>these comparisons don't really make sense over extended periods of time like this
Yeah. It's probably useful in something like a magazine article or book to give a sense for how someone in 1800 would have viewed a $20 bill in purchasing power. But you go back a century or so and the basket of goods you're comparing look so much different.
And behaviors are also just a lot different. Most middle class people in the US won't have a cook but they have tons of dining and take-out options. Just to give one example.
> Sure, $250 doesn’t sound like much but adjusted that’s around $2,300 today.
Tangential point: Prices are always compared adjusted with inflation, but I think it is actually more telling to compare based on average income because IMHO that's what really tells how expensive something was for people.
In 1959, the median income was $2,600 [1]. In 2019 it was $57,456 (for men) [2] and dropped since because of a certain pandemic...
Therefore, something priced at $250 in 1959 'felt' as expensive as something priced at about $5,500 today (that's quite more expensive than using inflation because people have got richer, i.e. incomes have been increasing faster than prices).
> "it's easy to argue the average middle class worker is substantially worse off"
it's also easy to argue that the typical metrics used in this comparison are misleading.
A "typical middle class worker" in the early 1970s lived in a house that was built in the 1950s or earlier, around 1200 square feet, 1 bathroom, 2-3 bedrooms, without air conditioning or a washer/dryer, and had one vehicle available to the household [0]. Nowadays, we consider that "the projects", undesirable housing for poor people, while the "middle class" live in considerably larger dwellings with more amenities.
The reason I mention this is that real wage / purchasing power comparisons almost universally use "average housing costs" as a significant part of the metric, and "average housing costs" are in no way measuring the same thing. (
It so happens that I live in my childhood home, which my parents purchased in 1975 for $32,500 -- about 3.1 times the national median household income. I purchased it from them in 2012 for $135,000, a mere 2.7 times the median income.)
If you actually compare the goods a median-wage worker can purchase today to the goods a median-wage worker could purchase in the 1970s, there are definitely some things we have a harder time affording (like routine health care), but with the majority of material goods, you can get much bigger/better/faster/higher quality stuff for the same portion of the budget [1]. A modern middle class income gets you much better than 40-years-ago middle class living conditions.
>>> average net worth increase for different brackets
>>> the normal people are faring compared to other/previous years.
The economic disparity is gross, you can't argue excess.
Comparing to the past is isn't going to play out the way you think. What time period do you want to compare to? Is that a period where "better off" was for a narrow segment of the population, where "better off" was robbing tomorrow?
The problem is that life looks a lot like the classic game design dilemma of "power creep".
If it was 1950, no cell phone (1 house phone bill), no internet, no cable, no streaming, no Spotify, no computer... You might have a tv (one, singular), radio, those are one time costs. Power, water, phone, food, house/transport (and likely 1 car for many family's). My neighborhood grocery story is a gym... so we traded a close by place to shop for more travel for food, and a place you pay to go exercise.
People ate canned and frozen veg, not fresh trucked in from everywhere items. And before you make the argument for health, go look at the nutrient content of a flash frozen green bean vs one that sat in a box for a week to get to your plate, the frozen wins.
Guess what, all of what we have, unsustainable. 8 billion people can't live like middle class Americans! As more of the globe wants in on the action things are only going to get HARDER for people, unless we make some drastic lifestyle changes.
>I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago
Over 100 years ago sure. Over 40 or 60 has it really? People usually consider more stuff (access to cheaper and more gadgets, the internet, etc) as an improved standard of living or quality of life. In other words they conflate technology making some products cheaper for a better standard of living.
But even more important factors, for a large part of society is access to healthcare, education, house, etc -- all of which have gotten more expensive. There was a time when a single earner could buy a house at 25 or 35 and get their kids to college. Now two earner families often struggle.
Middle class jobs have also become more stressful and pressing, while many middle and working class wages, inflation adjusted, have stagnated for decades, despite the increased stress, working hours, and productivity gains.
> People want the standard of living everyone had in the US decades ago, it costs much more now.
I think you are right. But all the CPI data and real income data says people are much richer than 40 years ago. And as someone who has spent a lot of time digging through the methodology of these time series, I don't see any bias or obvious error that should make me suspect the government data.
Then the next step is to say "yes, a car of today is much better than a car sold in 1980, so in real terms, maybe cars are cheaper but you can't buy those cheap cars now." But if you really think about it, that's not true, either. You can still buy cheap cars, for example used cars, that will last longer as they are better built. You can still buy cheap housing, just in a different location. Remember there were no mobile phones in the 1980s, no internet, no personal computers, etc. But if you want to live like someone in the 1980s, you can do that and have more money left over than someone would have in the 1980s.
So you point me to one thing and I will show you how, with today's income, you can get it at same or better quality and have more money left over than if it was 1980. Except healthcare, you can't get the cheaper version of healthcare from the 1980s (since that would be illegal). But other than that, you really can, and you can't pin the entire difference on healthcare.
The best I can think of is a vague notion that people have lost the skills to be able to live like they did 40 years ago, possibly because being able to live like that requires some community support, and we don't have that support anymore. As one data point, take the Amish, who live like they did 200 years ago. And they are not poorer. But they make sacrifices to live like that as an entire community. If an individual tried to do it on their own, they would fail. For one thing, no one would marry them once they found out about the lack of electricity and 18th Century amenities.
But I'm not too happy with this characterization, either. It's something that still puzzles me.
> ... 7.5% of her income. That seems astonishingly low, to me.
You've fallen victim to presentism, the cognitive bias of assuming the past was like the present.
Before the 20th century, households spent a far higher proportion on their income on food and on fuel (for space heating, cooking, lighting) than we do today. Clothing and footwear also loomed large in the budget. Housing used to be a relatively smaller cost than these.
7.5% is possibly on the low side for the time, but not astonishingly so.
>Focusing on income ignores the plummeting costs of goods, what they can buy is much better and more plentiful than they could in the 70s.
Actually the most important good, a house, is much more expensive to buy/rent than in the 60s/70s.
There were times when a middle class family with one working member could afford a house and send the kid to college without huge debt - something near impossible now even with 2 working members.
As for goods, those are hardly a compensation, if people work crazy hours, with stagnant pay, and get less share of _their_ society's wealth (their current society's, not compared to 20, 30 or 1000 years ago, which is what matters. We don't compare ourselves with medieval serfs or cavemen to see if we're doing OK, and we don't pat ourselves in the back in 2019 if we live in a trailer park because we have electricity and some rich person in 1800 wouldn't).
So, yeah, thanks to cheap foreign manufacturing one can have more stuff (just not the important stuff, like house and healthcare and education and better job conditions).
>That's definitely not the case, since the numbers I cited are adjusted for inflation.
Inflation adjustment doesn't take into account costs that are prevalent in an era but totally absent in another: like internet access, cellphone bills, and such. Nor how much one not puts into their retirement account / savings to spend on daily needs.
If it was just supposed to be relative to the past, we would all be content for living better off than the pilgrims. Who needs a fridge, for example, when they didn't have any either? So, if we have fridges now and stuff, and even the garbage man has a cellphone, it's all dandy.
Empirically, people older than you that have lived throughout those decades know the numbers a bogus as an indicator of purchasing power, whether they were inflation adjusted or not. One could buy a house with a regular blue collar job as a household's single earner back in the 50-60s. Today, and for a few decades, not so much. Same for things such as college education. You could pay for it back in the day by working laughable gigs by today's standards.
So whether you can have "avocados" or not, if you can't as easily have a house, an education, or a steady job, is a moot point.
Note how: "after adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today".
>The totally subjective hedonic quality adjustment (sure food is more expensive but iPads have more ram!), also this knife only ever seems to cut one way, enshittification doesn't have a inflationary effect like you would expect.
Quality adjustment is only active for a few basket items, and their contribution to the overall cpi is minimal. All the extra food inflation that's supposedly happening isn't being held back by faster iPads.
>Owner imputed rent as opposed to looking at what consumers actually pay.
Most Americans are homeowners. For them, they don't pay any rent. Pretending that they pay market rent has no relation to what their actual expenses are. How do you propose we capture their expenses?
>The basket of goods is unrealistic, most households don't have teams of economists putting their shopping list together in order to maximally limit inflation.
>Go back to the ‘50s and ‘60s and you can actually see things change.
The time just after World War II was kind of an economic anomaly for the U.S. Our population of about 4% of the world generated something like 50% of the worlds GDP, most other industrial economies were still rebuilding.
It might not be accurate to consider that period as a baseline for purposes of economic comparison.
I'm not sure it's what the parent comment is doing, but it's beyond baffling to me when I see this view in the wild. You'd have to be completely ignorant of staggering amounts of history, economics, and basic arithmetic to think that historical incomes were anywhere close to what we have today in terms of consumer goods, and yet I see this very often. (Not to be mistaken with more reasonable arguments that rely on the differences in utility derived from goods whose prices have gone down and goods afflicted by cost disease)
"In 1969 the median salary for a male worker was $35,567 (in 2012 dollars). Today it is $33,904. So for 44 years, while wages for the top 10 percent have continued to climb, most Americans have been caught in a ”Great Stagnation,” bringing into question the whole purpose of the American capitalist economy. The notion that what benefited the establishment would benefit everyone, had been thoroughly discredited."
I don't believe this analysis (which appears to be the central point of the piece) is meaningful. What is the author trying to compare and why? A male worker in 1969 could not buy a smartphone or a flat screen television. They would pay far more for air travel. Does it really make sense to quote their salary in 2012 dollars?
I would be interested to see the price of basic necessities over time. I would imagine Walmart, etc, would have caused a fall in food prices; I am unsure of other factors.
>In the US, the purchasing power of that range has dramatically increased over the years. We live in bigger houses, consume better medicine, more food, more education, more and better electronics and entertainment, etc. I think you'll be hard pressed to find a single category in which contemporary Americans have less than 1970's Americans, for any reasonable value of x. If you dispute this, go ahead and find that single category.
This conflates technological and process improvements (e.g. a CPU with 100 times an CPU 's PC power can now be made with 1/1000 of the money) with increases in actual purchasing power.
This also forgets that wealth is relative. A piss-poor Mississippi kid might now have a mobile phone, which in 1980 it would cost tens of thousands of dollars to have (if it was even possible). That doesn't mean the kid is richer than Gordon Gecko, it just means that the scale has changed.
See this for example:
American men in their 30s are earning less than their father's generation did (…) The study was produced by a handful of politically diverse think tanks including the Pew Charitable Trusts, the American Enterprise Institute, the Brookings Institute, the Heritage Foundation and the Urban Institute. It looked at income levels of American men in their 30s, which can be a good indicator of lifetime income. (…) Relying on Census Bureau figures, the study's authors found that after adjusting for inflation, men in their 30s in 2004 had a median income of about $35,000 per year, for a 12 percent drop compared with $40,000 per year for men in the same age group in 1974. (cnn.com)
>>Only in a bizarro world where the wealth is magically readjusted to account for inequality. In the real world this inequality is caused by wealth moving from the middle to the upper classes.
Are you seriously calling a world of economic growth and technological process "bizarro world"?
No, what I call bizarro world is that place you describe where "inequality is pretty much unrelated to how many people are middle class".
>We have become vastly wealthier than we were at any historical period, ignoring short term fluctuations (e.g., recessions). In the 1970s, the bottom 11% didn't have flush toilets.
Again, conflating technological and manufacturing progress (and cheaper prices for certain products) with wealth.
From Wikipedia: "12.3% fell below the federal poverty threshold and the bottom 20% earned less than $19,178". And this "less than $20K annual", is for household incomes, not personal.
>Hahaha! Now I know you are writing a parody of something - first complaining about inequality, then complaining about wages becoming more equal.
Yes, it must be "hahaha"-level funny for all the families in foreclosures, the homeless, the dying communities with an industry in decline, et al.
And, no, I'm not complaing about "wages becoming more equal", I'm complaining about wages entering a race to the bottom.
If the chinese made $1/hour and US workers made $20/hour, getting the chinese to $2/hour and the US workers to $5/hour is not the kind of equality we were discussing. How about raising Chinese wages WITHOUT fucking the american middle class over (and eventually the Chinese too, as it both caps their salaries and kills their market)?
> it was much easier to get a carpenter to build a table/furniture at a relatively affordable price
What do you call an affordable price in relation to mean, or median, purchasing power?
A quick web search finds a lot of one off dining tables in the USD700 to USD3k range in the US. Made to measure dining tables in the UK can be had for less than GBP800.
Nope, it's the early 21st century, and inequality in this country is higher than it's been since the Gilded Age. Not exactly a comparison we should want to be making. And the trajectory is still moving primarily in the wrong direction.
> In real terms adjusted by the price of coke, the median household income has fallen by 69%. (for giggles).
Not necessarily that far-out: since the core CPI that goes into inflationary figures is measured using things like the cost of a loaf of bread, I always thought it'd be nice to be able to flip that around, and see historical economic charts measured in loaf-of-bread-units. It would also allow for easy cross-comparison between figures from different countries.
(To go actually far-out, though, wouldn't it be interesting to have a salary and a bank account denominated directly in inflation-compensated purchasing-power, such that if you got paid 1 BreadBuck, it would buy you exactly one loaf of bread today, tomorrow, or twenty years from now?)
> Are we comparing a person in one location to another? I thought we were talking about improvements year over year.
We're doing both. And in both metrics, the bottom are the best off today than ever before. Unfortunately, the bottom were really poor in the 20th century, so being better than that (while good), doesn't mean our work as a society is complete. But that's a welfare problem, not a "what is the system like for the average American" problem.
It's also worth noting that, in America, the bottom 3 quintiles are extremely underrepresented in the highest COL metros. That's just not where they're concentrated. Given the purchasing power disparity between US states, the variance in the US-level data is probably too wide to be useful, and you kind of have to compare from State-to-State -> https://www.advisorperspectives.com/dshort/updates/2019/12/1.... Once you account for that, the root causes also become easier to identify — predominately local land use policy.
Yeah. It's probably useful in something like a magazine article or book to give a sense for how someone in 1800 would have viewed a $20 bill in purchasing power. But you go back a century or so and the basket of goods you're comparing look so much different.
And behaviors are also just a lot different. Most middle class people in the US won't have a cook but they have tons of dining and take-out options. Just to give one example.
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