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It takes now 53 weeks salary to earn same as 30 weeks in 1985

• mc32 7y ago
  Thank you globalization! Ross Perot was right. The Dems and Repubs both took Corp money and left the workers behind. Cesar Chavez knee this too. No one listened. And now we wonder how it happened. It’s no wonder. The pols, the Koches and many other industrialists sold us all out. On the other hand we can afford heaps of cheap junk that doesn’t last longer than it takes to ship it over cargo ship.
  • MuffinFlavored 7y ago
    > The Dems and Repubs both took Corp money and left the workers behind I get that the statistics show billionaires owning the majority of the wealth while the common-person in America makes $30k/yr but... there are plenty of Americans doing a-ok too. Who is really to blame? Take a trip down to South Florida. You'll see a lot of Bentley, Rolls-Royce, Lamborghini, Ferrari. Lots of high fashion and packed restaurants. Workers are getting left behind, sure. But some workers are making it too. Especially those on HackerNews in IT who are fiscally savvy, packing away six-figure salaries responsibly.
    • toomuchtodo 7y ago
      Don't let anecdotes fool you into believing they're data or the experience of the majority. I too have walked South Beach, and still know most Americans are having a terrible time making ends meet. Impactful policy decisions are based on data, not emotion.
    • eli_gottlieb 7y ago
      How many homeless people are you stepping over to see those Ferraris?
      • thrower123 7y ago
        Outside of California, rich people keep their homeless swept out of sight, for the most part.
        • eli_gottlieb 7y ago
          I see them plenty in Boston.
      • MuffinFlavored 7y ago
        https://en.wikipedia.org/wiki/List_of_countries_by_homeless_population https://en.wikipedia.org/wiki/List_of_countries_by_homeless_... United States: 0.17% Germany: 0.37% Canada + Sweden: 0.36% Not as many as other countries.
    • phkahler 7y ago
      Don't blame the people with low end jobs. I read an argument once using a public school janitor as an example. Someone argued that it was his responsibility to get an education, training, or whatever so he could get a better job. While that's true to some extent, it's also true that the school would just hire the next person they could find for the same price - they have an expectation that it's a low paying job and they've budgeted for it. Individuals can do better, but our institutions have come to depend on the disparity.
    • mnm1 7y ago
      > Who is really to blame? This is the wrong question that Americans love to ask when they don't want to solve any problems. The right question is how can this be fixed? But as long as people focus on blame, they can ignore solutions and things get worse. > Workers are getting left behind, sure. But some workers are making it too. Yes, I think we're all aware that the upper class and upper middle class are doing well. That's about 10% of the population or so. Meanwhile, the other 90% are left behind. Somehow this is supposed to justify the current status?
      • MuffinFlavored 7y ago
        My point is: why can 10% of the population make it but 90% can't? Is it hard work, is it opportunity, is it lack of education/resources?
        • mnm1 7y ago
          It's definitely not for lack of hard work. Not everyone can "make it." That'd be impossible. Making it requires one to achieve a high-end job with good pay. If everyone made it, who would clean toilets, serve burgers, and do all the shitty little jobs that need to be done in society? Why can't the other 90% of the population make it? Because that'd be impossible. Lack of opportunity and education/resources is a big part of it, but many still wouldn't make it because they are simply not smart/skilled/artistic/athletic enough to make it. What we could do is change that split from 90/10 to something more favorable. I don't think that can happen with a hyperfocus on profits over meeting people's needs. The number one reason that ratio has become this way is the lack of government protection for workers: enforcing proper minimum wages, providing proper time off, healthcare, childcare, housing, and education options. There's plenty more. When people's basic needs (Maslow's hierarchy) aren't met, we shouldn't be surprised that they're not living up to their full potential, or in some cases, any potential at all. That's why most of the other 90% of people can't make it. Their physiological and safety needs (levels 1 and 2 on Maslow's hierarchy) are simply not met.
    • departure 7y ago
      Is this a joke. Miami is actually known to have the worst inequality he country. [0] As the articles points out there are 30 billionaires but "Miami-Dade’s middle class is relatively small and shrinking steadily, the report found. Just over 43 percent of Miami households qualify as middle class, the 11th-lowest proportion among the 53 U.S. metros with populations of more than one million. And that proportion has shrunk significantly over the decades" That doesn't even address the fact that the HN crowd will never be owners of the bentleys and rolls-royces, billionaires have unattainable wealth, a FANNG engineer has to work for centuries to be even close. [0]https://www.miamiherald.com/news/local/community/miami-dade/article229441144.html https://www.miamiherald.com/news/local/community/miami-dade/...
  • markus_zhang 7y ago
    Globalization is only the symptom, and IMO it's a good thing. You don't want to fight globalization, you want to fight income inequality and bunches of other things. But ultimately, what you need to do is beyond the norm of Capitalism.
    • toomuchtodo 7y ago
      > But ultimately, what you need to do is beyond the norm of Capitalism. Democratic socialism (healthcare, education, labor unions, etc) is still Capitalism, just with guardrails.
      • deleted 7y ago
        [deleted]
      • markus_zhang 7y ago
        TBH I think it's a bit stretchy to put that into Capitalism, but yeah that's a good start.
        • toomuchtodo 7y ago
          Everyone still gets to turn a profit, we're just managing the outliers a bit more.
      • wahern 7y ago
        It's difficult to fund and maintain those things if capitalists offshore production and don't repatriate profits. Similarly, it's difficult to control costs on social outlays if the population expects a 4-bedroom ranch house with miles of million dollar pavement and other connecting services, cheap goods, a platinum health insurance plan (or at least the prospect of one--I don't think many ACA opponents realize how crappy their pre-ACA plans were and how precarious of a situation they were in and may be in again now that coverage mandates are no longer being enforced), etc. The politics of the United States is in many respects like that of much poorer, more dysfunctional countries. The poor, working and middle classes are promised the stars and get scraps; but they vote based on the promises. And to the extent the promises are delivered, they're paid for with mountains of debt. We've even convinced ourselves that "deficits don't matter" (literal mantra of the GOP), ironically right at the moment (dwindling debt purchasers) when there's a regression to the historical mean. Democratic socialism isn't viable in the U.S. The U.S. has all the bad qualities of conservatism and, increasingly, leftist populism, with little of the restraining characteristics of either.
  • goalieca 7y ago
    Is that really globalization? Or is it just concentration of wealth because of deregulation, reduced tax rates, etc.
  • ttoinou 7y ago
    Have you read the twitter thread ? Root causes have nothing to do with globalization
    • rconti 7y ago
      I read the thread, and it didn't address root causes at all.
      • ttoinou 7y ago
        More car regulations is linked to globalization ? Inflation of healthcare costs comes from globalization ? OP was just here to spill his political opinion and didn't address the content of the thread
  • danem 7y ago
    How exactly is it globalization's fault that we have locked people out of the most productive job markets in the country (NIMBY's + perverse incentives), and have a healthcare industry that has been completely captured by rent seekers and middlemen? These are two huge pieces of the puzzle that don't seem at all related to what you're talking about.
    • WillPostForFood 7y ago
      The problem for industrial states isn’t that the people can’t afford to move to San Francisco and become programmers (good luck with that plan, even with low housing costs), it is that the local factories shut down and moved to China or Mexico or wherever labor is cheap and regulation is nil. If they still had their middle class manufacturing jobs, they wouldn’t need to move, and they’d have healthcare. So it is at least partially globalization’s fault.
      • danem 7y ago
        Basically every large city in America is struggling to build enough housing, not just the Bay Area. Furthermore, there are a vast number of jobs to be had that aren't software engineering. I concede that globalization has changed the economic landscape, but it's effects didn't have to be nearly this negative. Had we invested in infrastructure and prioritized the building of new homes people could have adapted. Now we have homeowners capturing an extreme share of wealth for doing nothing but further exacerbating the problem. And relying on protectionist policies to subsidize certain industries certainly isn't a plan for long term success. How would American manufacturing compete with a fully industrialized India and China?
        • WillPostForFood 7y ago
          Basically every large city in America is struggling to build enough housing Are they? How about Detroit? I know it is shocking to Californians, but many people would be happy working at the Lordstown GM plant in Ohio if it was still open. Telling those people that the real problem is that rent is high in San Francisco, not that they lost their job is a total misread of the problem and the causes of the problem. If we magically had 10 million free apartment units in San Francisco, it does very little to help the rust belt.
  • Aunche 7y ago
    You do realize that the "heaps of cheap junk" are made by people who take pride in their own work right? Those people would otherwise have no means to generate enough surplus capital to survive a bad crop season.
    • mc32 7y ago
      We can live in an internationalist world where we all compete with each other fairly. Shipping jobs to the lowest wage country and shipping goods back to the country that lost that job and expecting that worker to buy things from low wage countries to prop up their economy to the benefit of big Corp while the union worker loses the job, the benefits, the healthcare and then imply it was that worker’s responsibility to support workers living under a government the newly unemployed has no say in kind of ridiculous. Then people cry about wage inequality. Globalization enables that. Check out Europe, check out Germany, the iconic example of wage equality, they’ve all suffered from globalization.
• burlesona 7y ago
  That is a really good thread. I hate how clunky reading long stuff is on Twitter, but, that’s beside the point. The author wrote the same content here with more room to breathe: https://americanaffairsjournal.org/2020/02/the-cost-of-thriving/ https://americanaffairsjournal.org/2020/02/the-cost-of-thriv...
  • sd_mikey 7y ago
    The Thread Reader App does a decent job of unfurling tweet storms. https://threadreaderapp.com/thread/1230505649794166785.html https://threadreaderapp.com/thread/1230505649794166785.html
  • pawelk 7y ago
    It was quite painful to read trough the series of tweets only to reach this link to the real thing at the very end. I sort of like how the twitter series summarizes the content, but it could have been done as a tl;dr style intro in the article itself.
  • rjkennedy98 7y ago
    Thank you so much for posting this. Its amazing how many real economic issues seem to be hidden behind the progress of the computer revolution and Murphy's law. Just as we consider TV's to have dropped 97 percent in cost and use this in our inflation estimates. I remember seeing similar analysis that was done on US manufacturing output that showed that productivity boom of computers was hiding an enormous loss in US manufacturing jobs in official US metrics. I feel like some people are starting to wake up to this. Its just so hard for these kind of official metrics to change when those in charge have every incentive to insist the US economy is doing great and just keeps getting better.
  • robocat 7y ago
    Important points from the link: “I propose the following Cost-of-Thriving Index (COTI): the number of weeks of the median male wage required to pay for rent on a three-bedroom house at the 40th percentile of a local market’s prices, a family health insurance premium [without employer subsidy], a semester of public college, and the operation of a vehicle.” “To assign an annual cost of college to a family whose tuition payments will be concentrated in a few years, the COTI uses the federal National Center for Education Statistics esti­mate for half of one year’s tuition, fees, room, and board at a four-year public institution. Two children pursuing four-year degrees would require a combined sixteen semesters of college, so a household preparing for those costs would need to save roughly one semes­ter’s worth of cost per year before the children reached college-going age.” ”In 1985, the COTI stood at 30 [weeks] — the median male worker needed thirty weeks of income to afford a house, a car, health care, and education. By 2018, the COTI had increased to 53 [weeks] — a full-time job was insufficient to afford these items, let alone the others that a family needs. A generation ago, the worker could be confident in his ability to provide his family not only with the basics of food, clothing, and shelter, but also with the middle-class essentials of a house, a car, health care, and education. Now he cannot.“ There is definitely something to his argument. In the past in a majority of families, one person could work and provide for a family. At present in a majority I think both parents must work to be able to cover necessities in New Zealand. Many more hours work just to “live”.
• bmmayer1 7y ago
  OK...that's one side of the story. But is cost of living really being compared fairly? One $200 smart phone now does the job that in 1985 required a clock radio, a walkman, a CD player, a word processor, a printer, a fax machine, a telephone, a calculator, an address book and a voice recorder. How does this account for the multiplicative effect of technology on purchasing power?
  • eropple 7y ago
    And most people didn't have a word processor, a CD player, a printer, a fax machine, or a voice recorder. Which--and this might be shocking!--was by and large fine, as life had not been adapted to their presence. "But society has stuck you with all this extra shit!" is not a good, moral, or acceptable response to "I am less able to pay my bills."
    • DiffEq 7y ago
      A large reason why wages have essentially "stagnated" is because the workforce has doubled with the advent of women entering the workforce. Laws of Supply and Demand say that wages should go down...it is to be expected. This is why for many a two income household is now necessary for a family these days.
      • dane-pgp 7y ago
        Unfortunately it's more complicated than that: https://ourworldindata.org/uploads/2017/08/Labor-Force-Participation-of-women-in-the-US-1955-2005.png https://ourworldindata.org/uploads/2017/08/Labor-Force-Parti... While the employment rate for "Married women, spouse present" doubled from 1955 to 1990 (which may be what you're referring to), the rate for "All women" between 1985 and 2005 went from 55% to 60% (and falling).
        • DiffEq 7y ago
          Yes I was referring to that statistic; but I think it it more representative of the cause of wage stagnation. We had a flood of people come into the workforce in a few decades that were not there previously. Although the statistic that you provided is interesting...I think maybe we should not be looking at ALL women? I say this because many women may be in school still or retired and don't want/need to work.
• dvt 7y ago
  > 5/ Fair enough. But, if you're a family that needs to buy a minivan, while it's nice that the 2018 Grand Caravan ($26,300 in 2018) has many features the 1996 Grand Caravan ($17,900 in 1996) did not, you still face the problem that you need an extra $8,500 to buy one. $17,900.00 in 1996 is $28,647.64 in 2018. Doesn't take a genius to double-check this work. It's factually untrue that the Grand Caravan went up in price when adjusted for inflation. The rest would take a while to verify (graphs have no source citations).
  • rm999 7y ago
    >It's factually untrue that the Grand Caravan went up in price when adjusted for inflation. He explicitly says that right before? "4/ For example, our inflation-adjusted data say car prices have not increased since the mid-1990s." I believe his argument is more around how we're calculating inflation, i.e. that prices have actually gone up more than economists claim through inflation. Looking at inflation adjusted numbers in the fifth thread would lead to circular reasoning and is besides his point. That said I am not great at dissecting these kinds of twitter threads and may be misinterpreting too; I agree that the way he is arguing it is confusing.
    • dvt 7y ago
      Inflation is calculated via the Current Consumer Price collected by the Bureau of Labor Statistics. if he has a problem with the methodology they use, he should talk about that, but as far as (4) is concerned: > 4/ For example, our inflation-adjusted data say car prices have not increased since the mid-1990s. Obviously, that's not remotely true. What economists are saying is that cars have gotten better so the higher sticker price doesn't reflect inflation, it reflects higher quality. Wait, what's not remotely true? That inflation also affects car prices? Is he being serious here? At the very least, can we agree that prices are comparable?
      • crooked-v 7y ago
        The not-remotely-true part is that, because inflation indexes are an average, they are way off when applied to specific categories of goods and services.
• vorpalhex 7y ago
  Talk about burying the lede. TLDR, the amount of time you have to work in order to buy some things, such as a car or some kinds of medical care, is greater now. In 1985, if you crashed your minivan going 50 mph, you were probably dead. You probably also killed whoever you hit. Yesterday, I was witness to an accident where a car going 50 mph t-boned a car and went through a fence. Both drivers were walking around and exchanging information after a few minutes. Some things have gone the opposite way. A basic computer was quite expensive in 1985 and took quite some time of diligent saving to afford if at all possible. Today, you can get a basic mediocre laptop for less than a weeks wages for low income earners. Yes, cars are just absolutely more expensive today, as is medical care. That's not some great economics argument, it's just how technology works.
  • einr 7y ago
    A basic computer was quite expensive in 1985 and took quite some time of diligent saving to afford if at all possible. A C64 was $149 in 1985.
    • yathern 7y ago
      To be fair it was effectively the cheapest computer on the market, in a very aggressive [pricing war](https://en.wikipedia.org/wiki/Commodore_64#Market_war_1982%E2%80%931983 https://en.wikipedia.org/wiki/Commodore_64#Market_war_1982%E...). Other machines on the market such as the Atari 800 cost $899 (>$2000 in 2020)
      • einr 7y ago
        Other machines on the market such as the Atari 800 cost $899 Not in 1985, it didn't. The 800 is a machine from 1979. In 1985 a contemporary machine would be the Atari 65XE for $120. Yes, it's true that home computers were subject to a pricing war and margins were slim. I don't think margins are very beefy on the cheapest low-end laptops in 2020 either.
        • NovemberWhiskey 7y ago
• ikeboy 7y ago
  Cherry picking by looking at males only, which somehow didn't make it into the title here in what I'm sure was an innocent oversight. It's also flat out lying by saying "earn same" - the tweet only claims earning enough to pay for typical household expenses - the typical household buys a lot more things than they did in 1985. Title is heavily misleading and inaccurate and should be changed. See https://twitter.com/Noahpinion/status/1230547825122889728 https://twitter.com/Noahpinion/status/1230547825122889728 for some other comments on the thread
  • eanzenberg 7y ago
    In many ways, the advent of dual-income households has made everyone poorer https://www.vox.com/policy-and-politics/2019/1/23/18183091/two-income-trap-elizabeth-warren-book https://www.vox.com/policy-and-politics/2019/1/23/18183091/t...
    • ikeboy 7y ago
      Note that Warren isn't claiming that everyone is poorer, rather specifically middle-class households that chose to buy expensive housing to get into better school districts. Her argument can be read as saying that housing/education inflation is higher for those families specifically (and therefore lower for everyone else - if it's higher than average for some it must be lower for others, that's the nature of averages). Also this is unrelated to my point, which is that OP has a misleading and borderline false title.
• iamsb 7y ago
  I am not an expert on American car market by any stretch, but I was interested to dig more into the claim about car prices of a certain. So I thought I will ignore that specific car brand (grand caravan) and see what data comes up in cars.com. After few searches - to me it seems like SUVs have over taken as a preferred choice and minivans have simply lost appeal. On cars.com for 90001 postcode there are close to 20,000 options for SUVs compared to only about 700 for minivan. And there are lot of SUVs available for less than 15K, where as the grand caravan is from 20K onwards. Essentially, I suspect market is working well in keeping cost of the cars actually getting sold low and minivans are expensive as choices are limited. Macro economics is hard. Author will get lot of different perception if they compared long distance phone calls in 1980s compared to today for example.
• gfrangakis 7y ago
  > 10/ When we say "inflation-adjusted wages look good," we are actually saying "if you could take your wage back to 1970 and spend it, you'd be better off than you were at the time with a 1970 wage." I mean, maybe that's interesting. But it doesn't describe lived experience. Isn't more like saying, you can buy more units of 2020 "consumer goods" with a 2020 wage than you could buy 1970 consumer goods with a 1970 wage? His point is just the definition of inflation: $1,000 in nominal dollars more valuable in 1970 than in 2020.
  • LeifCarrotson 7y ago
    The important part is the segmentation of inflation between the whole economy (consumer goods, industry, and also the basics) and the price of just the basics: housing, health care, transportation, education. If those basics were the basket of goods used to define inflation, then the numbers would be very different. $1000 in 1985 dollars buys $2300 worth of consumer goods in 2020. But you'd need $3,110 2020 dollars to buy the basics you could get for $1000 in 1985.
    • crooked-v 7y ago
      Or, in other words, inflation indexes are an average, and like all averages, it's a bad idea to blindly trust it, because sub-groups of the overall data may show much different results.
      • thedance 7y ago
        The problem is not averaging. The problem is these inflation measures specifically exclude major expenses.
    • kakwa_ 7y ago
      Also, another aspect to consider is what is the basic minimum to be integrated in society and exist socially. In the 20ies cars were not a social necessity, but beyond the 70ies, not having a car generally means partial social exclusion (more difficulties to get a job, etc). Today, not having a computer/smartphone/tablet and an internet subscription would impact social integration. This basic minimum need is not set in stone, it's a shifting target. Rephrasing the problem with "What is the current median revenue Vs What is the basic minimum to be an integrated member of society" would be a better way to put it.
• eanzenberg 7y ago
  That's great, welcome to 1980 healthcare efficacy and college built to train for 1980 careers. Enjoy!
• ecoled_ame 7y ago
  I think if there were less people there would be more resources to go around.
  • theandrewbailey 7y ago
    Resource creation requires work, and technology increases the rate that resources can be created. More people means more available work and better technology. We aren't at the point where less people means more resources.
    • ecoled_ame 7y ago
      I don’t really believe that; it’s also weird how many people argue in favor of a larger population. And anyhow the resources I want most are space, peace, and silence - all of which increase with a smaller population.
      • AnimalMuppet 7y ago
        "I don't really believe that" is a pretty weak response to a post that had at least some logical argument in it. > the resources I want most are space, peace, and silence - all of which increase with a smaller population. Sure, it was great when you could just find a place you like, break out your axe, build yourself a cabin, and just live there. You still needed an axe, though. Even if you were a blacksmith, the iron came from someone else - several someone elses, in fact. But that's not enough these days. Now you want a solar-powered cabin. Producing those solar panels takes people. And you want to not die in your cabin unnecessarily, so on occasion you need people like a good cardiologist. Many of us want space, peace, and silence. We just don't want to live in the kind of world where we could get it, because we also want chunks of modern civilization available on demand.
        • ecoled_ame 7y ago
          a cardiologist brings little resource to my life if i can’t bring him in on a 100 mile horse drawn carriage ride to my estate before dawn to treat me before i get ready to teleport to my underground laboratory in new michigan for work in the morning.
• esoterica 7y ago
  This twitter thread is complete garbage. The headline statistic is cherry picked to include the categories that have outpaced inflation the most. They also double count health insurance, which for most full time employees is a benefit they receive on top of their salary. Contrary to what rose twitter tells you, real individual compensation has increased over the past few decades, not decreased (albeit perhaps not by as much as it should have, and a lot of the increase has been diverted to surging healthcare costs).
• IanCal 7y ago
  I don't understand the point about the cars and inflation, don't your inflation measures use a basket of goods and services that get updated looking at current market shares? That's how it works in the UK. Source: https://www.ons.gov.uk/economy/inflationandpriceindices/methodologies/consumerpricesindicestechnicalmanual2019 https://www.ons.gov.uk/economy/inflationandpriceindices/meth... (search vehicle)
  • ryandrake 7y ago
    Doesn’t inflation as measured in the US omit most of the big things that drive the majority of people’s expenses like housing, healthcare, and education? It seems like as soon as the cost of some good starts growing out of control, -poof- it’s omitted from the inflation measurement!
    • lazerpants 7y ago
      Housing is absolutely included in CPI and PCE calculations. I'm less knowledgeable about how education and healthcare are accounted for but they are also included.
  • Zenst 7y ago
    Well for cars in the UK, https://www.racfoundation.org/wp-content/uploads/2017/11/car-ownership-in-great-britain-leibling-171008-report.pdf https://www.racfoundation.org/wp-content/uploads/2017/11/car... shows what I thought and that is car ownership per household has increased in the UK since 1985. Equally, whilst comparing money and inflation etc, you also need to factor in the increase in `standards` and by that, things like TV, phones, transport.... and compare to the past period. Heck, give it a few years and if you don't own a 4k TV, fiber internet and a 5G smartphone - you will be classed as living in poverty in the UK. Many things have become cheaper over time, which has also seen social patterns change. Less pubs and pub usage, though offset that with restaurant usage and you see how in some ways, it is hard to compare A to B, when their makeup is different that the aspect you can compare, become blurred in interpretation. Thus whilst you could say things like the headline, the nuances become much harder the further you compare.
  • 7y ago
• nostromo 7y ago
  He talks a lot about cars costing more (and being better). But he neglects that cars (and houses) are financed. Financing a car decades ago was expensive. You are now paying the same monthly price for a better and more expensive car. Fewer of your dollars go to the bank for financing, because interest rates are so low, and more dollars go to the car maker. The same goes for a lot of people looking at housing sticker prices, and not the actual cost people are paying for houses. When you look at how cheap financing is today, a lot of the inflation of these goods declines, or evaporates entirely.
  • lrem 7y ago
    True. But some of us are worried about what will happen if the rates increase. Also, any kind of liquidity problem seems more grave if your debt, which cost you the same despite 5x lower rates, is 5x more.
• maerF0x0 7y ago
  I used to say something to this effect about homelessness. That part of why we have a housing shortage and other countries do not is because we have made certain types of housing illegal and thus made the "bottom end" housing too expensive for some. Things like shanty towns etc. Now, I'm not advocating for a society that houses people in shanty towns as an end goal. But I am advocating that shantytown might be an upgrade for some and we need to help people upgrade.
  • bronipstid 7y ago
    Large portions of the US populations arguably already live in shantytowns; run down inner cities inhabited by great migration blacks, sprawling exurbs in the south and south west inhabited by recent hispanic immigrants, many illegal, and trailer parks in the rust belt where white factory workers layed off by globalization are dying from opioids. Its only in a few well insulated big cities that the true effects of globalization are kept far enough away to not be immediately obvious.
    • maerF0x0 7y ago
      I agree that many live in sub-average and sub-human living standards. What I'm trying to point out is that some home might be an upgrade from _no home_
• rayiner 7y ago
  The title isn't supported by the underlying data. The key chart in the Tweet thread is this: https://twitter.com/oren_cass/status/1230505794686373888/photo/1 https://twitter.com/oren_cass/status/1230505794686373888/pho... This looks at "major household expenditures" versus "median male income." Right off the bat, that should be a red flag--why are we looking at just male income? The percentage of women working since 1985 has only increased a little bit. But women's wages have gone up 50% adjusted for inflation. Of course, when women have been bringing more money into the family, people will spend more. For example, the chart shows expenditure on housing increasing. But the average American house today has twice as much square footage per person than in 1985: https://azgolfhomes.com/wp-content/uploads/2016/07/American-Enterprise-Institute-Housing-Data.jpg https://azgolfhomes.com/wp-content/uploads/2016/07/American-.... Expenditures on housing are increasing--but the number of vehicles per household has also gone up since 1985. The cost of college has gone up, but the percentage of people attending college has also doubled in that time frame. Colleges, moreover, are far more luxurious than in 1985. (The community college where my mother in law works now has far nicer facilities than Georgia Tech did when I attended just 15 years ago.) College itself has become something of a luxury consumption good--with large numbers of young people attending, drinking and having fun for four years, but getting degrees of questionable utility. There are a lot of sound bites (and Twitter-level analysis) on this subject, but it's actually extremely hard to figure out how to precisely measure changes in standard of living over time. For example, even just looking at the "median" is misleading. In 1990, when I came to America, the percentage of foreign-born people was 7%. Today it's double that. Even in an economy that provides tremendous upwards mobility for immigrants, doubling the share of the immigrant population is going to make the median income seem lower. The median household is also much smaller than in 1985, and less likely to be comprised of married couples. Since 1985, the percentage of people 18-34 living with a spouse has decreased by 2/3. (That observation is particularly significant because the percentage of women participating in the workforce hasn't changed significantly since then.) Accounting for these differences is important. When people think of the "median" they think they're comparing like with like. "Two-income middle class American-born family with two kids in 1985 versus 2015." They don't think you're comparing a married young couple from 1985, where both spouses work and share household expenses, to unmarried individuals maintaining two separate households in 2015. But unless you account for changing demographics, that's exactly what you're doing.
• awb 7y ago
  > But, if you're a family that needs to buy a minivan, while it's nice that the 2018 Grand Caravan ($26,300 in 2018) has many features the 1996 Grand Caravan ($17,900 in 1996) did not, you still face the problem that you need an extra $8,500 to buy one. > A key assumption of our inflation-adjusted analyses is that old products are still available. Don't like / can't afford the $26K 2018 Grand Caravan, go buy the $18K 1996 one instead. Except you can't. But you can. Tons of used cars available within 50 miles of SF for under $15k (https://www.cars.com/for-sale/searchresults.action/?prMx=15000&rd=50&searchSource=QUICK_FORM&stkTypId=28881&zc=94110 https://www.cars.com/for-sale/searchresults.action/?prMx=150...) including a 2018 Dodge Caravan for $13,999. There are certainly good points in the thread, but this isn't one of them.
  • entee 7y ago
    Right but there were tons of used cars in 1996 too that were available at a similar discount. The tweets are incomplete in that they fail to fully explain how CPI adjusts internally for quality improvement, but if we buy that (I think it’s reasonable) then cars, new and used, would be relatively more expensive today than in 1996
    • awb 7y ago
      But a used 2018 minivan is a lot better than a new 1996 minivan and costs less even without adjusting for inflation. So, I can get a better car for less money today than I could in 1996. I think the issue might be status. Driving a brand new minivan in 1996 might have felt like you were getting ahead in life. Driving a used minivan today might feel like you're falling behind just because other newer and more expensive cars carry much more status.
      • everdrive 7y ago
        Absolutely -- in fact, I think including cars in this discussion is a massive red herring because car reliability and choice have improved so much. Yes, the Caravan may be more expensive, but for sure there are much cheaper and more reliable non-Caravan options out there.
• aaronschroeder 7y ago
  How much of this is due to the growth in labor force in general and the prevalence of dual income families. See: https://www.dol.gov/agencies/wb/data/facts-over-time/women-in-the-labor-force#civilian-labor-force-by-sex https://www.dol.gov/agencies/wb/data/facts-over-time/women-i.... If you go further back (50s - 60s), it was very common for a household to survive on a single income. Even 30-40 years ago when I grew up, our family of 6 lived off a single income from a non-college graduate. That's very hard to do now, except for certain fields like tech.
  • duderific 7y ago
    That's pretty much the exact premise of the OP. Specifically, the growth in labor force/prevalence of dual income families was driven by the increase in costs, not the other way around.
• dcolkitt 7y ago
  > In 1985, the typical male worker could cover a family of four's major expenditures (housing, health care, transportation, education) on 30 weeks of salary. By 2018 it took 53 weeks. The author has clearly never heard of Baumol's cost disease. The primary reason that households now expend more on housing, healthcare and education is because they expend a significantly smaller fraction of their income on food, electronics, entertainment, energy, clothes, appliances, telephone service, automobiles, and furniture. All of which have seen strong deflationary pressures. Households ultimately need to expend their wages on some category. As the cost of certain goods fall relative to incomes, most consumers will allocate more of their expenditures on the goods that fell at slower rates. For example the average Nigerian or Indian spends a much lower percent of their wages on education or healthcare viz-a-viz the average Swiss or Singaporean. Only a fool would conclude that Switzerland's wealth has made it "fall backwards" relative to Nigeria. Instead the explanation is much simpler: the Swiss can feed and cloth themselves using a small fraction of their income. That leaves more left over to spend on comparative luxuries like better medical care and longer educations. This dovetails into the second fundamental flaw with the author's analysis. He's simply comparing the total expenditures on housing/healthcare/education/transport between 2020 and 1985. That's making the implicit assumption that people in 1985 were consuming the same basket of these goods as people in 2020. He explicitly eschews measures of inflation, because inflation reveals the fact that the items themselves have not seen price increase. Expenditures rose because households are using their higher incomes (including more two income families) to buy more of these goods with more premium qualities. For example one major reason housing expenditures have gone up is because the average home is 50% larger than it was in 1985[0]. Another reason is because of major quality improvements like central AC, attached garages, higher ceilings, better fire safety, higher capacity electrical circuits, and swimming pools. Adjusted for CPI, the median cost per square foot for housing only rose by 5% between 1990 and 2010[1] (which doesn't even adjust for significantly lower mortgage rates). Similarly expenditures on transportation has gone up because compared to 1985, Americans travel 25% more miles per capita, and have 20% more vehicles per capita[2]. Automobile fatality rates were nearly 200% higher in 1985[3]. And I don't think I even need to tell you how much more reliable and comfortable cars are today than in the 1980s. Healthcare and education probably have shown more true cost disease. However without a doubt Americans have also seen significant increases in their consumption levels. College enrollment rates have increased by more than 100% since 1985. Healthcare consumption has soared over the same period, not least because the country is significantly older and more obese, both of which require many more medical interventions. Compared to 1985, 100% higher proportion of the population works in the healthcare sector. All of which goes to show that the author is plain wrong about his conclusions. The trends he shows are easily explainable by the fact that real household incomes have grown significantly since 1985 (not least because many women entered the full-time workforce). It now takes a significantly smaller percent of household incomes to satisfy basic needs with regards to food, apparel, utilities, appliances and furniture. So people have much more money left over to spend on comparative luxuries like bigger homes, safer and more reliable cars for both adults in the household, more medical treatment with advanced techniques, more home healthcare, and longer post-secondary educations. That's not a story of American households struggling, that's a story of the incredible consumer growth. [0] https://www.propertyshark.com/Real-Estate-Reports/2016/09/08/the-growth-of-urban-american-homes-in-the-last-100-years/ https://www.propertyshark.com/Real-Estate-Reports/2016/09/08... [1] https://www.census.gov/const/C25Ann/soldmedavgppsf.pdf https://www.census.gov/const/C25Ann/soldmedavgppsf.pdf [2] https://www.ssti.us/2014/02/vmt-drops-ninth-year-dots-taking-notice/ https://www.ssti.us/2014/02/vmt-drops-ninth-year-dots-taking... [3] https://en.wikipedia.org/wiki/Motor_vehicle_fatality_rate_in_U.S._by_year https://en.wikipedia.org/wiki/Motor_vehicle_fatality_rate_in... [4] https://www.statista.com/statistics/183995/us-college-enrollment-and-projections-in-public-and-private-institutions/ https://www.statista.com/statistics/183995/us-college-enroll... [5] https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/ https://randomcriticalanalysis.com/why-conventional-wisdom-o...
• bfieidhbrjr 7y ago
  Well done: https://twitter.com/oren_cass/status/1230505794686373888 https://twitter.com/oren_cass/status/1230505794686373888 The guy identified the 4 big government backed monopolies, all with government backed debt, which all now eat a majority of income. We've known since 1776 that the way prices come down is competition. You should know that it's illegal to open a hospital or college without government permission. It's illegal to build a building. It's so bad that in order to open a hospital in most states, any nearby hospital can protest you license application merely for being close to another hospital. Who in their right mind would give an 18 year old $100k for college? Nobody. That's why the government backs it and you can't default on it. Who backs your mortgage? The government. It goes on and on and on. There is no mystery here AT ALL if you studied economics. The answer is very simple, allow competition. Now to lay back and drown in the downvotes :-)
  • happytoexplain 7y ago
    >Now to lay back and drown in the downvotes :-) Please consider omitting this self-fulfilling prophecy that implies you are some kind of underdog.
  • lidHanteyk 7y ago
    I don't see why you should get downvotes. You should get schooled instead. For starters, you don't mean 1776. You mean one of the years from 1787-1789 when the Constitution was written and first used to instantiate our Federal Government. You certainly don't mean 1776 because the attempt to create the government in that year, the Articles of Confederation, was not at all the current government, and it barely lasted a decade, depending on how one measures it. Opening a hospital, or any kind of medical practice, is generally regulated. In particular, regulation is done by a dedicated guild of medical professionals. Similar regulation covers legal advice, with bar associations qualifying legal advisors. In both cases, there is a monopoly on service providers. Two observations are important here. First, despite the monopoly, alternative service providers exist in the marketplace; quacks, fly-by-night veterinarians, alternative medicines, homebrew pharmacology, WebMD, etc.; or for law, anything from a smart friend to r/legaladvice. Second, only one of these practices seems to have had a cost disease. Perhaps the cost disease is due to something else! In particular, perhaps it is due to the 1973 HMO Act. You are right to be irritated at the government, but wrong to focus your ire entirely there. HMOs are to blame, too; in fact, they are mostly to blame. Exercise for you: Rerun the previous paragraph's logic with mail and USPS, and double-check that it still holds. I don't know where you live, but around where I live, it's legal to build a building, but not inside city limits or on protected wetlands. If you have title to the dirt below, then you can build things above. You might want to consult with local authorities depending on exactly what you're building, but you can generally build it. (Go ahead, I dare you to rattle off all the things that can't be built.) Just like how banks can and do compete with Freddie and Fannie for securing loans to homeowners, there are plenty of private sources for student loans. Perhaps it is predatory cruel for the government to issue student loans; perhaps student loans are predatory and cruel in general, like payday loans or title loans, in which case we should outlaw them entirely. It sounds like you might have studied economics. In that case, surely you don't believe in the Efficient Market Hypothesis? Markets are clearly inefficient and there's good theoretical reasons to believe that it takes exponential time for an honestly-run market to find even one Nash equilibrium. Finally, who cares about economics? You ought to study history. In particular, remember Enron? [0] This is the sort of thing that makes your position look like that of a stupid libertarian standing in the water with his waders and wondering why there's no fish in the river for him. [0] https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis
• grawprog 7y ago
  >How to get higher wages? How to get lower costs? Gee I wonder... https://www.epi.org/publication/ceo-compensation-2018/ https://www.epi.org/publication/ceo-compensation-2018/ >CEO compensation has grown 940% since 1978 Typical worker compensation has risen only 12% during that time >What this report finds: The increased focus on growing inequality has led to an increased focus on CEO pay. Corporate boards running America’s largest public firms are giving top executives outsize compensation packages. Average pay of CEOs at the top 350 firms in 2018 was $17.2 million—or $14.0 million using a more conservative measure. (Stock options make up a big part of CEO pay packages, and the conservative measure values the options when granted, versus when cashed in, or “realized.”) >CEO compensation is very high relative to typical worker compensation (by a ratio of 278-to-1 or 221-to-1). In contrast, the CEO-to-typical-worker compensation ratio (options realized) was 20-to-1 in 1965 and 58-to-1 in 1989. CEOs are even making a lot more—about five times as much—as other earners in the top 0.1%. >From 1978 to 2018, CEO compensation grew by 1,007.5% (940.3% under the options-realized measure), far outstripping S&P stock market growth (706.7%) and the wage growth of very high earners (339.2%). In contrast, wages for the typical worker grew by just 11.9%.
  • maerF0x0 7y ago
    How do you recommend we go about telling someone they cannot earn what they can convince someone to pay them, or that a company/board cannot pay the CEO as much as they're willing to?
    • grawprog 7y ago
      Find ceos with some integrity for a change. http://newsinflight.com/2018/12/03/japan-airlines-ceo-took-a-pay-cut-to-punish-himself/ http://newsinflight.com/2018/12/03/japan-airlines-ceo-took-a...
    • jrs235 7y ago
      "You can pay your CEO whatever amount you want so long as it isn't 50 times more than the lowest hourly wage times 2080 that you pay any employee of yours." ... Queue the gig economy...
• ryanyde 7y ago
  The original article (posted below) hits the nail on the head: regardless of 'inflation' or 'quality increases', a single breadwinner (assumed male in this case) can't support basic parts of the 'American Dream'. They could in 1985, with some money to spare. That's a HUGE difference in social structure and the 'feeling' of society. A part of the socialist mindset is the idea that people in fact should be able to live in an economic system and afford the things that everyone wants. Socialism doesn't deliver that exactly (see Spain, Greece, France, etc.) without huge amounts of natural resources, but it's similarly clear capitalism has driven out most people's abilities to do that too in the past 30 years. Thus the impasse (political and economic) the US finds itself in right now.
• aussiegreenie 7y ago
  I hate the current method used to calculate the CPI. I am boring I prefer to use oz of gold. Yes, gold is very volatile but the US dollar is very volatile. Gold 1985 USD 327 per oz, therefore, the car is $17,900/ 327 = 54.74 AU oz Gold 2018 = $1320 per oz Car $26,300 , therefore, car = $26,900/1320 = AU 20.37 oz The car is dropped by 2/3 in terms of gold.
  • vanusa 7y ago
    That's neat but people don't get paid dollars, not gold.
• throway1n 7y ago
  a sad but true story. there are - hn commentariat included - adults, some of whom earn “large salaries”, yet at the age of 30-40 live in shared accommodations and with flatmates. some of them are software engineers and earn what to some may appear a large salary. equally bad, some spend more than half of their income for a property they will only be able to enjoy very late in life due to long and expensive mortgages payed by selling their most beautiful years. this is pretty much what corporate socialism leads to. pathetic.
• bunchOfCucks 7y ago
  Boomers
• soapboxrocket 7y ago
  I would like to see the impact of the dollar in terms of the environment in 2020 vs 1985. I hope that the impact of my dollar is less, and I bet most people today are willing to pay more for a smaller environmental impact.
• RickJWagner 7y ago
  I wonder how much that 1985 worker paid for smart phones, cable or streaming tv, and modern entertainment. I think today's standard of living is simply higher. You could live on 1985 wages, but your family wouldn't be happy.
  • flukus 7y ago
    But that's the problem, we have more stuff but lower quality of life. And even if you sacrifice the stuff you can't live on 1985 wages. I'd gladly sacrifice a smart phone and streaming TV to live in a large house with 3 kids on a single working class income like my father did, but the $200 phone and and $10 netflix wouldn't even cover a weeks rent.
    • RickJWagner 7y ago
      Hey, it can be done. I'm living in a fairly big house now, with 3 kids and a stay-at-home wife. I live in the central US, and work remote. (The company pays fair wages for the northeast, which translates well to my locale.) I know not everybody can be so lucky, but I wanted to mention it can still be done.