> "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.
> Are you seriously arguing that whatever fraction of Americans are below "middle income category" should should be ok with not being able to house, feed, cloth, heat themselves
No, I'm saying that people who are below the middle income category (as that adjusts locally) often cannot reliably, securely "afford someplace relatively clean to live, feed themselves, afford heat in winter, etc.". I'm not saying that they should accept that, just that if you are advocating for a living wage, you are, in fact, advocating to move the floor up to something that fits what is commonly styled "middle class" income currently.
Yes, I am. All econometrics comparisons are in real (i.e., inflation adjusted) dollars.
Here's [1] one example: median inflation adjusted household income from 1985 ($52K) to today ($68K) has grown a lot. Dig up the same info per quintile, and you see the same trends.
This also ignores that households have fewer not more dual income over this time (check Census data to confirm if you don't belive), and that the average worker has gotten younger (thus are earlier in a career, thus lower income on the career ladder - this can be checked with BLS and Census data), and the actual person in the precise same set of circumstances now as then has shown even more growth than this simple median metric shows.
>workers increasingly can’t afford housing
Also false. Here [1] presents inflation adjusted price per square foot of new housing - remarkably consistent over the period listed 1978-2020. What has changed over this time is the median house has increased in size tremendously.
I've ran these numbers back as far as I can find data, and the trend is the same - flat per square foot price when inflation adjusted.
So I agree some places are expensive, but the vast majority of the US is not, and overall workers are not facing increased housing costs for the same housing. What they do now is want more than their predecessors want, and complain the prices are more.
>Also, as someone that refinanced a house this year, I can assure you the wealthy are receiving much larger payments than the working class got from their stimulus checks.
I also refinanced, and I don't how you conclude this from doing one refi, or even how you can conclude such a claim from a single anecdote. Care to explain?
If you;re going to claim some statement testable with real values, please provide a citation to your data. I don't find any of the stuff you're claiming to match these sources (Fed, Census, BLS, CBO) which are pretty well regarded sources of economic data.
> The economy is doing stellar for the upper classes which account for maybe 10 to 15% of the population.
Part of the problem is that the US isn’t one “the economy”, it’s localized, primarily due to housing markets. There is no way that the top 10% of income earners qualify as “upper class” in the US, because the majority are in high COL areas.
When you make $400k/pa, but pay $5k/mo in rent/housing, that’s a very different outcome than making $400k/pa and paying $1k/mo in rent/housing. Both of these situations exist in the US, but the former is much more common than the latter. Looking at income only without accounting for cost of living presents a skewed view of things. The person paying the higher cost of living in this situation is solidly middle class, if and only if they own that property, renters by definition aren’t middle class. The person paying the low cost of living almost certainly owns the property and is able to invest heavily, so is almost certainly upper class or a HENRY.
Earning $90k/pa puts you in the top 10% of income earners, and isn’t even six figures. The new middle class for non-Boomers starts in the top 3%. You only need to earn $300k/pa to be in the vaunted 1%, and in most high COL areas you’ll never be able to afford a house.
Looking at income percentiles without looking at cost of living is a really skewed viewpoint, and it ignores the huge wealth chasm between the top 0.1% and everyone else, even 1%ers struggle to make rent.
>Sad to say, $200k is not middle class. $300k is the line, nowadays. Very few of us are middle class, in the sense that our grandparents could be even on a regular wage. That is, there is essentially no middle class in the US anymore. Income is distributed strictly bimodally.
If you think <300k/yr is not middle class, I think we are coming from such different places that we cant have a meaningful discussion.
>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).
>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.
> Lots of middle class professionals have essentially the same output as their forebears did 40 years ago.
No, they have much higher output.
> They are not expanding the pie.
They are.
> They are nonetheless richer in absolute terms
They are not. It takes two incomes to do what one income used to pay for. Lots of middle class people cannot afford to even buy a house. Something most of their parents managed to do at a young age.
> but have pulled away in relative terms
Yes, this has also happened.
> those that are much more productive than their fore-bearers.
Much more productive? That's also not true.
> This is perfectly fine but for envy.
If it were envy, the middle class wouldn't be asking for better wages. They would be asking to become rich. It's not envy.
> I think this is obviously false and hurts the credibility of the rest of this comment.
It is not OBVIOUSLY false.
Look at education costs relative to the cost of living. Consider that your only recourse to a decent salary is through higher education, since the middle class union job is dead (and REALLY dead for someone young since all the ones that do exist are held by older people that sold out the younger generation in successive union negotiations).
You really think housing is cheaper or better now? I'm assuming you live in silicon valley. The only thing built is "bigger and better" because that is MORE EXPENSIVE and people have to PAY MORE for it. Nobody builds 'affordable housing' which you are obliquely criticizing people for not choosing. There is no choice for 'affordable housing': all of it that exists is occupied. That's why there is a housing shortage and rental shortage in practically every major urban market.
And then there is health care...
Food has dropped in quality even if one argues it has maintained cost parity.
Jobs are far worse that they used to be. Like food, the number of jobs is cooked to seem the same, but the quality of the job is far worse, which leads me to...
A great deal of consumer cost advantages have been due to globalization/arbitrage of foreign near-slave-labor. The cost of better consumer goods is destruction of the middle class and US manufacturing.
All the major milestones of the happy capitalist worker's lifetime are all very very very much more expensive or worse.
All of these structural degradations to the US are being propped over with financing shenanigans such as low interest rates. The Pandemic is all that on steroids.
All those shenanigans are sensitive to disruption. COVID is pushing our currency manipulation/control to the brink.
>> Your dad could afford to buy a Toyota Corolla and a new mid-line TV in 1980. You can afford to finance one with low interest rates in 2019. But your son won't be able to afford those things with spiked interest rates and more restrictive lending paradigms.
This is a misrepresentation of the real statistics around wage stagnation. Real wages (adjusted for inflation and/or purchasing power) hasn’t changed much for the lower and middle classes in the USA for the past few decades. So, the average American can afford to purchase exactly what they could a couple decades ago.
>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".
> Additionally, crappy wages and unrealistic job descriptions.
What’s interesting, is from what I’ve seen, a lot of stuff is paying a lot better than I remember seeing a decade ago. However, the costs, notably the cost of things you need to survive (especially housing) has managed to far outpace those wage gains in a much shorter period of time. Although that might be specific to my location.
> "But the average American house today has twice as much square footage per person than in 1985... 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."
> "...it's actually extremely hard to figure out how to precisely measure changes in standard of living over time."
indeed, those kinds of increases are of "questionable utility", and thus not relevant to the standard of living discussion.
rather than the fed's definition of inflation, it's important to look at the basket of essential goods (and more house and more cars ain't it) when we consider the economic tide for the majority of americans.
> And when we look back at our history, we see that in the 1950s and 1960s — the glorious postwar years of rapid and equitable growth and plentiful jobs — we spent far more on our military than we do now.
Yeah, but two important words in this sentence are no longer true today: equitable growth.
We taxed the ultra wealthy at a much, much higher rate than we do today and individual purchasing power was much higher.
The household median income in the U.S. in 1950 was $2,990 — roughly 40% of the median home value of $7,354 at the time, according to census data. This is no longer true as a median income doesn’t even qualify for 80% of purchasable homes today[0]
Sure, we can say that there has been some benefit to the middle class in the West through reduced price on some of the goods but certainly not on big bill items such as housing and education. It's great that I can buy a cheap jacket and keep some of my income, it sucks that my housing expanses went from 1/5 to 1/2 of my income (as an example).
Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
> This idea that middle class boomer parents could afford a luxurious lifestyle for their families is not all that truthful.
“Middle class” has a slippery definition, but it is definitely the case that by many measures Millenials are, overall, seeing worse family financial conditions any any given age than Boomers did (e.g., median real wealth is lower for Millenials than it was for Boomers the same age.) There is also indications that this is accompanied by much greater in-generation disparity (e.g., 90th percentile wealth is higher for Millenials than it was for Boomers of the same age, despite the median being lower.)
> In the 1950s, the average house was still ~3 years of average income.
Today you'd be lucky if that's 10 years; most likely very well paid too. For most people with well-paid jobs it's 15, and for everybody else it's a lifetime endeavour (20-30).
Not sure how you're contradicting me exactly with this.
I guess we are both showing bias and filter bubble effects. I live in a poor country and even if I am not poor myself, how almost everybody around me lives is sadly too visible.
> It’s also true that an average wage earner today enjoys a higher standard of living than at any point in history - bigger house, more cars, tvs, and luxury items.
I really disagree with that. I'm a 35 year old single man with no kids and a well payed software developer, better paid than 90% of the population. At this point in life my father had a stay at home wife, 2 kids and was working for near minimum wage as a cleaner.
He had a huge 4 bedroom house, double garage, large backyard with a swimming pool, 2 cars etc and was close to paying off the house at my age. Meanwhile I'm looking forward to pay off a tiny studio apartment in a few years.
Yes we've got bigger TV's and smart phones now, but they don't contribute to a high standard of living.
>There is no state, metropolitan area or county in the U.S. where workers earning minimum wage can afford a two-bedroom rental home by working 40 hours a week, according to the study.
This seems like an unreasonably high standard for a single minimum wage income unless they're using the excess here as a proxy for other necessities.
Edit: This seems unreasonably high because it greatly exceeds the standard of living we expect for a single minimum wage income household. Sure it would be nice if a single minimum wage household could rend a 2br but that's not what we currently expect them to be able to do. Saying "people who make X can't afford Y" when we didn't expect them to afford Y in the first place isn't very meaningful when you're discussing the ability of people making X to have a standard of living that meets our expectations for people making X.
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.
[0] dig through the reports at http://www.census.gov/programs-surveys/ahs/data.All.html for details
[1] http://nonprofitupdate.info/2011/07/27/i-can%E2%80%99t-think...
reply