APOCALYPSE NOT: Technically speaking, merchants are now allowed to add a surcharge for people using credit instead of cash as of today. There has a been a flurry of articles about this recently, but it’s much ado about nothing. If merchants started doing this en masse, then the credit card game would be a lot less rewarding. It’s not going to happen, though, and here’s why:
- “No extra fees” is a state of equilibrium. If everybody had a surcharge on credit cards, one merchant in a given niche could gain a lot of business by cheating and not charging an extra fee. Other merchants would be pressured to follow suit or lose business.
- Cash has costs too. Much is made of the few percentage points merchants pay for accepting credit cards, but cash has costs too–extra labor and increased theft, for example.
- People spend more when they use credit cards. Sure, merchants can save a few bucks by reducing fees, but they’ll also reduce the amount people will spend.
All of which is to say, lucrative points-earning opportunities will continue for the foreseeable future.
$10 OFF $20 at BARNES AND NOBLE: Toys and games only, here’s the printable coupon. Online codes are K9W7J4X and J7K3M8X. Lego excluded, alas. (H/T: Slickdeals)
MIDDLE CLASS IN MANHATTAN: One our my hobbies is reading about how awfully expensive New York City is and being thankful we don’t live there. Here’s the latest from NYC:
The average Manhattan apartment, at $3,973 a month, costs almost $2,800 more than the average rental nationwide. The average sale price of a home in Manhattan last year was $1.46 million, according to a recent Douglas Elliman report, while the average sale price for a new home in the United States was just under $230,000. The middle class makes up a smaller proportion of the population in New York than elsewhere in the nation. New Yorkers also live in a notably unequal place. Household incomes in Manhattan are about as evenly distributed as they are in Bolivia or Sierra Leone — the wealthiest fifth of Manhattanites make 40 times more than the lowest fifth, according to 2010 census data.
Though to be fair, there’s some historical perspective as well:
“Soon, there will be no New Yorkers,” proclaimed the Sunday magazine of The New York Times in 1907, in an article that detailed how families making $1,000 to $3,000 a year — $24,000 to $72,000 a year in today’s dollars — were being pushed out because of increasing rents, and servants’ wages, as well as the crushing cost of ice and coal. Adjusted for inflation, laundry alone for a family cost $115 a week. A pound of chicken? $8.08. Rent, on the other hand, for a “small, middle-class flat in a decent, but unfashionable locality,” would seem to be a bargain in today’s market, at the price of $272 per room per month.
In 1968, New York magazine documented the mad scramble for affordable apartments ina cover article detailing the extreme lengths to which average people went to secure one. “Surgeons have postponed operations, housewives have gone back to work, hippies have cut their hair and families have destroyed their pets,” the magazine reported. “Little hope is held out for the middle-income ($15-20,000 a year) people, career girls who do not want roommates and couples with more than one drawer-sized infant.” Brownstones that had sold for $125,000 in 1958, according to the article, were selling 10 years later for twice that much (in today’s dollars, a jump from $827,000 to $1.65 million).
Reports of the middle class’s demise also appeared in 1978, 1998, 2006 and 2009, when The New York Observer chimed in with “City to Middle Class: Just Not That Into You.”
The full article, though lengthy, is quite interesting. (H/T: Barry Ritholtz)
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