Overview of The Indicator from Planet Money
This episode of The Indicator from Planet Money (NPR) covers three short “Indicators of the Week”: falling real wages for low- and middle-income households, a floated proposal for 50-year mortgages in the U.S., and new research showing riders could save money by comparing prices across rideshare apps. Hosts Waylon Wong and Darian Woods explain the data, put figures in context, and give practical takeaways.
Key takeaways
- Low-income U.S. households saw real wages fall about 2% over the last year; middle-income households fell about 1% after inflation, while high-income earners saw roughly 1% real wage growth.
- The idea of a 50-year mortgage lowers monthly payments but dramatically increases total interest paid — roughly $400,000 more in the AP example used — and slows equity accumulation.
- A working paper finds many riders only open one rideshare app; switching between Uber and Lyft when cheaper could save NYC riders an estimated $300 million annually (about a 14% saving per ride on average).
Segment summaries
Falling real wages for low- and middle-income households
- Source: Bank of America report cited by the hosts.
- Findings: After accounting for inflation (~3%), low-income real wages are down ~2%, middle-income down ~1%; high-income up ~1%.
- Framing: Described as a “K-shaped” recovery — gains concentrated at the top while others stagnate or fall — which helps explain consumer sentiment and uneven spending patterns.
50-year mortgage proposal (housing finance)
- Context: Social media posts by President Trump and FHFA director Bill Pulte sparked discussion of 50-year mortgages.
- Example calculation (AP analysis):
- Home price: ~$415,000, 10% down, interest ~6.17%.
- 30-year mortgage total payments ≈ $820,000.
- 50-year mortgage total payments ≈ $1.2 million — about $400,000 more.
- Drawbacks: More interest over life of loan, slower equity build-up; typical first-time buyer age ~40 means long-term indebtedness into old age.
- Status: Administration language shifted toward “portable mortgages” as an alternative; 30-year likely to remain dominant.
Rideshare price comparison and consumer behavior
- Study: NBER working paper by Fawcett, Luca, and Ashu.
- Main finding: In NYC, passengers spend ~$300 million/year more because most users check only one app (Uber or Lyft) rather than comparing both.
- Behavior: Only ~1 in 6 users open both apps on a given day; mobile browsing reduces comparison due to smaller screens and friction.
- Potential savings: Average per-ride savings about 14% if people consistently choose the cheaper app.
Data & notable figures
- Inflation referenced: ~3% (context for wage changes).
- Real wage changes: low-income −2%, middle-income −1%, high-income +1% (year-over-year, inflation-adjusted).
- Home example: $415,000 purchase, 10% down, 6.17% rate → $820k (30-year) vs. $1.2M (50-year).
- NYC rideshare overspend: ~$300 million/year missed savings.
- Average rideshare saving if comparing apps: ~14% per ride.
- Typical U.S. first-time homebuyer age: ~40.
Recommendations / Action items
- If shopping for rideshares: open both Uber and Lyft (or compare via aggregator) — you may save around 14% on average.
- If evaluating long mortgage terms: calculate total interest and equity timeline, not just monthly payment; be wary of very long-term loans that leave borrowers indebted late into life.
- For policymakers and analysts: monitor distributional impacts (K-shaped recovery) — aggregate growth can mask declines in low- and middle-income households.
Implications & context
- The wage dynamics underscore growing inequality: strong markets and rising asset prices can buoy high-income households while wage stagnation and inflation squeeze others.
- Proposals like 50-year mortgages may increase near-term affordability but likely shift costs to long-run interest burdens and slower wealth-building, raising distributional and financial stability questions.
- Small behavioral frictions (not comparing apps) create sizable aggregate waste; digital design and consumer nudges could capture savings at scale.
Notable quotes
- “This whole phenomenon is known as a K-shaped economy.” — on diverging income trajectories.
- “With a 50-year mortgage, you are looking at total house payments of $1.2 million. That's like $400,000 more. That's a whole extra house.” — on long-term cost of 50-year loans.
- “Check both apps, folks. Check both apps.” — practical takeaway for rideshare users.
Produced by NPR’s The Indicator from Planet Money; episode hosts: Waylon Wong and Darian Woods.