I recently saw a video named "I Took a Millionaire Inside a Homeless Man’s Life" on YT and I was shocked that in the richest country of the world people can be so poor. If that veteran with health issues served a poorer country like Finland, he would probably be living in a government-paid apartment and not in the street.
For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing sequential waves of lower and lower ‘quality’ consumer credit (such as the subprime tranches popularized by the Big Short). That they’ve reached the point where they’re targeting advertising of grocery debt towards the half of the country’s population that could not afford food, medicine, and shelter without debt suggests that we’re nearing the limits of what the latest wave can solve. There certainly isn’t much runway left if they’re down to loans for utilities. So, the underlying question raised by this for me is:
What will happen to the workforce when BNPL debt runs out?
This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan.
If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
I'm just evaluating the claim that household income has deflated for 50 years. So I took the start of the data series at ~60k and compared it against the latest datapoint at ~80k. So I concluded that the data does not support your claim that household incomes have deflated for 50 years. I have no position on how household income influences BNPL.
What basket of goods does your source use for determining income in real terms? The ratio of money on essentials versus luxuries has changed over the past few decades, and it's done so unevenly across the population. For example, a young person looking to find a place to live today is going to face astronomically higher rents while someone who bought 30 years ago in a place like California that caps property tax growth may find that their monthly (or total over a long time) housing cost is vastly lower.
Whether real wages have gone down depends on what you use as a benchmark for said wages.
You can look at the linked page. It uses "Income in 2024 C-CPI-U (2000-2024) and R-CPI-U-RS (pre-2000) adjusted dollars." I would be interested in a dataset that shows deflated household income over this same period using a reasonable basket of goods. The FRED dataset shows an increase of roughly a third. It would take a very large adjustment to knock that down to significantly negative growth.
While we can find extreme examples, we should be hesitant to conclude that they are a representative sample of the population. We should let outliers update our beliefs about means and medians very little to none for population level values.
What analysis that has been done of disparate inflation points out:
> The cost of medical care has more than quintupled since 1983, growing almost twice as fast as the overall price level. The BLS calculates that people 62 and older devote 11 percent of spending to medical care, while the general population devotes 8 percent. Figure 4 shows basket-share differences between older adults and the general population, and the price changes for those categories over the past 10 years.
Loading figure 4...
> Older adults also spend considerably more on housing (49 percent versus 45 percent for the general population). They spend relatively less in other major categories, including food and transportation, that had lower rates of inflation than medical care and housing.
I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent seems like a colossally bad idea.
In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".
Saying "people should be free to get loans that fit their circumstances" implies a level of financial literacy that simply does not exist in this country.
You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of.
If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.
I respect that position, and you're right that not everyone is smart enough to make good choices for themselves. I don't carry a balance on my credit cards, which makes me somewhat smart, but I also don't follow all the subreddits about maximixing credit card points, moving balances from here to there, etc. Some people might look down on me for "leaving money on the table" in that regard. I could probably make a thousand dollars a year if I were more informed/aggressive.
I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization.
I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
I see both sides of this argument and am really not sure which side I land on. But I wonder if this fits into things like driving, where hey - done recklessly this is dangerous to yourself and others around you, so we require some level of targeted education (e.g. a license). Then if you choose to be reckless anyway its a bit easier to say "it was your own fault".
I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what.
I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
>" implies a level of financial literacy that simply does not exist in this country.
Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles.
Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
Maybe you were lucky to be raised into financial literacy and only circulate around other people who have, and so can only imagine -- with charity -- what other people must be thinking when they take loans.
But others here have been truly naive themselves or have journeyed with intimacy and openness beside a parent, partner, or friend who really just doesn't get it.
The reality is that there are a lot and lots and lots of real people in the real world who sincerelt just don't understand the terms they're agreeing to, how their own finances work, what's plausible in their own financial future (near or long term), etc -- and the companies the design and promote convenience loans know this and they target these people like sharks hunting prey.
They use any and every trick they can get away with to lure these naive people into agreements for which all outcomes (payment or default) favor the shark.
Without regulation of both loan design and presentation, lending naturally become a vehicle usury, vaccuuming assets and opportunity from the many earnet people who will always be too credulous, too trusting, too naive, or too desperate to resist.
Everyone in the demographics most likely to buy these financial products has seen this stuff play out many times by adulthood. They're not stupid or ignorant, or at least not in those ways. They know how it all plays out or how the math maths. They buy these products anyway for human poverty trap incentive to not make good decisions because it won't actually change anything type reasons.
Regulation won't change the fundamental economic reality of those living paycheck to paycheck. It'll just change the form those hardships take.
Be careful of who is looking down their nose at whom because my words come from having personally bailed out people who genuinely did not have the capacity to make sound financial judgements.
I'm not making judgments of the people you're speaking down about, I'm making judgements of a nation utterly failing to prepare its citizens for the financial realities of our world. It's not a personal failing for hundreds of millions of people to be financially illiterate, it's a failure of society and those elites who like to gaze down at the dirty peasants for not knowing better.
Many forget that the other side of the "personal responsibility" coin is "social responsibility". Often the ones invoking the former can't even conceive of the latter.
There is an element of truth to what you say, but I also think you're being dismissive. It _doesn't_ exist today. For one simple example: how many times have you heard people talk about payraises etc., "bumping me into a higher tax bracket so I actually lose money"? I've probably explained it dozens of times to people I consider entirely intelligent - many of them believe there's this little window at the border of each taxation tier that makes no sense to be in.
> In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.
> But using them to pay for utilities or rent seems like a colossally bad idea.
You_Dont_Say.gif
As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away.
Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.
You can use the same to argue for "paycheck advance ursery", because the alternative to that is borrowing from the mob, or not borrowing anything at all and being thrown on the streets.
Another alternative could be implementing reasonable and toothy checks on corporate malfeasance like price fixing, rent-seeking, wage theft, and wage suppression such that the lower class can actually afford to live in society.
To that point, we planted that tree a hundred years ago. Someone cut it down 50 years ago because they didn’t understand why it was there - so yes, the best time to plant the tree was 50 years ago, we should plant it today, and also let’s maybe take the axes out of the hands of the idiots who cut our tree down the first time, too.
I see no path for how this could/would happen that doesn't wind up with BigCo saying "our obvious evil is complaint because lawyers and engineers and experts we paid off say X Y Z" and any medium or small business that could ever threaten them gets screwed status quo that we currently see with every other area of compliance.
The next best option is something like begging your friend/relative for the money they were gonna use for rent. None of the options in these situations are good.
For a while, I volunteered with a social services agency that had a deal with the power company where we could directly cover electric bills for people who were in danger of being disconnected. Nobody wants to lose their electrical power; in the desert it's kind of essential to keep the A/C and refrigerator going.
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
Then everything includes itself in power,
Power into will, will into appetite;
And appetite, a universal wolf,
So doubly seconded with will and usury,
Must make perforce a universal prey,
And last eat up himself.
Payday loan places don't know what you're using the cash for. They just give you a cash advance that you can spend on groceries, rent, drugs, or whatever else you want.
BNPL platforms know what you're spending on, and whether it's a one-time expense that you're spreading out, or a rent/utility payment that's going to come due next month as well.
If you have to take a loan to buy food or medicine, you are already at the bottom. Because you need to repay the loan with an interest next month, and you will have even less money left.
There’s something in that about the nature of predators - you don’t actually get mad at the wolf for eating the chicken, it’s what the wolf does, just like eating the worm is what the chicken does and eating your garden fruit is what the deer do. You don’t get mad at the wolf, you either build a fence or you kill the wolf.
Banks varied in their philosophy of interest rates, minimum monthly payments, and so on. None of that mattered to Bud. What mattered was what they would do to him if he got into arrears, and so after he had allowed a decent interval to pass pretending to listen very carefully to all this crap about interest rates, he inquired, in an offhanded way, like it was an afterthought, about their collection policy. The banker glanced out the window like he hadn't noticed.
The soundtrack segued into some kind of a cool jazz number and a scene of a multicultural crew of ladies and gentlemen, not looking much like degraded credit abusers at all, sitting around a table assembling chunky pieces of ethnic jewelry by hand. They were having a good time too, sipping tea and exchanging lively banter. Sipping too much tea, to Bud's suspicious eye, so opaque to so many things yet so keen to the tactics of media manipulation. They were making rather a big deal out of the tea.
He noted with approval that they were wearing normal clothes, not uniforms, and that men and women were allowed to mingle. "Peacock Bank supports a global network of clean, safe, and commodious workhouses, so if unforeseen circumstances should befall you during our relationship, or if you should inadvertently anticipate your means, you can rely on being housed close to home while you and the bank resolve any difficulties. Inmates in Peacock Bank workhouses enjoy private beds and in some cases private rooms. Naturally your children can remain with you for the duration of your visit. Working conditions are among the best in the industry, and the high added-value content of our folk jewelry operation means that, no matter the extent of your difficulties, your situation will be happily resolved in practically no time."
"What's the, uh, strategy for making sure people actually, you know, show up when they're supposed to show up?" Bud said. At this point the banker lost interest in the proceedings, straightened up, strolled around his desk, and sat down, staring out the window across the water toward Pudong and Shanghai. "That detail is not covered in the brochure," he said, "as most of our prospective customers do not share your diligent attention to detail insofar as that aspect of the arrangement is concerned."
He exhaled through his nose, like a man eager not to smell something, and adjusted his goatee one time. "The enforcement regime consists of three phases. We have pleasant names for them, of course, but you might think of them, respectively, as: one, a polite reminder; two, well in excess of your pain threshold; three, spectacularly fatal."
Bud thought about showing this Parsi the meaning of fatal right then and there, but as a bank, the guy probably had pretty good security. Besides, it was pretty standard policy, and Bud was actually kind of glad the guy'd given it to him straight. "Okay, well, I'll get back to you," he said. "Mind if I keep the brochure?"
The Parsi waved him and the brochure away. Bud took to the streets again in search of cash on easier terms.
What will happen to the workforce when BNPL debt runs out?
https://fred.stlouisfed.org/series/MEHOINUSA672N
This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan.
If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
Whether real wages have gone down depends on what you use as a benchmark for said wages.
The federal reserve even has an article about this topic: https://www.federalreserve.gov/econres/notes/feds-notes/diff...
What analysis that has been done of disparate inflation points out:
> The cost of medical care has more than quintupled since 1983, growing almost twice as fast as the overall price level. The BLS calculates that people 62 and older devote 11 percent of spending to medical care, while the general population devotes 8 percent. Figure 4 shows basket-share differences between older adults and the general population, and the price changes for those categories over the past 10 years. Loading figure 4...
> Older adults also spend considerably more on housing (49 percent versus 45 percent for the general population). They spend relatively less in other major categories, including food and transportation, that had lower rates of inflation than medical care and housing.
https://www.minneapolisfed.org/article/2024/breaking-down-in...
In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".
You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of.
If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.
I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization.
I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what.
I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles.
Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
But others here have been truly naive themselves or have journeyed with intimacy and openness beside a parent, partner, or friend who really just doesn't get it.
The reality is that there are a lot and lots and lots of real people in the real world who sincerelt just don't understand the terms they're agreeing to, how their own finances work, what's plausible in their own financial future (near or long term), etc -- and the companies the design and promote convenience loans know this and they target these people like sharks hunting prey.
They use any and every trick they can get away with to lure these naive people into agreements for which all outcomes (payment or default) favor the shark.
Without regulation of both loan design and presentation, lending naturally become a vehicle usury, vaccuuming assets and opportunity from the many earnet people who will always be too credulous, too trusting, too naive, or too desperate to resist.
Regulation won't change the fundamental economic reality of those living paycheck to paycheck. It'll just change the form those hardships take.
I'm not making judgments of the people you're speaking down about, I'm making judgements of a nation utterly failing to prepare its citizens for the financial realities of our world. It's not a personal failing for hundreds of millions of people to be financially illiterate, it's a failure of society and those elites who like to gaze down at the dirty peasants for not knowing better.
Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.
You_Dont_Say.gif
As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away.
Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.
I’m all for major reform, but I am suspicious of “instead of the small fix, do the big fix”.
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
BNPL platforms know what you're spending on, and whether it's a one-time expense that you're spreading out, or a rent/utility payment that's going to come due next month as well.
(And also, though I don't begrudge them much, also, a special hell for those who offer this up to companies for a cut).