Another Sensationalistic Fake Tip Story?

Yahoo reported this story Person claiming to be pastor leaves waiter note: ‘I give God 10%. Why do you get 18?’

In short the story claims a pastor left a note on a tip saying ... oh yeah the title of the article actually pretty much sums up the story doesn't it?  

I distinctly remember another story not too long ago that found its way on Yahoo news which was about a rich 1%'er who left a 1% tip with a note "get a real job".   Then the day after that the story was revealed as a hoax.   It isn't hard at all to fake a tip and write something controversial and then apparently the 'news' will pick it up and run with it and 1000 people on the internet will get indignant.

I smell something fishy.   Lets wait and see if tomorrow or the next day this alleged zero tip receipt from the pastor is revealed as just a photoshopped hoax...
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Shadowstats is Wrong on Inflation

Shadowstats is a website and newsletter that claims that the government inflation numbers are wrong.   The Shadowstats site claims the government is incorrectly calculating inflation and that the data is intentionally manipulated by the government for political reasons.  


They say in their 2004 article "GOVERNMENT ECONOMIC REPORTS: THINGS YOU’VE SUSPECTED BUT WERE AFRAID TO ASK!" on the consumer price index that :

"Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 7% per year."

They have also been predicting hyperinflation to occur within the year since 2008.

If you use some common sense and a little math I think its relatively easy to refute the claim that inflation is really 7% higher than government reports.

Lets just look at the past 10 years.   The governments BLS inflation calculator says that over the past 10 years inflation has been 28% total or about 2.5% compounded annually.    Shadowstats would have us believe that this number is 7% lower than the real figure so they are claiming that inflation has really been more like 9.5% a year.    Ok, but what does 9.5% annual inflation look like?   Over 10 years an annual inflation rate of 9.5% would cause prices to be 2.48 times as high.

Now comes the common sense part:   Has the price of EVERYTHING gone up 2.5 times in the past 10 years?   Its true some things have more than doubled.  Gasoline has gone up a lot (and then down a lot then up a lot then down a lot then up a lot)  It seems that health care and college tuition have gone up substantially too.     But there are clearly many things that have NOT doubled in cost or even come close.

Housing certainly has not doubled in cost in the past 10 years.   According to the Case-Shiller housing index  the composite index for 20 markets went from 132 to 144 between Oct. 2002 and Oct. 2012 (latest data).   Thats only 9% increase over 10 years.  

2003 Toyota Camry had an MSRP of $19,000 to $25,000 range.   Todays 2013 Toyota Camry has MSRP range of $23,000 to $30,000.    Thats more like a 15-25% increase, and clearly not double.   This is just one example but I'm sure you'll find similar pricing changes across most new cars.

Health insurance premiums have more than doubled in the past decade.  See figure 15 of this KFF report.  But thats an exception and even that hasn't gone up the 2.5 multiple that Shadowstats claims would demand.

Look at the typical household budget and you'll see that housing and transportation are the two largest expenses and those costs have certainly not gone up anywhere near the 9.5% annual rate.  In fact in the past 10 years they've gone up closer to 1-2% rates.    Its not much of a stretch to see that if the top 1-2 expenses haven't doubled then all spending has not doubled either.   Only the extreme worse items have doubled in the past 10 years.   Thats the exception and not the norm. 

Shadowstats is wrong on inflation.

Why Some People Think Landlords Are ALL Evil Slumlords

Excuse me while I step on my soap box...

We often see people who have negative viewpoints of landlords and who seem to think landlords are all villainous slumlords.  I'm a landlord and my father has been a landlord across four decades so I have some experience from the landlord perspective.    Naturally I may get a little offended when I see random people disparaging landlords as a group of heartless opportunists.   But its a somewhat common thing and I think it has a logical reason.  I think the general negative view of landlords comes from peoples experiences and perspectives.  

Lets say that 10% of landlords are awful and 10% of renters are awful.   Thats just an arbitrary assumption for arguments sake.   Almost everyone rents a home at some point and most people end up having a few rentals in their lives.   Its not at all unusual to live in 5-10 different rental properties.   Its therefore common for renters to end up facing 1-2 awful landlords.   So most people rent and most people end up with a bad landlord at some point.   You may luck out and have only bad landlords.  This ends up resulting in a lot of people with negative experiences with  landlords.   Either because 1-2 of their landlords across 5-10 properties was bad or they lucked out and had 2 bad landlords in 2 rentals.   It is statistically likely that most people have had a bad landlord at some point.   That tends to sour peoples view of landlords and they make negative generalizations of landlords.

On the other hand very few people are landlords.  I'd guess around 5-10% of the population are landlords.   Landlords will see many renters over time and get exposure to good the bad and the ugly among tenants.  But most people have no experience at being a landlord and do not see the landlord perspective.

Therefore the end result is most people rent at some point and experience a bad landlord.   So its easy for people to end up with a negative impression of landlords all due to 10% awful landlords which is actually equal to the 10% awful renters originally assumed for this discussion.

Now I'm not saying that 10% of landlords or tenants are awful, thats just a made up number to illustrate the example.   There may indeed be a higher percentage of bad landlords out there. I doubt there are a lot of broad objective data on the quality of landlords.   I did find one study from a program at a University that surveys students who rate local landlords at the University of Pennsylvania.   They have a total of 58 landlords rated and the average score is 3.68 out of 5.   20 of 58 landlords rated 4 or higher while only 11 landlords had scores under 3.     Thats almost twice as many good landlords as bad landlords in this particular survey.   Of course this is a pretty small sample so its hard to draw any general conclusions but its at least one data point supporting the idea that most landlords aren't awful slumlords.

Another reason that landlords may have a general negative reputation is the situation in general.   Landlords are occasionally faced with the difficult task of having to evict a tenant.  Evicting someone is not something a landlord really wants to do.  Trust me as a landlord I'd prefer to never have to evict anyone and I'd much prefer they all pay their rent promptly and never break their lease terms.   Eviction isn't something a landlord in their right mind would do without good reason.  Eviction is a costly, time consuming bureaucratic hassle.   Simply put its easy to view landlords as the 'bad guy' if they are the ones 'putting people out on the street'. 

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Infation versus Wages for 2002 to 2011

I've seen a couple blogs talking about wages versus inflation.   Theres a concern lately that wages aren't keeping up with inflation.   Personally every individuals wages and expenses take different paths so what matters to you is your own wage history and your own spending.    Looking at national averages really only gives a very abstract situation.  Still you don't want the national situation to be negative in general.

I got data on wages and inflation from the BLS.

Here's how the wage and benefit costs have changed annually versus inflation :

The cost of wages and the cost of benefits are different for employers.   Employees usually only really look at or even see the wages portion.   You know your hourly pay or salary.   However most employees also get substantial compensation via benefits which our employers pay for.   The cost of the benefits to employers may include reduction in benefits, so the % cost here isn't too useful from the employee perspective.  

If you just look at wage change minus inflation change then its still been generally positive :

If you add up the cumulative changes from 2002 to 2011 then wages went up about 28.5% on average and inflation went up about 26.9%.   The total for the latest 3 years shown isn't as great from 2008 to 2011 wages were up 8.1% but inflation rose 8.4%.   So we lost a little ground in the latest 3 years.

 Of course these numbers don't mean much to an individual who may or may not have gotten a wage increase.   Also the numbers don't really say what the  "average raise" was but instead show the average in wages paid.   Theres a difference there.   A 3% increase in wages doesn't mean people got 3% raises, but that total wage spending was up 3%. 

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