The Shrinking Middle Class in America

[ShaneWalter]

That's kind of a loaded question Kuci, IMO. The only people who would say yes to such a hypothetical situation are those that are deeply dissatisfied with their current lives. I don't think your hypothetical question proves anything other than the fact that people are generally satisfied with their lives.

If given a choice between earning the median income now, or earning the median income in the 70's, of course I'd choose to earn the median income now. However, if given the choice between earning the median income now, or earning the median income in 2050, I'd still choose to earn the median income now, even though conceivably technology should be even more advanced in 40 years.

[Al B. Sure!]

Why are you still not getting it? All your talk of computers and cellphones is irrelevant.

$7K was sufficient in 1970 to support a family of 5 people reasonably well compared to what would have been possible in 1970.
$30K is not sufficient in 2004 to support a family of 5 people anywhere even close to well compared to what would have been possible in 2004.

That is the heart of the matter. Do you disagree with that? The same relative quality of life required less money in 1970; it required only one person per household working. Also, the difference between what the median household could afford and what was possible was much lower in 1970 than in 2004 (ie- there was less inequality).

Can someone else speak on this issue? Can someone come at this from a different perspective to clear up our disagreement?

[Al B. Sure!]

If you somehow say that you disagree with that comparison, then why did this happen?



and why did this happen?

Women as % of nonfarm payrolls:


And as for greater economic inequality...


If $30K in 2004 was so superior to $7K in 1970 why is it that $30K today is clearly deemed insufficient for a family? Why is it that mom works now (so add another $30K to the household pie)? Why is it that households are more reliant on credit than ever before?

The relative quality of life that a family could have with one wage earner earning $7K now requires TWO wage earners earning $30K EACH and substantial credit card debt (debt that exceeds disposable income even!).

Looks to me that the relative quality of life of 1970 is valued at at least $90K in today's dollars.

[Kuciwalker]

That's kind of a loaded question Kuci, IMO. The only people who would say yes to such a hypothetical situation are those that are deeply dissatisfied with their current lives. I don't think your hypothetical question proves anything other than the fact that people are generally satisfied with their lives.

Uh, Shane, the fact that you think it's "loaded" is a great demonstration of my point. The entire purpose of the exercise is to compare the real value of [$1970]7k versus [$2004]30k. You agree then, that almost everyone would prefer to have the latter? Well, that's really good evidence that the latter has far more real value than the former.

If given a choice between earning the median income now, or earning the median income in the 70's, of course I'd choose to earn the median income now. However, if given the choice between earning the median income now, or earning the median income in 2050, I'd still choose to earn the median income now, even though conceivably technology should be even more advanced in 40 years.

You're either crazy, extremely pessimistic about the future, or absurdly risk-averse. The stuff we'll be able to buy in 2050 will probably be ****ing awesome and I'd go for it in a heartbeat.

[Kuciwalker]

$7K was sufficient in 1970 to support a family of 5 people reasonably well compared to what would have been possible in 1970.
$30K is not sufficient in 2004 to support a family of 5 people anywhere even close to well compared to what would have been possible in 2004.

That is the heart of the matter. Do you disagree with that? The same relative quality of life required less money in 1970;

Wait, you mean that maintaining the same quality of life as compared to the people around you? So ****ing what? That doesn't change the fact that the real value of the $[2004]30k is LARGER than the real value of the $[1970]7k. If the worst social injustice you can find is that some people are getting even more ridiculously awesome new stuff than others, then we live in a ****ing awesome country.

I suppose you'd be pissed if in the year 2500 the median wage-earner could only afford a used spaceship, instead of the shiny new ones so many of his neighbors have

[Kuciwalker]

If $30K in 2004 was so superior to $7K in 1970 why is it that $30K today is clearly deemed insufficient for a family?

There are things today that are considered necessities - it is considered to be a hardship to not have access to them - that didn't even exist forty years ago. The reason $30k today is deemed insufficient is because our perceptions of what is necessary have changed.

[Al B. Sure!]

Wait, you mean that maintaining the same quality of life as compared to the people around you? So ****ing what? That doesn't change the fact that the real value of the $[2004]30k is LARGER than the real value of the $[1970]7k. If the worst social injustice you can find is that some people are getting even more ridiculously awesome new stuff than others, then we live in a ****ing awesome country.

I suppose you'd be pissed if in the year 2500 the median wage-earner could only afford a used spaceship, instead of the shiny new ones so many of his neighbors have

The 5th post in this thread... my very first post in this thread from last week:

Mr.Fun:

Even if the gap between rich and poor is greater than it was in let's say 1960, that doesn't mean that the entire population, rich and poor, has not moved together to the the richer side; in other words, even if the gap is greater, everyone has become richer.

However, I recall reading some research several years ago that found that people's happiness is not tied to an absolute appraisal of well-being but rather a relational appraisal; people are less happy the greater they feel the disparity is between them and others in things associated with general well-being (which is more than income and wealth though those two play a big role).

It is fairly paradoxical and illogical but the research seemed to indicate that people have self-evaluated themselves as happier when they are absolutely poorer but do not have considerably less than the next man than when they are much richer but have considerably less than someone else. Basically, someone given a dollar when everyone else is given a dollar is happier than if he were given five dollars and others given a hundred dollars.

But I suspect all this has less to do with national gini coefficients and more with what the Jefferson's next door have.

Where have you been?

The quality of life that one could buy with $7K in 1970 is no less than the quality of life that one could buy with ~$90K in 2004.

Yeah, some of the crap that you can buy has gotten better since then but that doesn't change the fact that it takes so much more working hours (plus debt) to reach the same level of relative happiness.

That doesn't sound like a clear-cut win situation to me. Does it to you?

(Not to mention the family value repercussions of both parents working 40+ hours a week and the kids left to be babysitted by the television or playstation)

[Kuciwalker]

That would be relevant if I were talking about "happiness" (which we can't measure anyway! we can only measure reported happiness, and there's no reason at all to believe that intertemporal comparisons of that are meaningful wrt actual "happiness"). But I've been very consistent with the principle that A has more real value than B if you would pick A over B, given the choice.

[Al B. Sure!]

That would be relevant if I were talking about happiness. But I've been very consistent with the principle that A has more real value than B if you would pick A over B, given the choice.

The problem with the comparison is this:

$7K in 1970 allowed you to raise a family. Presumably, a bachelor making that much would live like a king relative for the time.

$30K in 2004 will leave your family in the gutter (not just because of no internet or electronic devices; you might very well not even be able to afford electricity or food for your family! Do you realize how little $30K is if you're trying to support a family of 5? We're talking worse standard of living by any measure than a 1970 family at $7K)

That last point is the reason why all those trends that I discussed occurred. Families that were only raised on $7K can not at all now be raised on $30K... so, now, mom works to bump the household pie to $60K... they use credit cards (and with average credit card debt equal to or even greater disposable income), that debt is very significant.

Do you get it now?

The 1970 value of 2004's $30K might just be less than $7K; the possibility exists that the CPI UNDERSTATES inflation (and since it ignored housing and fuel costs, it very likely does). How else would you explain the need for more wage earners per household and more credit card debt?

[Al B. Sure!]

It suddenly occurred to me Kuci that you have no conception of the value of money because (you know )...

Let's breakdown the spending habits of a $30K household today:
House is out of the question; Housing prices skyrocketed since the 1970's. No house; that's one big strike relative to 1970's living.
Rent... need two bedrooms with 5 people... $1000/month typically.
You need utilities... let's go just electricity/gas/water/phone... $180/month sounds reasonable (confirmed by whitefenceindex.com)
You need food. Average cost per meal per person... even with cheap eating, would probably be around $4/meal/person. 3 meals a day*5 people*30 days*$4 per meal= $1800/month

So where are we right now? $1000+$180+$1800 = $2980/month * 12 = $35760

You're already $5760 racked up in credit card debt and you haven't even bought clothes yet!

Where's the cellphone? Where's the internet? Where's the xbox?

CLEARLY, it is prima facia or whatever fancy latin word for obvious you used earlier, ABSURD to say that $30K today is worth more than $7K in 1970!

THAT is why mom works. THAT is why credit card debt exceeds disposable income!

The standard of living isn't higher because real wages have increased. It is higher because more people per household work and there's considerable use of debt.

[Boris Godunov]

$4/meal/person seems a rather high estimate. That's about what I spend, and I have disposable income to burn and am not particularly frugal about it. I think you could easily halve that number.

Edit: I also live in an area that I would suspect has a higher-than-average cost of living. I will spent maybe $10 on food in a single day if I eat out for lunch.

[RGBVideo]

Let's breakdown the spending habits of a $30K household today:
House is out of the question; Housing prices skyrocketed since the 1970's. No house; that's one big strike relative to 1970's living.
Rent... need two bedrooms with 5 people... $1000/month typically.
You need utilities... let's go just electricity/gas/water/phone... $180/month sounds reasonable (confirmed by whitefenceindex.com)
You need food. Average cost per meal per person... even with cheap eating, would probably be around $4/meal/person. 3 meals a day*5 people*30 days*$4 per meal= $1800/month

There are things to clear up arguments like this, and they're called inflation-adjustments.

http://www.westegg.com/inflation/

[Al B. Sure!]

$4/meal/person seems a rather high estimate. That's about what I spend, and I have disposable income to burn and am not particularly frugal about it. I think you could easily halve that number.

$2/meal is a little too low I think. Consider, McDonalds dollar menu is very much a bargain (the food you get per dollar is usually more than you could usually manage if you were to make the food yourself; I believe this is well documented in studies about the eating habits of poor people)... A person would usually need two double cheeseburgers to be satisfied but then they'd have to drink water $3-4/meal seems appropriate to me.

Even with $2/meal/person, however, you're still at $2080/month or $24960/year.

Considering that you only have $5000 left after ONLY shelter, food, and basic utilities, that's not a very good situation. You have only about $400/month to spend on everything else for 5 people (clothes, transportation, even fun things, etc.).

My point still stands.

[Al B. Sure!]

There are things to clear up arguments like this, and they're called inflation-adjustments.

http://www.westegg.com/inflation/

No. Kuci has repeatedly denied the validity of the CPI so that doesn't work, VJ. Pay attention, my man

In fact, if he accepted it, we wouldn't even be having this debate that has gone on for 5 pages.

[RGBVideo]

Kuci has repeatedly denied the validity of the CPI so that doesn't work

what the ****?