The above chart comes from the U.S. Bureau of the Census, 1997. It shows the turning point for men's wages in the United States (you can click on the chart to enlarge it).
If you were a man aged 25 to 34 in 1967, things might have seemed pretty good in terms of wages. The median wage was nearly twice as high compared to your father's generation.
If you were a man aged 25 to 34 in 1977 things were still OK. The median wage for men had barely grown for ten years, but you were still doing appreciably better than your father had done at your age.
But for men aged 25 to 34 in 1987 things weren't so good. The median wage for men had fallen by this time and was actually lower than what the father's generation had earned.
And by 1997 the gap had continued to open up. Now young men were doing appreciably worse than their father's generation.
So if you're an American man and you think that your father may have had it a bit better than you when it came to supporting a family, you might well be right. The days of each generation of men being better off appear to have finished back in 1987.
(Source: here p.29 of PDF, p.19 of document)
Have those wages been adjusted for deflation? A modern car is no more expensive but has more power and better fuel economy while producing 99% less pollution and is significantly safer for its occupants. Food, clothing, and durable household goods cost much less than they did then. And then there's stuff that didn't even exist in 1967, like iPods, laptop computers, and flat-screen TVs. I think you'd have to be insane to prefer 1967, the standard of living was appreciably lower than today's no matter what the wage data say.
ReplyDeleteI think I'd prefer 1967. The dresses were better quality, the clothing are shit now...I just washed a bunch of stuff and noticed one item that I paid 69 dollars for looks like shit after 2 washings.
ReplyDeleteHave you noticed how everyone Needs a Flatscreen, Cell Phone, Computer, and then you have to replace your laptop when it burns out, you have to replace your laptop fan when it burns out, then you have to pay your cell phone bill, then you have to get your car payments etc etc etc
I think things are way worse now and I personally feel it.
On the bright side I got some cheap workout clothing for 5 bucks......
But do my new 5 dollar shorts that will last for a month, really make up for the shit storm that is my life? No.
The big difference between 1967 and now is the public schools. In 1967 you could send your kids to public schools in LA and be assured that they get a great education. Now you MUST send your kid to private.
ReplyDeleteThere's a lot of 'hidden' costs to avoid some of the problems of multiculturalism that weren't around in 1967.
To stay upwardly mobile you need a lot more then you did in '67.
I've seen quite a few different sets of data on this issue.
ReplyDeleteThe high point for men's wages was 1972 rather than 1967. Since then real wages for men have either stagnated or declined depending on which research set you look at.
However, the effect has been felt most by men without a university degree. Wages for men with bachelor degrees seem to have risen.
Also, family income (i.e. taking into account the wages of women) has risen due to the rising female wage.
And it's true that some consumer goods are cheaper now than in the past. But the costs of housing and education are considerably higher as is taxation.
Median family income (MFI) is actually dropping off a cliff, Mark. At least in America and Europe. The average family is getting poorer again, and that has been the case for the last 13 years (see chart).
ReplyDeleteIt's true that MFI initially rose as women entered the workforce, but their entry caused a glut of workers in the labor market. Because of that, men's median incomes have not risen since 1969 (in fact, they are now lower), while women's rose from then until recently. Increases in house prices have eaten up all of the extra money the women brought in.
Now divorce and single-motherhood is reducing MFI even further. The households increasingly only have one wage-earner again, and that wage-earner is a low-wage or part-time working woman, rather than a full-time working man. The smaller family size means that there's a higher proportion of the income for each member, but the income is smaller, and the housing costs swallow up so much money now that it makes no difference.
Tax burden's are now quite low, by historical standards. Most people don't pay any federal income tax, for example.
ReplyDeleteBut the tax cuts are running out this year, and will jump to the highest rates ever. High taxes combined with falling MFI. Doesn't look good.
Alte, you're right about stalling family incomes. I remember the same thing from the US census data I looked at. Median family income rose for a period of time in the 1990s but the effect was then lost.
ReplyDeleteIts a tricky exercise comparing purchasing power over different eras however if I look back over my own experiences a few things stand out.
ReplyDeleteI grew up in a upper middle class home which when we moved to WA my father purchased for 35K in Claremont with bedrooms each for us 6 children. At that time 1972 his annual salary was 30K and from time to time my mother worked.
Every single peripheral of that upper middle class home would be well within the reach even of a welfare class family today, colour TV, Stereo, Pushbikes, Music (CD Today of course),food (much cheaper and much more variety), aircraft flights , restaurants etc so at first glance it would seem that you have much more purchasing power.
However lets look at fundamentals e.g. the house. Recently it was sold for 3.5 Million and as my father pointed out that's 100 times what he payed in 1972, how many upper middle class men take home 3 million a year? Also through the 70's my parent had up to 6 of us in private schools, boys at Christchurch Grammar and Girls at PLC today you would be looking at around 100K in school fees alone per year and how many men could pay that today?
It strikes me that what has crippled purchasing power is property, once it represented how much money you could borrow on a single male wage, now it represents how much you borrow on 2 wages. When women entered the work force in huge numbers they actually ended up placing a huge amount of their earned wealth into a non liquid real estate asset. Male wages have not been halved by the entry women into the work force but they been reduced considerably and I suspect 1987 probably was the tipping point.
Wages went down because feminism more or less doubled the amount of Labour in the market. When you double supply of a resource you reduce it's cost.
ReplyDeleteEconomic growth has made up for a lot of that, but if you don't have a uni degree and happen to be Male, you are in trouble, particularly when the market is now flush with almost worthless degrees, half of all school leavers now go on to tertiary education.
By the way, Bob Carr [former NSW Labor premier] has written an amazing article about the incredibly close links between the Labor party and the Communist Party of Australia in the 50's and 60's.
I encourage everyone to take a look:
http://www.theaustralian.com.au/news/opinion/thankfully-whitlam-and-co-rescued-labor-from-the-reds/story-e6frg6zo-1225887763473
Wages also go down when growth slows. What happened in 1972? The end of the long post war boom.
ReplyDeleteHarvard law prof Elizabeth Warren in 2007 gave a lecture on the imminent collapse of the middle class. Watch it here.
ReplyDeleteUS-focused, but the lessons transfer. She addresses the "two-income trap," and how single-income families were much better off.
She gives quantitative backing to many of the issues already touched upon in these blog comments.
While the prices of "flexible" purchases have decreased, the price of "inflexible" necessities have increased.
She blames the jump in real estate on the fact that home prices are proxies for school quality. And the need for two-car families in the U.S. has all sorts of costs, including a doubled risk of a family member suffering a traffic accident on the work commute.
Today's big killer is houses prices. All the cheap gadgets in the world don't mean much if you most of your wages end up going on mortgage repayments or rentals.
ReplyDeleteExpensive accommodation definitely undermines the goals of conservatives.
Note for example how today's government's transfer millions of taxpayers money to private landlords to pay for the costly rentals of middle class solo mums, who the liberal establishment tells us these people don't personal autonomy comprimised by having to live in cheap government made housing.
Meanwhile not enough affordable houses get built, and nobody outside the welfare class can afford to start a family until they are about 40.
When you combine autonomy theory with egalitarianism you end up with a bizzare world where the irresponsible and those who can't take care of themselves are given maximum freedom while the those who are capable and want to get on with things are kept in chains.
If you want housing to get cheaper, stop government from undersupplying land. Regulatory restrictions like "Smart Growth" and crazy regulatory costs are more responsible than anything else for the cost of housing.
ReplyDeleteWhen oh when will something be done on that point (cheap credit and tax write off's).
ReplyDeleteRight after pigs fly and Hell freezes over, I suspect. But then it's definitely next on the list.
ReplyDelete;-)
It'll go soon when the money finally runs out. It'll suck for us, though, as we have a lot of interest right now with our new-to-us house, and enjoy an enormous write-off every year. We've started scraping together our savings just in case we get walloped with a jumbo-sized tax bill next year. Better to be prepared than broke.