8 ms·
A single mother working as a waitress at Denny's in the 1980's had more spending power than a college educated cubicle drone in 2019 Do you have any source to
by xyzzyz 7y ago
A single mother working as a waitress at Denny's in the 1980's had more spending power than a college educated cubicle drone in 2019
Do you have any source to support this? Because real median personal[1] income went up almost 50% since then[2].
[1] — don't confuse it with real median household income, which didn't grow nearly as much, because of a significant rise in single-person households which pushes the median down a lot.
[2] – https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N
- crooked-v 7y agoFor some simple examples, inflation-adjusted home prices have gone up by a factor of 6 and inflation-adjusted education prices have gone up by a factor of 3 over the past few generations [1], while inflation-adjusted average wages have only gone up by $2/hour [2]. That single mom would have had a dramatically easier time providing housing and education for kids even with lower purchasing power for most consumer goods. [1]: https://www.cnbc.com/2017/11/29/how-much-college-tuition-has-increased-from-1988-to-2018.html https://www.cnbc.com/2017/11/29/how-much-college-tuition-has... [2]: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
- internet_user 7y agothat just means a single mother today working the same job would be able to afford fewer things than 20 years ago. where is the comparison with cubicle drones?
- crooked-v 7y agoIf a cubicle drone is making twice as much money in adjusted terms but has to pay three or four times as much for housing, they could well be coming out behind in the equation.
- TremendousJudge 7y agoOne thing that I find amazing about Americans is that most of them don't understand inflation at all. It's uncommon to see any mainstream source talk about inflation-adjusted values when referring to past numbers. This becomes clear when for instance box office numbers become a conversation topic -- nobody really stops to consider how comparing films from 20 years ago with films of today is just really a measure of how money loses its value and therefore movies make more money than before
- travisjungroth 7y agoThe box office thing is a game, and the game isn’t fun when Gone With The Wind will never be defeated.
- selectodude 7y agoThe new Avengers movie is already #5 (inflation adjusted) and it's only been out for a little over three weeks.
- kaesar14 7y agoThree weeks pretty much mean the lions share of the box office take is in already.
- asdff 7y agoIt's still a fun game when you can double to quadruple your investment
- challenger22 7y agoThey could, but most people are coming out ahead now. That is more relevant. Turns out that when some consumption categories outpace inflation, the people that consume the most of those categories pay more!
- eli_gottlieb 7y ago>that just means a single mother today working the same job would be able to afford fewer things than 20 years ago. That's a pretty bad indictment of our economic structures!
- schintan 7y agomany of the problems in this world can be explained by one thing : too many people.
- Miner49er 7y agoNo, GDP per capita has doubled since the 80s. We have more wealth per person then ever in history. The problem is wealth distribution.
- gizmo686 7y agoExcept our per capita productivity has gone up, and we are not facing any fundamental shortages.
- ac29 7y agoThey're not making any more land in high-demand areas.
- gizmo686 7y agoHigh-demand areas aren't (generally) high demand because of intrinsic qualities. They are in demand because of the people and social structures that are already there. It is not inherently the case that there is a fixed amount of high-demand areas, that is just how we are set up politically at this point in time.
- imtringued 7y agoThat doesn't mean it is impossible to zone for higher densities.
- prklmn 7y agoI think institutional corruption is a much bigger problem than population size for the US.
- Miner49er 7y agoAnother thing to note: Real GDP per capita has basically doubled since 1980, but that increase in wealth isn't being seen by the average person, as your data shows.
- rukittenme 7y agoYou're not accounting for the higher interest rates of the 1980s. Which home would you prefer to buy: $150,000 at 15% over 30 years. $350,000 at 4% over 30 years. Hint: they both have approximately the same total loan cost and payment. You can do this calculation with your parents. My home cost $350k at 3.8%. My parents bought my childhood home for $88k at 8%. Adjust my parents' home price for inflation and run the result through a mortgage payment calculator. You find that I paid slightly more for my home but my home is much nicer (central heat and air, closer to town, larger, better schools, etc). My parents' home happens to be for sale currently (not by them). If I paid full asking I would pay MORE in raw dollars but LESS in inflation-adjusted-total-loan-cost (which is what actually matters).
- api 7y agoDown payments are the monkey wrench here. The requirement to have a down payment means high prices basically lock people out of homeownership, period. That in turn limits ability to build wealth at all, even at a crappy interest rate.
- LUmBULtERA 7y agoOwning a home is not the only way to build wealth, nor is it necessarily the best way to build wealth.
- tathougies 7y agoHaving a mortgage is not a form of wealth.
- rukittenme 7y agoI put $15,000 down or 4.2% of the total loan amount.
- war1025 7y agoThe main way that owning a home allows someone to build wealth is that it forces them to put money towards something productive rather than blowing it on stupid things. My experience from buying a house two years ago is that though I suspected it, I never truly realized how many amenities were covered by my rent. I went from paying $30/month in utilities, etc. to ~$400 /month. I also now live 10 miles further away from where I work / hang out. Granted, we live in a house that is ~2x as big as our apartment, plus two car garage. But if you factored out strictly the various recurring expenses I now pay from my previous rent, it is extremely close to breaking even. And that isn't including the increased cost of owning / operating two cars that now drive ~60 more miles a day between the two of them. Our net worth increased much faster while we were renting than now that we have a house.
- shados 7y agoIsn't it partly expected though? I never looked at the stats for single income vs dual income families over time, but my instinct tells me that single income was much more common in the 80s, and dual income is much more common today than it was back then. So even if single income had drastically gone up, they'd be "competing" with dual income families on a global level. And sure enough, when you look at house prices in an area, they very much seem priced for dual incomes. All anecdotal and unverified guesses, mind you. But even a highly paid software engineer in SF will have no hope of competing with a DINK family of equally paid software engineers, for example. And there's more and more of those. I assume the market's following.
- tathougies 7y agoHome sizes have also shot up by a significant margin. What's the % change in price per square foot?
- itronitron 7y agoprice per sq ft is probably going down as home sizes go up, largely due to location. Most new homes are built where land is available, further out from city centers, and therefore have a lower price per square foot despite being larger.
- xyzzyz 7y agoYes, but it's always been true. The houses in 1930s, 1950s, and 1990s were also built where land was available, further out from city centers, so this hasn't changed, and doesn't explain why price/sq ft is going down.
- tathougies 7y agoYeah, this is what I'm not getting. It seems like the houses that are like the houses we grew up in, or our parents grew up in cost the same. However, people want more.
- xyzzyz 7y agoThe reality is that people simply can (or think that they can) afford more these days on the one hand, and the actual building costs are lower on the other due to cheaper material and more effective techniques.
- ranie93 7y agoI'm not the OP, and they may be overstating statistics (happy to be shown otherwise). At the same time, wage stagnation is no myth: "From 1973 to 2013, hourly compensation of a typical (production/nonsupervisory) worker rose just 9 percent while productivity increased 74 percent. This breakdown of pay growth has been especially evident in the last decade, affecting both college- and non-college-educated workers as well as blue- and white-collar workers. This means that workers have been producing far more than they receive in their paychecks and benefit packages from their employers."[0] "The minimum wage peaked in inflation-adjusted value in 1968, when it was equal to $10.15 in 2018 dollars. [...] As of 2018, the federal minimum wage was worth 28.6 percent less than in 1968" [1] "While the cost of a four-year degree exploded to $104,480 [from $52,892 adjusted for inflation], real median wages only went from $54,042 to $59,039 between 1989 and 2016." [2] Heavy childcare costs [3] "In U.S., wage growth is being wiped out entirely by inflation" [4] [0]https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/ [1] https://www.epi.org/publication/raising-the-federal-minimum-wage-to-15-by-2024-would-lift-pay-for-nearly-40-million-workers/ https://www.epi.org/publication/raising-the-federal-minimum-... [2]https://www.forbes.com/sites/camilomaldonado/2018/07/24/price-of-college-increasing-almost-8-times-faster-than-wages/#39068b4066c1 https://www.forbes.com/sites/camilomaldonado/2018/07/24/pric... [3]https://data.oecd.org/benwage/net-childcare-costs.htm https://data.oecd.org/benwage/net-childcare-costs.htm [4]https://www.washingtonpost.com/business/2018/08/10/america-wage-growth-is-getting-wiped-out-entirely-by-inflation/?utm_term=.46fc10bbb5da https://www.washingtonpost.com/business/2018/08/10/america-w...
- ta1234567890 7y agoThank you for putting all of that info together in a very easy way to read and to follow the sources.
- xyzzyz 7y agoThe productivity and wage decoupling is very hot debate topic in the economic circles. It's not very easy to sum it up, as there are many factors going in. For example, productivity is calculated based on real GDP, which uses GDP deflator, while deflator for real wages that is typically used is CPI. Just the fact that you're using two different deflators already makes a meaningful comparison harder. Looking at minimum wage is not really relevant, as only around 2% of workers earn minimum wage. The degree cost explosion is very unfortunate, not only because it is more expensive now, but also because much fewer people had (or even attempted to obtain) degrees, so not only it was much cheaper for them, but also they simply didn't need to get them as much as people need them now. The push for universal tertiary education has been very detrimental to our society, as people need to spend more, and the only result is degree inflation.
- emddudley 7y agoBest I could find... apologies for any mistakes below. Purchasing power in the U.S. has stayed roughly the same since 1964. [0] The median annual income for single women with children in the U.S. in 1985 was $16,431 [1]. Couldn't find information on just waiters/waitresses. I believe these are 1985 dollars? If so, that income is nearly $40,000 in 2018 dollars. The median annual income for waiters/waitresses in the U.S. in 2018 was $21,780. [2] [0] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... [1] https://www.census.gov/data/tables/time-series/demo/income-poverty/p23-196.html https://www.census.gov/data/tables/time-series/demo/income-p... [2] https://www.bls.gov/ooh/food-preparation-and-serving/waiters-and-waitresses.htm https://www.bls.gov/ooh/food-preparation-and-serving/waiters...
- xyzzyz 7y agoI recommend using FRED data, they aggregate many data sources nicely. For example, you can see that median usual weekly earnings of women went up about 50% since 1980s[1]. [1] - https://fred.stlouisfed.org/series/LES1252882800Q https://fred.stlouisfed.org/series/LES1252882800Q
- Eleopteryx 7y agoMy understanding is that real median income is influenced by the sheer total number of hours worked. Real median income can increase by virtue of more people working more often while their wages stay the same.