened to me.

I'm a perfect example, I got arrested. I have all of these things that for a lot of other people would have been a complete derailment. And for me, I'm privileged enough that it was a lesson.

You've done a lot of research about charter schools, and the role that they play in communities. I think a lot of people, my mother happens to be a teacher, strangely like half of our company's employees our mom's are teachers. I don't know how that happened.

I know a lot of teachers. I'm surrounded by a lot of teachers. So I feel a little bit more familiar than average about the incredibly controversial role that charter schools play in education.

And I'd love to hear your thoughts on charter schools, specifically as they're positioned as an antidote to low income children, or a huge benefit to low income children, an opportunity for them. Yeah. So, man, you're speaking to an issue that I've both thought a lot about and have kind of a lot of nuanced thoughts about.

So I'll start with just out of the gate, there's compelling and good research that shows some charter schools are very, very beneficial for low income and disadvantaged students. Full stop. There are good charter schools that operate well and that are beneficial.

Now, so there's the big policy environment, and then there's the theory, and then there's the broader, philosophic question that we can interrogate a bit. So let's start with the broader policy environment. So for those that are, maybe, unfamiliar with charter schools.

Charter schools are, essentially, privately operated but publicly funded schools that are exempted from a lot of regulations and restrictions that traditional public schools have to operate under. So they can set their own teacher salaries, they can set their own hiring and firing practices, they can set a lot of their own curriculum. And so there's a lot of things that they get exempted from.

The other part of the policy landscape that's important to understand about charter schools is that they're state specific. So different states have different laws applying to charter schools, and they govern them and regulate them very differently. So much of the research that identifies really, really good charter schools looks in at charter schools in New York City and charter schools in Massachusetts tend to be just rock star charter schools, but they're also heavily regulated relative to the rest of the sector in other states.

On the other side of the coin, states like North Carolina or Ohio have relatively lax charter school regulations. New Orleans is another example of very successful charter schools, but they're kind of also a weird and unique example and I don't want to derail too far into the weeds on that. So that's the general policy landscape.

Now, as a researcher, to the extent that I have a particular ax to grind about charter schools, it's that they're also exempted from a lot of data sharing that traditional public schools are not exempted from. So there are a lot of charter schools in a lot of states that don't have to report performance data, or don't have to report it publicly, or with the granularity that traditional public schools do; which is a problem for researchers, but it's also just a problem publicly for general transparency. The other thing about charter schools that I think is important for a lot of people to understand is that because they received some public funds but they're privately operated, they also can raise private funds.

And so many of them will receive foundation money, or will do fundraising themselves and will have a lot of resources that are not related, necessarily, to their public resources. So there are, actually, I think, a lot of under considered questions about the extent to which some of the charter school effect is driven by the charter schools themselves, or the fact that these are somewhat well-heeled schools operating in otherwise poor districts. And so their comparison schools might not actually have the same kind of resources in a lot of instances.

So that's a bit of a digression. So the theory behind a lot of charter schools is that the way that you want to improve education is there's going to be some incentives for schools to satisfice, what's called satisficing. It's doing the minimum acceptable job.

And part of that is because they have a lock on enrolments. In other words, their enrollments come from people just living in their neighborhood. And there are actually bad dynamics from this in the sense that high income, well-heeled individuals don't have to live in a given neighborhood.

They can live in another neighborhood. And so school choice ends up being a luxury good, or a luxury right, given to high income people that can afford to buy a house elsewhere, that low income people get locked out of. And so one way that you can try to up the game of low income schools is to create alternative schools that are competing for students and competing for resources.

And that competition will induce some efficiencies in traditional public schools. And there is actually some evidence of better performance in some cases through competition. But the third order, like broader, philosophic question in the way I feel about charter schools is that there are a lot of assumptions built into why traditional public schools are struggling the way that they do that seem to ignore the broader context of the white flight of the 60s and 70s that hollowed out a lot of cities, that led to a lot of neighborhood segregation, and that led to a lot of concentration of poverty in certain schools.

And in some ways, it's the kind of thing that's hiding in plain sight in that the federal government has a program called the Title I Program that provides low-income schools additional resources. That's the intent of the program. And Title I schools meet a threshold for eligibility when they have a certain percentage of low income, or otherwise disadvantaged, students.

In other words, they have to have concentrated poverty at a school to be eligible for Title I funding, which means we have an entire category of policy dedicated to schools that are dealing with concentrated poverty. In other words, we know that this is a thing that exists. And the means by which we can deal with it are multifold.

We could try to take away the incentive for people to leave city districts, and set up their own school districts in the suburbs, and wall off low income individuals through this kind of neighborhood segregation. We could have preempted that by creating Metropolitan Statistical Area, MSA, school districts. In other words, instead of say Detroit being its own school district the ends of the boundaries of Detroit, Detroit and its greater suburbs would be the school district.

And so your kid can go to any school within that district. And that changes the incentive to try to game the district boundaries that creates this concentrated poverty in some schools. But in a 5 to 4 decision in I think it was 1972, Milliken v.

Bradley, the Supreme Court struck down this proposal. And this is actually, I believe, brought in Detroit. So it was a specifically chosen example.

And so, in some ways, charter schools was like a second best option to try to deal with this issue of high-income individuals are able to concentrate in different school districts systematically in a way that undermines the health and viability of school districts that low-income students and students of color are often sent to. So that's like the big picture of charter schools. So my recent work on this has looked at how the lift of the cap on charter schools in North Carolina has changed the landscape of it.

There was an explosion. There was a cap of 100 charter schools that were allowed to operate in North Carolina. In 2012, the state legislature removed that cap.

There's just an explosion of charter schools that entered. And so I was curious as to how these newly entering charter schools affected traditional public schools. And what my co-author, Professor Lucy Sorensen, who's also at University Albany with me, what we found is that, generally, what ends up happening with this explosion of charter schools is the really problematic things are driven by predominantly white charter schools.

So a lot of these new schools will be predominately white, predominantly high-income schools. And when they enter, a lot of the most effective teachers start to leave the traditional public schools nearby. And the students at the traditional public schools nearby end up having less experienced, less effective teachers on average.

So that was a long, long answer. No, it's totally fine. It captures my views on charter schools.

Sorry, that was a bit winded. No, no, no, please. I'm very familiar with when you ask an academic about one of their preferred areas of study.

So, thank you so much for such a thrilling conversation on all of these extremely important topics I know you are frequently talking about them for laypeople, like myself, on Twitter. Where can our audience go to find you there? Yeah, so on Twitter I'm @stevebholt.

We will link you guys, also, in the description and the show notes. And thank you again for taking the time. I've really appreciated having you here.

Yeah. Thank you so much. This was a great conversation, and really, I think, an important set of topics.

And I really appreciate learning about your show. Oh, thank you. And thank you guys all, again, for tuning in.

And we will see you next Monday on the next episode of The Financial Confessions. Bye.