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Real people don't care about "real income". They care about if they can get and retain a decent home, job and life. How much debt they are in, that their educat

by lansol 1y ago

Real people don't care about "real income". They care about if they can get and retain a decent home, job and life. How much debt they are in, that their education is enough, how their social life is, if they can have kids and how they think about their future. "Real income" is measured against the consumer price index (CPI). CPI is used to gauge inflation, "are people paying more for groceries this year than last?", not living standard. Most of the important questions like "how many years of education do you need for a good job?" or "how many average salaries do you need for a good home?" are all massively worse. So are many metrics of despair. What real income really shows is that more money now gives you less. That what buys you a loaf of bread doesn't buy you a good life anymore. Because median income might be keeping up with inflation, but not with anything else.

hdgvhicv 1y ago
Adjusting for CPI the median wage in America is up about 10% in the last 20 years.
- lotsofpulp 1y ago
  Yet people feel like their purchasing power is going down. Their expectations might be to live in the top few decile neighborhoods of a metro, where land prices have gone up a few hundred thousand in the previous decade. It doesn’t matter if the stats say income went up 10% if they or their kids won’t be able to land that house they wanted, or can’t make that appointment with the doctor and instead have to see an NP, or worry about having to move to a more expensive metro to reduce income volatility.
  - camgunz 1y ago
    This is pretty spot on. In the mid/latter half of the 20th century, most people who thought they should have what they thought was the good life could get it. It's less about "you didn't need 2 incomes" and more about "culturally, people thought women should work in the home while men worked outside it". Now, it's not really even clear what the good life is, but whatever you think, it's very hard to get it. Schools, commutes, quality housing, health care, stable income, they've all gotten far, far worse for almost everyone, and there's nothing they can do about it.
- nothercastle 1y ago
  You can’t use cpi directly like that. The model uses hedonic adjustment to say that modern goods are better than old stuff so you are earning more. For example your $1000 oled tv is better than your $1000 crt tv therefore you your purchasing power has gone up. Or your base truck now comes with nav therefore your truck can be 5k more and still be net neutral. The problem with this system is that in order to stay in the same price catagory on the index you continually need to move down the product tiers. So today’s lowest tier is a decade ago mid tier is 2 decades ago high end. Moving down like that makes you feel poorer because wealth is relative.
  - SpicyLemonZest 1y ago
    TVs are the archetype of of why hedonic adjustment is necessary. Your $1000 OLED TV is better than your $1000 CRT TV, but it's not even the right comparison. Every TV on the market today, even the bargain basement ones it never even crossed your mind to buy, is better than your $1000 CRT TV. We've hedonically adjusted, so it's hard to believe - is it really true that the "huge" "high definition" CRTs our cool friends had two decades ago were 720p and <35 inches? But yes, it is true. Consider a more concrete example. In 2005, a 40 inch 720p LCD panel cost $3,500 (https://slate.com/culture/2005/09/it-s-finally-time-to-buy-an-hdtv.html https://slate.com/culture/2005/09/it-s-finally-time-to-buy-a...). Today, that same panel in 1080p is $100 at Best Buy (https://www.bestbuy.com/product/insignia-40-class-f40-series-led-fhd-smart-fire-tv/J2FPJKSFFJ https://www.bestbuy.com/product/insignia-40-class-f40-series...).
    - _DeadFred_ 1y ago
      I never had a CRT die on me. A $100 Best Buy TV is disposable junk. Is that factored in to your index? Modern product lifespan is at least half, and repairing something is no longer an option or is 'replace $1000 board' not the $50 fix it used to be. The current price should be at least doubled to try and match in some way. For 30 years my parents had the same TV, is that factored in? My TV has an explicit shelf life. Apps have already stopped working/being supported even without the TV breaking. My parent's TV never sold any data. My new, much more 'expensive' TV spys on me 24X7. You would not have been able to PAY my grandparents enough to put a TV like that in their house, yet alone consider it an 'upgrade'.
- geye1234 1y ago
  In the 1970s, a single-income family on a factory worker's wage could buy a 3-bedroom house with a 3x mortgage.
  - SpicyLemonZest 1y ago
    Factory workers weren't (and even today really aren't) a replacement-level job that anyone can just go out and get. A guy making $4.50/hr at GM in 1970 had a great job that his peers would have envied; quite a lot of people who worked just as hard were making $3 or $2.
    - geye1234 1y ago
      Sure, but the 2025 equivalent of that GM job -- if you can find it -- is not going to pay enough to support a family and pay a mortgage on one income.
- chessgecko 1y ago
  The real issue is that housing is heavily underweighted in the cpi basket. How many people do you know that are only spending 12.9% of their after tax take home on housing, water and fuel? Only people with paid off mortgages.

by lansol 1y ago

hdgvhicv 1y ago

Adjusting for CPI the median wage in America is up about 10% in the last 20 years.

lotsofpulp 1y ago
Yet people feel like their purchasing power is going down. Their expectations might be to live in the top few decile neighborhoods of a metro, where land prices have gone up a few hundred thousand in the previous decade. It doesn’t matter if the stats say income went up 10% if they or their kids won’t be able to land that house they wanted, or can’t make that appointment with the doctor and instead have to see an NP, or worry about having to move to a more expensive metro to reduce income volatility.
- camgunz 1y ago
  This is pretty spot on. In the mid/latter half of the 20th century, most people who thought they should have what they thought was the good life could get it. It's less about "you didn't need 2 incomes" and more about "culturally, people thought women should work in the home while men worked outside it". Now, it's not really even clear what the good life is, but whatever you think, it's very hard to get it. Schools, commutes, quality housing, health care, stable income, they've all gotten far, far worse for almost everyone, and there's nothing they can do about it.
nothercastle 1y ago
You can’t use cpi directly like that. The model uses hedonic adjustment to say that modern goods are better than old stuff so you are earning more. For example your $1000 oled tv is better than your $1000 crt tv therefore you your purchasing power has gone up. Or your base truck now comes with nav therefore your truck can be 5k more and still be net neutral. The problem with this system is that in order to stay in the same price catagory on the index you continually need to move down the product tiers. So today’s lowest tier is a decade ago mid tier is 2 decades ago high end. Moving down like that makes you feel poorer because wealth is relative.
- SpicyLemonZest 1y ago
  TVs are the archetype of of why hedonic adjustment is necessary. Your $1000 OLED TV is better than your $1000 CRT TV, but it's not even the right comparison. Every TV on the market today, even the bargain basement ones it never even crossed your mind to buy, is better than your $1000 CRT TV. We've hedonically adjusted, so it's hard to believe - is it really true that the "huge" "high definition" CRTs our cool friends had two decades ago were 720p and <35 inches? But yes, it is true. Consider a more concrete example. In 2005, a 40 inch 720p LCD panel cost $3,500 (https://slate.com/culture/2005/09/it-s-finally-time-to-buy-an-hdtv.html https://slate.com/culture/2005/09/it-s-finally-time-to-buy-a...). Today, that same panel in 1080p is $100 at Best Buy (https://www.bestbuy.com/product/insignia-40-class-f40-series-led-fhd-smart-fire-tv/J2FPJKSFFJ https://www.bestbuy.com/product/insignia-40-class-f40-series...).
  - _DeadFred_ 1y ago
    I never had a CRT die on me. A $100 Best Buy TV is disposable junk. Is that factored in to your index? Modern product lifespan is at least half, and repairing something is no longer an option or is 'replace $1000 board' not the $50 fix it used to be. The current price should be at least doubled to try and match in some way. For 30 years my parents had the same TV, is that factored in? My TV has an explicit shelf life. Apps have already stopped working/being supported even without the TV breaking. My parent's TV never sold any data. My new, much more 'expensive' TV spys on me 24X7. You would not have been able to PAY my grandparents enough to put a TV like that in their house, yet alone consider it an 'upgrade'.
geye1234 1y ago
In the 1970s, a single-income family on a factory worker's wage could buy a 3-bedroom house with a 3x mortgage.
- SpicyLemonZest 1y ago
  Factory workers weren't (and even today really aren't) a replacement-level job that anyone can just go out and get. A guy making $4.50/hr at GM in 1970 had a great job that his peers would have envied; quite a lot of people who worked just as hard were making $3 or $2.
  - geye1234 1y ago
    Sure, but the 2025 equivalent of that GM job -- if you can find it -- is not going to pay enough to support a family and pay a mortgage on one income.
chessgecko 1y ago
The real issue is that housing is heavily underweighted in the cpi basket. How many people do you know that are only spending 12.9% of their after tax take home on housing, water and fuel? Only people with paid off mortgages.