Pod Insights The Clark Howard Podcast 05.12.25 Income Inequality / Privacy Alert! Alexa Can Hear You About this episode The Congressional Budget Office update found the top 10% of earners in the U. S. have 70% of the nation’s wealth, possibly the greatest disparity in our history. Today, Clark discusses the severity of income inequality and its effects on our society. Also - if you have a smart device in your home, you might not realize some of the privacy concerns, especially with Amazon’s Alexa. Income Inequality: Segment 1 Ask Clark: Segment 2 Privacy Warning!: Segment 3 Ask Clark: Segment 4 Mentioned on the show: NYTimes: America Has Never Been Wealthier. Here’s Why It Doesn’t Feel That Way. How To Freeze and Unfreeze Your Credit With Experian, Equifax and TransUnion Understanding Home Equity Agreements Amazon Is Removing a Key Alexa Privacy Setting: Should You Worry? [The Washington Post] Alexa is getting creepier. Take this one step to improve your privacy. When Is the Best Day and Time To Call Customer Service? Clark.com resources: Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
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1:04 Speaker 02 I'm so glad you've joined us here on The Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. So, I want to talk about something straight ahead that is a fact. We have crazy income inequality in the United States. I want to talk about how that's affecting so much in our society. And then later, I want to talk about having an Amazon, I think the trade name is Echo? The one that has Alexa in its name? Hope I didn't set off your device.
1:46 Speaker 02 Something you gotta know about that device, I'm going to talk about later in this podcast and YouTube show. We've got such an odd thing going on in the United States.
2:02 Speaker 02 The wealth overall of the United States is by far the highest it's ever been. The United States, over the last many years, has outkicked almost every country on earth with growth of what's called per capita GDP. That's how much wealth the nation has per individual breathing in this country. The problem we've got is the division of that wealth has gone crazy skewed. And we've had other times in American history this has happened.
2:44 Speaker 02 But that's how, you can hear me talk out of both sides of my mouth, in almost the same Senate sometimes. I'll talk about, wow, you should know about this deal, and you can do this, and do that, and spend this money, and go there, and whatever. And then, a second later, I'm talking about people having trouble even paying their monthly rent, or mortgage, or paying bills of various types. So, the Congressional Budget Office recently put out an update that found that the top
3:20 Speaker 02 10% of earners in the United States have 70%, 7-0% of the nation's wealth. That may be the greatest disparity, maybe, in American history, because the stats back in the 1880s, 90s, when there were the, what we called the robber barons. I don't even know if we could equally compare the stats when we had such horrific income inequality back in the late 1800s. The bottom 50% of Americans now, according to the CBO, have 3% of the nation's wealth.
4:02 Speaker 02 That's why there's so many people, half the population, struggling so much every month.
4:12 Speaker 02 No Dollar General that sells generally to people at the lower end of the income scale is having to reduce the size of their packaging because people come in and they can't afford to buy the quantity of an item they're coming in to buy they bought before. And then other people buying these fancy fancy designer things. Do you know that Hermès, which is a brand that sells ultra-high-end, I hope I pronounced that right, they just push through big price increases because their target customer base,
4:52 Speaker 02 people at the ultra-high end of the income line, the demand's so high, they're like, "Okay, we're going to charge more." And a lot of their competitors have been raising prices. We are in such a split right now that leads to such division in society. I don't know exactly how we fix it. I don't know how we address it. I can tell you through history, conditions have changed over time and income disparity has narrowed, but that's no comfort to you if you're having trouble putting food on the table every day and paying rent every month and putting gas in your vehicle every
5:37 Speaker 02 time you have to fill it up. So as a man of privilege, I don't go to gas stations a lot because I drive electric. I've been driving electric for 14 years, but I rent cars like 30 times a year, more a year. And I go into gas stations and I watch people who are only putting in $2 or $5, which just is enough to get them back on the road going down the road. And then others, like me, we just fill it up and we just pay for it, tap at the pump. I mean, we really do have... This split and unfortunately, because people that are at the higher end of the income
6:21 Speaker 02 scale tend to live close to each other, hang out with each other and all that, there's a disconnect going on right now. So this is something as a society, we need to keep doing trial and error to narrow these gaps because this is not healthy for our society to have. It's great that we have done so much better overall than the rest of the world, almost without exception, but it's terrible that that wealth is not shared. I'm not talking about government forced redistribution or anything like that. I don't know exactly
7:02 Speaker 02 how you do it, how you fix it, but what we got right now isn't good.
7:08 Speaker 03 I know this was very much more serious, but I have to say you did pronounce Hermes correctly and you're definitely not wearing Hermes belt or have ever purchased anything Hermes. So I'm surprised. I mean, nor am I, but what is where's your belt from?
7:22 Speaker 02 It's probably a Kirkland signature.
7:24 Speaker 03 I'm sure it is. Yeah.
7:25 Speaker 02 Yeah. So you take all the clothes on my body and I got, I got $22 in clothes on my body, not including the belt or my shoes.
7:35 Speaker 03 Wow. Nice.
7:36 Speaker 02 I spent too much, didn't I?
7:39 Speaker 03 All right.
7:40 Speaker 02 Oh, by the way, you have not noticed after we got complaints that my
7:44 Speaker 03 You have a nice new shirt.
7:46 Speaker 02 Golf shirts were my Members Mark golf shirts had gotten really long in the tooth and were looking really worn. So I got the new Members Mark style from Sam's Club. They were $8 more than I paid for the last ones. It were six something.
8:04 Speaker 03 Very nice.
8:05 Speaker 02 Are you just saying that?
8:06 Speaker 03 No, I mean it.
8:07 Speaker 02 Cause I've been wearing them for weeks and you never noticed.
8:10 Speaker 03 No, I did. I did. But you had told me. So I just, I should have said something. I'm sorry, Clark.
8:15 Speaker 02 You should have said.
8:16 Speaker 03 They're very nice.
8:17 Speaker 02 I look so fashionable.
8:18 Speaker 03 You do. They're less like worn looking and yeah. Okay. We'll go to questions. Scott in Wisconsin says, I love this show and even have my college graduate daughter listening. My daughter has over $28,000 in student loans unsubsidized with interest rates of 3.73, 4.99, 5.5 and 6.53 for each of the four years. She graduated in four years from a big 10 school. Amazing. We, the parents, have the financial means to pay off our loans to help her jumpstart her post-college years without debt. While we paid all her other college expenses, she is an only child and we have over 2.8 million in assets and no other debt, with my wife at 58 and retired and I'm 56 and still working.
9:00 Speaker 03 We're frugal and we don't spend money on extravagant houses, cars, vacations, et cetera. I've read about taking tax breaks for student loan interest and feel that would help ease the pain of interest over the years. Although, should we, one, pay off the debt in a lump sum by giving her the money? Two, give her the money each month to pay her monthly payment of around $308 and let her deduct the interest on her taxes? Or, three, any other considerations?
9:26 Speaker 02 I would say you're in such good financial shape. And your daughter made it through in four years at a big state university, which almost no students do anymore. So she saved a whole year of expense right there. It takes six years, I think, often for a college student now to get through not working a job while they're in school. And you can afford it, particularly the 5%, the 5.5%, the 6.5%. Blow those out. And then I would say something else. Leave her responsible for paying the 3-point-something percent. So that she'll appreciate more that you wiped out three of the four years of student loans
10:11 Speaker 02 that were at the higher interest rates. If you just pay them all off, she's not going to appreciate it at all. So leave her with the one at the 3-point-something percent. Kill off the others and make it her, part of her budgeting that she service that and eventually pay it off. Just my thought, one parent to another, because I think then there's more appreciation.
10:37 Speaker 03 Michael in Georgia says, "I recently received an email from Capital One. It stated that my credit freeze must be removed to continue my application. The problem is, I had not applied for credit."
10:46 Speaker 02 Oh, boy.
10:48 Speaker 03 Luckily, I had credit freeze from all three credit bureaus in place. Then I added fraud alerts and contacted Capital One to let them know that the application for credit in my name was fraudulent. My question is, what else should I do to protect myself?
11:00 Speaker 02 You have done it, Michael. You have shown the power of the credit freeze. Because without that credit freeze, if you have good credit, that crook would have gotten it. And then you got a mess on your hands. Because let me tell you, when they successfully generate one app, they turn around in the next 48 or 72 hours, and they apply for credit all over the place before the credit reporting system catches up on it. And then you're chasing your tail for another year or two, trying to clean up all this credit obtained fraudulently. It was not your responsibility. So you did the greatest prevention there is.
11:44 Speaker 02 You set up credit freezes with the three bureaus. You've done your work.
11:49 Speaker 03 Kevin in North Carolina says, hey, Clark, I don't think I've heard you talk about a home equity agreement yet. Supposedly, you don't have payments, but you're giving up part or maybe all future value of your home. Is this a good thing?
12:02 Speaker 02 Yeah, it's known as a shared appreciation deal. Historically, they work many different ways. So Kevin, the way it works is you have basically an investor, or a group of investors as part of a syndicate, who subsidize your cost of living in a home. And you keep responsibility for taxes, maintenance, repairs, anything with the home. But they get a big chunk of future value of that home. So it's a way that, you're not hearing me say, yay, this is great. But it is an option.
12:44 Speaker 02 Because what it may do is it may make it possible for you to buy a home that you would not have been able to afford otherwise. It is your home to use, but you're basically in a partnership with someone else who is benefiting from the fact that they put up the money for a portion of the purchase of that home. So that you can get in a home that you wouldn't have been able to own at all otherwise. So that's the idea. Know the upside is you get in that home. The downside, you don't get a lot of that growth and you have a partner in the home
13:27 Speaker 02 who may not want to do things you want to do, or may not agree to things you want to do. Any shared appreciation deal, you need to hire your own real estate attorney to review the agreement and tell you the goods of it, and more important, the gotchas in that agreement. Coming up ahead, a gotcha from Amazon you need to know.
13:55 Speaker 00 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
14:26 Speaker 04 Low energy, unfocused, foggy, you might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body with a clinically proven electrolyte blend and no artificial colors or flavors. Great tasting hydration, no matter where you're going. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.
14:55 Speaker 02 All right. You know how every Amazon Prime Day mysteriously, the deals on Amazon sold items, not the ones sold by third parties. But overwhelmingly, there are various Amazon technology devices, tablets, Echo type devices that you say that word, A L E X A. I'm spelling so it don't trigger your device. Amazon sells all these devices. So they recently laid off a lot of people in that part of their company and discontinued a lot of the devices, but they sell these things because it's to their benefit. Why do you think Amazon is so huge in the home
15:39 Speaker 02 security camera business and sells those cameras many times at a potential loss? Just because if you're a big Amazon customer and you're having problems with porch pirates, they got that video from you of who the thief is. I mean, they're not dumb there. How did they get to be what the world's second largest retailer, whatever they are, by doing things that serve their interests? Well, now, if you have devices that you say A L A X A two, they're listening not just when you say that, but they're now requiring
16:19 Speaker 02 that if you are a plus user, that they get all your voice data, all of it. Used to be before I told you the option where you could opt out of it, they aren't allowing opt out anymore. So everything personal, everything intimate, every conversation, they're getting. I don't like that. I just don't like that kind of intrusion. We used to have one of those Google things you talk to in our bedroom area. And my wife, Lane, was like, get that out of here. You can put it in the kitchen. You can put it in the living room. It's not
17:01 Speaker 02 going in the bedroom. Smart wife, right? Because even though Amazon is listening, Google said they weren't. But can you trust that? So think about these devices that you bring in. And it really is great to be able, in the case with our Google thing, we got the photos, we can see what's going on. And we'll see an old picture like this morning when I was getting up, my wife saw a picture that was from 15 years ago of our kids, our two younger kids. And she said, Hey, I want that picture. I love that picture. It's a picture of the two younger kids with me.
17:43 Speaker 02 And so I was able to send it to her and she was so happy. But it's not where anybody can be listening to anything we don't want them to be listening to. So think about that with any of these devices you bring in. It can be so nice to have, but you never know what you're talking about that they're hearing. And remember the scandal with Amazon? When employees were having a fun time listening to people's private conversations? And then I did the thing about how you could do the opt out? And now they took away the opt out. What are you doing there at Amazon?
18:22 Speaker 03 Yeah, okay.
18:23 Speaker 02 Do you use an A L E X A device?
18:26 Speaker 03 I use a Google device. And I do know like to an extent like our everything we use that if there are voice commands, they have to be listening for those voice commands. But yeah, there should be ways to turn off certain things, I think. Okay, well, Brian in Georgia has another beef with Amazon. So Brian in Georgia says, I hope this email will be a beneficial public service announcement for Amazon Prime members. I've been a subscriber for years and have been pleased with their shopping experience. As I'm sure you're aware, Amazon Music is something you have access to by being a Prime member. I rarely use this service and was surprised to see an Amazon Music charge on my credit card. I found out I was being charged for the Music Unlimited, an upgrade I never asked for. I called Amazon, they said they would refund the money within five to seven business days
19:11 Speaker 03 and assured me the unlimited music was canceled. I received and saved an email confirmation regarding the refund. A month went by with no refund. I called customer service back and they said they didn't want to honor the promised refund. I referred to the saved email and after a lengthy discussion, they said that they would make an exception and refund the promised amount.
19:31 Speaker 02 Wait, wait, wait, wait. Make an exception? Come on.
19:34 Speaker 03 They also confirmed that the unlimited upgrade was canceled. We'll see if the second attempt works.
19:42 Speaker 02 You know, it really is true that where the rubber meets the road is when a customer has a problem with your company, how do you handle it? And if you handle it well, you create a more loyal customer. If you provide them customer no service, you alienate them and potentially lose them. Now, what's interesting is not a word from Brian that he's willing to live without Amazon. But I think about the ultimate power you have with any company, when they treat you like dirt, is you kick them out of your life. You couldn't live without Amazon, though, could you?
20:22 Speaker 03 I could. I could live without most things.
20:24 Speaker 02 You sure?
20:25 Speaker 03 Yes.
20:26 Speaker 02 You sure you could live without Amazon? I don't know. I see you shaking just at the thought.
20:30 Speaker 03 No, stop. Okay. Marian, Wisconsin, says, "I'm the durable power of attorney for my elderly aunt who suffers with Alzheimer's. She's in a memory care facility in the state of Minnesota. Beginning in January, the facility started charging a $30 fee per month to submit the billing to long-term care insurance. That is $300 a year. Being the frugal person that I am, I called her long-term care provider and asked if I could submit the bills myself. They do not allow this as they are fearful of insurance fraud. Is this fee legal? Isn't it part of doing business? Please also note that the facility has raised its rates in excess of 10% every year, always greater than the rate of inflation. Is there anything I can do?
21:12 Speaker 03 The long-term care company said that they have never heard of any other facility charging this fee. The facility claims it's standard practice, although they did charge it in the past, and the facility my own mother is in does not charge it."
21:25 Speaker 02 So, whether it's legal or not, depends on, you live in Wisconsin, but your aunt is in Minnesota, so you would contact Minnesota. They will have a regulatory body that oversees memory care facilities, and they will be able to tell you if it violates any statute in the state of Minnesota. Okay, so there, there is a cost to a facility for handling this billing, but the biggest beneficiary of that process is the facility, because they're getting paid.
22:07 Speaker 02 By the insurance, by the long-term care insurance. And they're cutting off their own nose to spite their face because they got somebody who's a reliable payer month after month. And so even if the state of Minnesota says there is no law prohibiting it, it's a dumb business practice because it alienates you and this is a reliable revenue stream that they're charging you a junk fee for. It's weird.
22:39 Speaker 03 Corey in Ohio says while applying for a mortgage recently, the loan application our lender provided listed one of our credit cards twice. Upon further investigation, the first listed account is for the first 12 digits of the card only. The second listed account is for the last four digits of the card only. When we inquired with our lender, they were able to provide additional information that the first 12 digits were being reported from two of the three major bureaus, with the third bureau reporting the last four digits. In short, our balance is being double counted. Thankfully, we pay off our cards every two weeks, so the balances are small, but I wonder how one would go about reconciling this issue.
23:17 Speaker 02 So this is, Corey, something that the mortgage underwriter would normally be familiar with. The way different loans that are outstanding are listed on different credit reports can vary. As you said, in your case, it's listed one way on two reports and then a third way on the third. So when, when you're going through mortgage underwriting, they go through a different kind of process. It's a try report and it's one that's put together for the mortgage underwriter that pulls all three credit bureau reports and puts them together on one master report.
23:59 Speaker 02 Normally, a credit issuer for most anything else, car loan, credit card, home equity line of credit or whatever, they're only pulling one credit report from one bureau. This kind of thing with things double posting or even potentially triple posting, to my knowledge, only occurs with mortgage underwriting and mortgage credit reports. So in terms of... Harm to you, probably none from this. A mortgage underwriter might ask a question, hey, why do you have two different accounts with this card company or whatever? But it should not be a disqualifier on what are known as ratios, how much debt you're
24:44 Speaker 02 carrying, because it is a known thing to a mortgage underwriter about the discrepancies and how something might double or triple post because of the way it's reported to the three major credit bureaus. I want to thank you so much for your question, all the questions we've had today, and you being with us on our YouTube show and our podcast. And if you have a question for me, know you can post it at Clark.com/ask. Know that the reason we're here is we're all here to serve each other.
25:23 Speaker 02 We're all here to help each other, to impart knowledge, wisdom to each other, so that we are in a better position to save more and spend less and avoid getting ripped off. Tomorrow, our Ask an Advisor podcast, and then I'll be back with you on Wednesday. Have a great day.
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