They don't pay anything like jobs of the past used to. There used to be a large middle class that could afford things like housing, new vehicles, vacations, and hobbies on a regular basis. Service jobs generally don't provide that quality of life.
That can be fixed by policy. There's enough wealth to let everyone live decently and have hobbies without having to pretend that a person must deserve it by spending eight hours per day at an assembly line.
I think you are looking at the past a bit optimistically. First off, many houses in the past were MUCH smaller. I know people of the WWII generation that raised their families in working class Detroit neighborhoods. They were considered middle class but raised a family of 7 in a 900 sq. foot house. Yes they went on vacations, but they drove and didn't go out to eat. They had usually only a single car. My point is that they didn't live as extravagant as you seem to think. By the way, you can still buy one of those houses for about 65k in Detroit today. A 30 year mortgage with 10k down on that is less than $300 a month for a mortgage payment.
I think one of the problems is that even if you're frugal with your resources, you're barely making it. In the suburbs, two parents with a single car working 9-5 (if you're lucky) is barely sustainable with two young kids. It isn't sustainable when those kids get a little older and have to go off and do their own activities in order to (hopefully) grow into well rounded human beings. In the a major city, transportation cost have increased too.
I cook every meal, and I can tell you, food prices are starting to look iffy to me. I can only imagine someone on a fixed/restricted income. Let alone having a spouse or a kid or two.
I also think you over estimate the average person's ability to save, even if you're not buying a bunch of extravagant crap. In the "middle class" there isn't as much spending going on as people think.
Also, sure you may be able to buy that type of home in Detroit for that little (which i argue really isn't that little... especially if you have no savings and shot credit), but if it's in the city proper, you have increased food costs, lack of public transportation, deficient police, fire and ems, high taxes as Detroit tries to recoup loses... etc. If you live in the suburbs (which most people do in Detroit, which eroded their tax base and caused their current problems), you have the issues I highlighted above.
Combine that with little job mobility and lack of a viable path to increase income... the "middle class" is taken for a ride... the poor are screwed.
I agree that the student loan issue is a big problem. If people tried to get a mortgage, they would be required to back the loan somehow and show income that can pay it back. With student loans, there are no such requirements and people can get any kind of degree and take out insane amounts of debt. How can someone that ends up getting $12/hr pay back a 100k student loan and then be able to afford anything else?
Also, the houses I was looking at were in Garden City, MI. Not unsafe, not dilapidated, just small houses.
Finally, I disagree with the argument that kids need a lot of activities (such as team sports) that they must be driven to and from in order to be well-rounded. There are many paths to being well-rounded.
Regardless of how you enrich your kids, staying in the house without outside interaction isn't optimal. I just think that transportation is a need, and in suburban sprawl, walking doesn't cut it. When multiple people in the household need transportation, but you have two (or less) drivers, who have responsibilities of their own... I think you see where I'm going.
Also let's not get into the fact that it's "frowned upon" to have kids "wander" by themselves now.
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