Struggling on $500,000 a year, Bloomberg style

It's a standard story. Banker who enjoyed six-figure salaries and hefty bonuses all through the good years loses his job and is suddenly out on the street. What to do next? Bloomberg Magazine offers this sympathetic profile of David Roberts, an out-of-work economist.

"Roberts never earned millions from Wall Street. In his best years, he made $500,000, which provided scant cushion against prolonged unemployment or career upheaval. His salary is more representative than those of the chief executive officers and hedge fund managers who have been pilloried in congressional hearings."

So Bloomberg thinks that $500,000 a year provides "scant cushion" against unemployment. Do they point out that this is ten times the median household wage of the United States? Or that this would put Roberts very comfortably in the top 0.5% of US earners? No.

It's hard to have much sympathy for somebody that has worked for decades on Wall St that has spent and invested their very large salary so irresponsibly that they have no buffer against a couple of years of unemployment. Of course this is the story that Bloomberg is missing. All of these people thought the good years would never end, and structured their entire financial lives around that fiction. Hence the sudden difficulty paying off ridiculously large mortgages, etc, when the music stopped.

The mess that is US health care

The inefficiencies and inequities of the US health care system are legendary -- the country spends 15% of its GDP on health care (vs an OECD average of 8.4%), and despite that, is ranked 79th among 191 nations by WHO in terms of "overall level of health". Infant mortality rates are higher than all other developed countries. And 15% of the population is uninsured. One of the bizarre quirks of the US sytem is that it is employment based; lose your job, and you're out of health insurance, just at the time when you're likely to need it most.

And here's another strange quirk of the employment-based insurance system, courtesy of Princeton's Uwe Rhineheart on the NY Times' Economix blog:

"...the group health-insurance premiums employers pay to private insurers are “experience rated” over that employer’s group of employees. This means that the group premium is based on the claims experience – that is, the health history — of just that small group of employees. For small employers, it can mean that if serious illness befalls one or several employees in the group, it can drastically and unpredictably drive up the premium for every employee in the group."

Astounding.