Posted on 10/17/2006 5:56:54 AM PDT by Fan of Fiat
As the U.S. population crossed the 300 million mark sometime around 7:46 a.m. Tuesday (according to the U.S. Census Bureau), the typical family is doing a whole lot better than their grandparents were in 1967, the year the population first surpassed 200 million.
Mr. and Mrs. Median's $46,326 in annual income is 32% more than their mid-'60s counterparts, even when adjusted for inflation, and 13% more than those at the median in the economic boom year of 1985. And thanks to ballooning real estate values, median household net worth has increased even faster. The typical American household has a net worth of $465,970, up 83% from 1965, 60% from 1985 and 35% from 1995.
In Pictures: Mr. And Mrs. Median Over The Decades
Throw in the low inflation of the past 20 years, a deregulated airline industry that's made travel much cheaper, plus technological progress that's provided the middle class with not only better cars and televisions, but every gadget from DVD players to iPods, all at lower and lower prices, and it's obvious that Mr. and Mrs. Median are living the life of Riley compared to their parents and grandparents.
So why are they so unhappy?
Yes, despite their material prosperity, the Medians are a grumpy lot. A Parade Magazine survey (a good source for all things median) performed by Mark Clements Research in April showed that 48% of Americans believe they're worse off than their parents were. A June 2006 study by GFK-Roper group showed that 66% of Americans said that their personal situations in the "Good Old Days"--defined by the bulk of respondents as anywhere between the 1950s and the 1980s--were better than they are today. And in May, a Pew Research Center poll showed that half of U.S. adults believe the current trends point toward their children's future being worse than their own present.
Attribute some of the dissatisfaction to what economist Milton Friedman dubbed "Permanent Income Theory," which assumes that people measure where they are relative to where they expected to be a few years ago. They don't care a bit what the average income was four decades ago.
"If you expect a 3% rise in income and you get 2.5%, you're disappointed," says Ken Goldstein, an economist at the Conference Board, a private research group in New York.
And because people generally judge their fortunes not in absolute terms, but by comparing themselves to others, the super-success of the top 1% can make Mr. and Mrs. Median feel relatively poorer. Take CEOs--the $19 million that Wal-Mart Chief Lee Raymond raked in last year was 410 times what Mr. and Mrs. Median made, as opposed to the $469,000 a year earned by Exxon's Ken Jamieson in 1975, which was a mere 40 times more.
It's the same with celebrity athletes. Those who worshipped Joe Namath in the 1960s could at least identify with the $142,000 a year he made ($848,000 in today's dollars). But how many can identify with the $87 million Tiger Woods took in last year? And not only are the elite making much more today, relatively, than the Medians, the rise of cable television and the Internet assures that they know all about it.
"It's now easy for us to see how other people around the world live, not just how our neighbors live," says Barry Schwartz, a professor of psychology at Swarthmore College. Schwartz also argues that the plethora of consumer choices today, while generally a good thing, can be a catalyst for bringing people down. Not everyone can have a new flat screen television with both a 60 inch screen and premium sound.
"The more options you look at, the more you have to give up," he says.
It's true that the wealthy have grabbed up a larger share of the growing economic pie over the past 40 years. Census Bureau stats show that the percentage of pay collected by the middle 60% of wage earners dipped to 46% in 2005 from 52% in both 1965 and 1975. That figure doesn't include income from investments, which would make the gap even larger.
But the overall pie is much larger too. A near quadrupling of the Gross Domestic Product since 1967 means that today's Americans share $12.5 trillion in wealth, or $41,579 per capita, compared to the $3.8 trillion, or $18,951 per capita, enjoyed by 200 million people back then.
Of course, the super-rich have done even better. When the first edition of the Forbes 400 hit newsstands in 1982, the top-ranked person was shipping magnate Daniel Ludwig, with an estimated net worth of $2 billion. That was about 20,000 times the net worth of Mr. and Mrs. Median at the time. There were only 12 billionaires on the list that year.
The top person on the 2006 edition of the Forbes 400, Microsoft (nasdaq: MSFT - news - people ) Co-Founder Bill Gates, had a net worth of $53 billion, or 133,741 times the Medians. That means that while Mr. and Mrs. Median have seen their net worth rise 130% percent since the first Forbes 400, the richest man in the country is worth 1,225% more. Oh, and every member of the list is now a billionaire.
But what does the pay of celebrities and CEOs have to do with the average American, other than provide fodder for jealousy? It would be one thing if growing incomes at the top stretched prices of goods and services so much as to dramatically push inflation ahead for everyone else. But inflation has been tame for over two decades.
The fact is that in real terms, the Medians are doing great. Mr. Median makes 25% more than his father did 30 years ago, even after holding for inflation. Mrs. Median is a lot more likely to work in the professional ranks than her mom was, and to be paid about three times as much doing so. And though she still makes only 77% of what her male counterparts earn, this is up from 33% in 1965. They dote on the same number of children (two), but waited longer to have them, until both careers are well under way. They also pay less tax to the federal government and have 8% more purchasing power than they did 20 years ago, including 5.7% more than they had just ten years ago.
But, if despite their prosperity, the Medians need some cheering up, there is one powerful person whose wage growth they have outpaced nicely over the last two generations.
When Lyndon Johnson occupied the White House in 1965, he earned $100,000 a year, or 14 times what the Medians earned. This year, George W. Bush will earn $400,000, or just eight times the Medians.
Ping
I'm unhappy and grumpy because the social values, educational system, and popular culture has been in straight decline for at least 40 years.
I blame the Left in general, and the hippy baby boomers in particular.
"And though she still makes only 77% of what her male counterparts earn..."
I hate this stupid "statistic". This takes all fields and all people. A women heart surgeon will likely make the same as a male heart surgeon. A woman grocery clerk will probably make the same as a male grocery clerk.
Agree. It also fails to look at # of years on the job, # hours worked etc.
They love quoting that fraudulent "statistic," don't they?
Nicely debunked years ago:
Amazon.ca: Women's Figures: The Economic Progress of Women in ...
| Amazon.ca: Women's Figures: The Economic Progress of Women in America: Books: Diana Furchtgott-Roth,Christine Stolba by Diana Furchtgott-Roth,Christine ... |
IMO, that's a key number for understanding why many people feel that they are doing little if any better than their parents' generation.
It's kind of hard to avoid reaching the conclusion that Mr. and Mrs. Median are malcontented @ssholes.
I thought there were equal pay for equal work laws. Yet this myth will always persist that women are paid less than men doing the same job.
If selfish people who are making way more than their parents and grandparents are have complaints about what a struggle they have, who do they blame? The media will obviously blame rich Republicans and big business. In reality, are prices on everything high because of high taex, regulation, and union rules? I am no economist but obviously "blaming Bush," which many people do, is ridiculous.
I wonder if you compare purchasing power w/ time spent away from work how it would look. I don't think people worked nearly as long in 1975 as they do today. Kids played more tag and had less organized activites that required their parents to be chauffeurs.
I was born in 1961, so I can make some other non-financial observations:
1967 vs 2006:
- POTUS is far better now.
- New music is far worse now.
- MSM is worse now, however information choices are far better now, thus information quality is far better.
- Air pollution and litter are beter now
- Race issues are somewhat better now
- Hollywood is worse now, but choices for entertainment is better.
- Quality of professional sports is slightly worse now
- Driving a car is way less enjoyable.
- Japan makes quality stuff now.
- Nobody tells Pollock jokes anymore.
"popular culture has been in straight decline for at least 40 years."
Remember, "The Monkees" was a top television show back then. You might be over-dramatizing the decline.
Make sure you factor in time savings we enjoy now: i.e. online bill pay, telecommunication advances etc.
Jim Crow was still in force in areas of the South in 1967.
I agree. Money can't replace those things.
That's true, but some of those advances contribute to more work (i.e. cc. masters of email at work, clients calling your cell phone at night, etc.).
Interesting topic for Rush thread ping
I attended a segregated high school in Mobile, Alabama in 1969. For a Yankee from New Jersey, it was a nightmare.
On a mildly related note: can anyone find a photo of Malcolm Forbes' 727(?) "Capitalist Tool?" There used to be one on the 'net, but I can't find it anymore.
Thanks. His 727 had the same paint job, if I properly recall.
Depends on what you look at.
For individual workers the average work week (bottom trend line) is about the same as in 1975, so the ratio is positive.
OTOH, that average week reflects an increase in part time workers, probably a better measure to use for your purpose is the average number of hours worked by all family members summed across the family (upper trend line).
In that case the ratio is slightly negative, which likely helps explain why many families in an "objectively" better situation feel they are not much better off:
Generally speaking a lot of the worst stuff is the most watched and the stuff that doesn't draw in the fans is better. American Idol has 21 million people watching it, and The Wire has to fight to stay on the air? There is no justice when it comes to tv shows.
And those who are expecting their baby boomer parents to leave them a healthy inheritance are in for a big surprise, their parents are blowing that wad, plugging slot machines and taking expensive cruises (and plugging slot machines), enjoying their retirement on money they raped from future generations.
How a young couple is ever going to afford an average house, a 3 bedroom bungalow, which is upwards of $250,000 in a decent area, with the downward pressure on wages due to massive illegal immigration, is near impossible. I think things were better over all in the 60's and 70's, even the 80's
Your point is a good one. Another point worth mentioning is that we have a good amount of control over how much of the popular culture we absorb.
We don't HAVE to watch everything that comes along. I have no idea what night American Idol is even on. I spent last night with my husband, an Edith Wharton novel, and Mozart Violin Concerti on the stereo. The tv wasn't on all evening.
Yes they were, but that was also considered "extreme".
What I have noticed is how many people have the tv on almost as a security blanket. They may also be on their laptop doing homework and IMing but that tv is on tuned to something mindless. I will admit that I sometimes do get sucked into this, if for no other reason than seeing people act like idiots on TV makes me happy to be in school so i can hopefully avoid the same fate. :)
Well that settles it!
And those who are expecting their baby boomer parents to leave them a healthy inheritance are in for a big surprise, their parents are blowing that wad
I don't expect or desire my parents to leave me anything. They earned the money, not me.
How about the 50's? I grew up n thelate 20's..30's
and drafted in service in 40's. With that background
and a large family (7 kids)..anything that happened for
the good was appreciated...while I think of it...If you
want to thank an organization for a major donation to
the country...Thank the American Legion..they were the
ones who promoted and got passed the GI bill that paid
for the college education of all of us..and without it,
a lot of talent would have been wasted...country prosperd
with educated and dedicated men and women who grew up
in those times... Jake
What happened --- Mom & Dad kick you out of the basement or something?
It's because women tend to end up in "labor-of-love" careers like teaching, day care, and social work more often than men do.
The Midwest. Ohio, Indiana, Missouri...all placed you can find a decent home for $150,000 in a GOOD area.
Thank you again!
See #34.
They're the same jokes - they just replaced Pollack with West Virginian. 8-)
Oops.
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