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That's not true. Wages have generally outpaced inflation as long as we've measured inflation properly. Up until the early 1970s this was very palpable, sinc
by bryanlarsen 1y ago
That's not true. Wages have generally outpaced inflation as long as we've measured inflation properly. Up until the early 1970s this was very palpable, since the early 1970s the delta has been much lower, wage increases have been very slightly above inflation.
Why does it feel different? 1: the amount of stuff we buy has increased a lot. Anybody who owns what would be considered solidly middle class in the early 1970s will feel quite poor today. 2: financial security is way down.
In the early seventies a middle class family of 6 would own a 1200 square foot house, a single car, a single TV and a single radio would be the sum total of the entertainment electronics they owned, they'd have less than a dozen outfits apiece, they'd eat out about once a month, a vacation to a neighboring state would feel like a splurge, et cetera.
But they were relatively content. 1: they were much better off than their parents and grandparents, who experienced the depression & WW2. 2: they were "keeping up with the Joneses". 3: they had a feeling of financial security due to job security and the fact that serious health events were unlikely to financially devastating.
- kiba 1y agoAverage American household budgets are dominated by housing, transportation and taxes. Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
- 9rx 1y ago> Average American household budgets are dominated by [...] transportation Huh? Doesn't the average American live in a city? The whole reason for accepting being squeezed in tightly with other people is so that you don't have to worry about transportation; enabling everything you could ever want and need to be found in short walking distance. Transportation is for people in rural areas. Yes, it is expensive, but that's exactly why most people left rural areas for the city long ago.
- smelendez 1y agoMost American urban areas are dominated by suburbs where it’s not practical to walk everywhere and public transit is very limited. So a car is necessary and often a car per working adult.
- 9rx 1y agoYes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers? That completely defies the whole reason for the density. I'm not saying it doesn't exist, I question why people are doing it.
- acuozzo 1y agoFWIW, I grew up in Brooklyn, NY. I know about both urban and suburban living. I now live in Columbia, MD: a suburb from the late '60s planned with high ideals. My three children each have their own room. They can ride their bicycles on our sleepy street without having to constantly worry about reckless drivers. They can explore the walking trails and wooded areas our community maintains. They can play baseball in one of the nearby fields without having to worry about breaking a car window in doing so. My wife has a large crafting area. I have an office. We have a home theater. We have a workshop in our garage. We have a large sunroom which opens to a large deck suitable for entertaining many friends at once. Getting even a fraction of what I described above in a city would cost a fortune.
- 9rx 1y agoThe benefits of living in the country are obvious. And since the land provides income itself, the extra cost of transportation one has to assume to live in the country is well offset anyway. Its the weird middle ground that has all of the downsides of the country and all of the downsides of the city all packed into one that we're talking about.
- acuozzo 1y ago
- bryanlarsen 1y agoThat's a two-edged sword. Food, clothing, cars and all sorts of factory produced stuff are significantly cheaper today than they were 50 years ago. So they don't dominate budgets the way they used to 50 years ago.
- xeromal 1y agoI remember reading years ago that food used to cost 30% of a family's income in the early 1900s
- johnnyanmac 1y agoYes, so why are we ignoring that housing is multiple times more expensive? Even with 5 times the luxury expenses, you're not going to end up cheaper than boomers who paid $1000 on a mortgage in a high COL area. Telling people to penny pinch on buying Netflix subscriptions while rent is 70% of their budget is just political theater at this point.
- bryanlarsen 1y agoRent per square foot per person as a fraction of income has been relatively constant. Rent has gone from 13% of income in 1970 to 30% of income today, but average house size has doubled and average family size has halved.
- corford 1y agoRenting is not owning (no benefits accrue from asset appreciation). The same calc for ownership is very different. Also would love to know % of population in 1970 that rented versus today. My guess is it's much higher today.
- SirMaster 1y agoBut renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it. I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance. So how am I losing out on anything unless you think that a house value (minus loan rate) would appreciate more than I can earn with that money instead invested in the stock market or some other real-estate investment deal like multi-family units.
- BobaFloutist 1y agoTaxes? That can't possibly be right. Average American household pays a small fraction of their income in taxes. Unless they somehow got a huge, expensive house and have the mortgage paid off, I don't see how their income could possibly be dominated by taxes over, say, healthcare, or food.
- drdec 1y agoIncome tax is not the only tax. First off there is payroll tax. Then there are sales taxes. And don't forget property tax. I am probably forgetting something.
- Whoppertime 1y agoWell if they're buying gasoline in California, or cigarettes in Australia taxes can be a huge part of the pricetag even if they're not thinking of it as taxes. You can see various taxes and fees if you look at the receipt of an airline ticket or a bill from a Telecoms company. I admit the fee they add to fund 911 calls isn't typically large but every little bit adds up
- JamesBarney 1y agoA family that makes 80k spends about - 9400 on federal income taxes - 12,000 on payroll taxes (including corp chunk b/c of economics) - 3000-9000 on sales/property/stage income taxes That's a pretty big chunk.
- BobaFloutist 1y agoI guess I don't really count payroll taxes since it's not a line item in my budget. Anyway, that's certainly a bigger chunk than I was envisioning.
- jimbokun 1y agoYou left out health care and education.
- potato3732842 1y agoAnd in the 1870s the average middle class family wouldn't have owned nearly the same variety of finished wood and metal products. Industrialization changed that. You can't just say "but iphones" to hand wave away huge changes in the big items of a family's budget.
- WalterBright 1y agoThe amount of junk in my house is astonishing when compared to what was in the small house I grew up in.