Hacker News Reader

Comment by janalsncm | Hacker News Reader

I’ve traveled to many places where stores seem to be doing just fine. They have too many employees, even, by American standards.

I think it comes down to the cost of real estate. Both for the store, but also for employees’ housing. Higher rents mean people need to be paid more which means fewer employees and a worse experience.

I don’t know who came up with the “30% of your salary” rule for housing, but it was probably the same person who came up with the “3 months salary for a ring” rule. It seems made up. 30% is way too high. I’d love to see a survey of these factors globally. I think we put up with things in America because we don’t know any better.

View on HN

> 30% is way too high

Underestimate in many circumstances. Poor people living in UK cities are paying up to 50% of their income in housing. https://ifs.org.uk/inequality/wp-content/uploads/2023/11/IFS...

(the Georgists have a point; over time, rentiers gradually capture more and more of an economy)

Also department stores are a victim of a gradient across the globe. You want a westerner, standing in a western city, to spend time with you selling you a product? Of course all those things are staggeringly expensive. See also healthcare.

> I don’t know who came up with the “30% of your salary” rule for housing

The "30% of your salary" rule for housing stems from U.S. federal housing policy. It was first introduced in 1969 under the Housing and Urban Development Act as part of the government's effort to define affordable housing.

25%-30% was a benchmark used in housing assistance programs to determine eligibility for federal aid. If households spent more than 30% of their income on rent, they were considered "rent burdened" and might qualify for subsidies.

https://www.hud.gov/about/hud_history https://en.wikipedia.org/wiki/Housing_and_Urban_Development_...

---

> person who came up with the “3 months salary for a ring” rule

That was good old De Beers. In the 1980s, they promoted the idea that spending two months' salary on a ring was appropriate, which later increased to three months in some markets.

Example of their marketing campaigns: https://i.etsystatic.com/17868656/r/il/2bc5ab/1933571085/il_...

> 30% is way too high.

It is not something to strive for. It is offered as a warning.

Like how the US suggests 50 mSv/year for occupational radiation exposure. That doesn't mean you should go out and purposefully expose yourself to radiation to hit 50 mSv. You still want to minimize exposure to the greatest extent possible. The figure indicates the danger zone where if you see yourself drawing near, you need to get off the path you are going down.

It's not a rule, it's guidance to say - if you spend more than this you're probably being irresponsible and living outside your means.

The thing is that you're never going to convince most people to give up living in the place they want to live in, they'll stick around until the bitter end, and that means you end up with people earning 10 pounds an hour living in Zone 2 London in some dickensian shoebox.

> if you spend more than this you're probably being irresponsible and living outside your means

It’s funny, the way you’ve said it is a common framing, but I rarely see the opposite, equally valid framing: no responsible person should take a job whose wage is less than 3.3x their housing cost. If companies don’t pay enough, the responsible thing is for no one to take the job.

From my perspective that's the action you take in order to avoid the problem but it's kind of the same thing.

I guess what it comes down to is what comes first for you. For me I've always figured, well, if I'm close to my limit (e.g. I only have a few months savings) then nothing matters other than to build that buffer.

Some people seem to focus more on things like the short term (e.g. do I like where I live, does it have things I enjoy doing, etc etc). There's nothing wrong with that, we all will wake up one day and realise we're getting older and it's a bit late to do certain things now, but there's a balance somewhere.

Everything in every society is just "made up".

Sure, and some of those things were made up thousands of years ago and have proven to work well since. Others were made up in the last 30 years by global corporations trying to extract maximum profit as fast as possible, future be damned.

> I don’t know who came up with the “30% of your salary”

Well of course, it was "the experts". You know... "THE experts".

I wish I had $20 for everytime the media parrots something without every questioning it. And the masses nod mindlessly and think, "Yes, of course."

In this case... Landlords, banks and real estate agents - all with an interest in higher === better - are the likely candidates for "the experts".

You have no idea how clueless and privileged that idea is.

Apparently you think that number is meant to encourage engineers who just landed a 200k FAANG job to buy a McMansion to get up to 30%.

It's quite exactly the opposite: it's usually given as an upper limit to prevent people from getting houses they can't afford.

And it's increasingly unrealistic for low-income people in HCOL areas because even the cheapest available housing is more than 30% of their income.

As for who came up with it: it was originally an observation of what people were typically paying, which in the 60s became a limit for the price of public housing. And at that time it was 25%, changed to 30% in the 80s.

Source: https://www.huduser.gov/portal/pdredge/pdr_edge_featd_articl...

Huh? I didn't say it was legit. Actually...

You missed the obvious sarcasm.

You missed the bit about the mindless media repeating it and not asking how legit is.

The point about the banks, etc is that ALL those "experts" have incentives to get people to buy more than they can afford.

Come on man, the math was all there... just take a moment to add it up.

Oh wow. You missed my point completely.

I was saying that it IS legit.

And that your idea that it is propaganda to "get people to buy more than they can afford" is clueless and privileged.

30% is legit? Oh come on now. We're seeing that it's not. We're seeing that if that's the baseline, the starting point, then it's too easy / tempting for many to go over that. When that happens, it gets normalized and that's a free pass for leadership / politicians to not address the issue.

If 30% is housing, and 20% is healthcare (which keeps going up), and inflation is eating up more budget... What's left? Where is that increase in income coming from?

The point is 30% of income is a false god. It's for fools. It's at best a fax machine.

What part of "it's an upper limit, not a baseline" do you not understand? And an upper limit that people exceed not by choice but because there is no cheaper housing available. And the causes for that have absolutely nothing to do with the number.

Again, it is a very, very privileged position where you can suggest that people should just spend less than those 30%, because it shows your income is big enough that a smaller proportion of it is still enough to afford something.

You're naive.

What part of housing is priced such that 30% is the defacto baseline for most people, don't you understand? Individuals don't set the prices, the market does. And fyi home sellers and landlords love the phrase "what the market will bear".

Sure, if you have two six figure incomes in your household you can come in at 25% or 20%, but everyone else... 30% would be a God send.

Where and when did I suggest people just spend less? Again, I repeat, that 30% is a number used by people who... Wait for it... Make more money from higher prices. It's not the families setting that bar.

We're done here. You're so intent on picking a fight that you're ignoring everything I'm saying. This is not what I come to HN for. Thanks. Good night.

> Individuals don't set the prices, the market does.

Exactly. So why do you think the number is relevant in how actual prices are determined?

> Again, I repeat, that 30% is a number used by people who... Wait for it... Make more money from higher prices. It's not the families setting that bar.

And again, I repeat that is simply not true.

> We're done here. You're so intent on picking a fight that you're ignoring everything I'm saying.

You are describing your own behaviour.

Reply on news.ycombinator.com