Posted on 10/18/2006 6:39:06 PM PDT by WFTR
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 families were in 1967, the year the population surpassed 200 million.
Mr. and Mrs. Median's $46,326 in annual income is 32% higher than their mid-1960s counterparts, 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, average 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.
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 with their parents and grandparents.
So why are they so unhappy?
Despite their material prosperity, though, the Medians are a grumpy lot. A Parade magazine survey conducted by Mark Clements Research in April said 48% of Americans think they're worse off than their parents were. A June 2006 study by the GfK Roper group reported 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 said half of U.S. adults think the current trends point toward their children's future being worse than their own present.
(Excerpt) Read more at articles.moneycentral.msn.com ...
Mr. and Mrs. Median's $46,326 in annual income is 32% higher than their mid-1960s counterparts, when adjusted for inflation, ...
Is Mr. Van Riper really so dense that he can't see a big difference between "Mr. and Mrs Median" in the mid-60's and "Mr. and Mrs. Median" today? If he can't, here's the important. In the mid-60's, only Mr. Median was working outside the home in order to produce that income. Today, both Mr. and Mrs. Median must have jobs to make ends meet. While their annual adjusted income has increased 32%, they've had to put out 100% more work in order to make that income. When we consider that not every family is a double-income family, the increased work is probably only sixty or seventy percent higher, but the point is the same. Mr. and Mrs. Median are getting a much lower return on their effort than they were forty years ago. Working harder to get less is going to make anyone feel less optimistic about their financial future.
Later in the editorial, he makes this comment:
They also pay less tax to the federal government and have 8% more purchasing power than they did 20 years ago and 5.7% more than they had just 10 years ago.
I have a hard time believing that we're paying less in taxes than we were forty years ago. The rate on the top incomes may or may not be lower, but that rate is not what "Mr. and Mrs. Median" face. We may have 8% more purchasing power, but again, if we are having to go from one income to two incomes to get that purchasing power, we're getting a lower return than we were back then. I wonder whether the difference in purchasing power would reverse if he compared the couple of today to the one of forty years ago. What made him use an example from the 1960's for inflation adjusted income but use other examples for purchasing power? Would a comparison of purchasing power contradict his argument?
Another point that could be significant but that he doesn't address is the aging of America. As we become older and more skilled at our work, we generally command higher salaries. For the past thirty years, we've been aborting the next generation, and the editorial does mention that people are waiting longer to have children. The average age of Americans today is higher, so we should be making more money simply because we're older and more experienced in our careers. However, for the person at each stage in a career, prospects may be no better and are likely worse than they were at other points in the past.
A big point that the editorial doesn't address is the loss in benefits for people who must change companies because of layoffs. Many companies have a pension formula that includes a years of service multiplier and salary during the last two or three years of service. The employee who can work thirty years for one company will end up getting a very good pension from that company. The employee who has been forced to change companies two or three times may end up retiring with only fifteen years of service. He may have some pension coming from those other companies, but the pension from those companies will be computed based on the much lower salary he had at those early times in his career. The pension from his final company, where he rose to the highest salary, will be half what the 30-year employee will get if they both finish with the same salary.
I'm not saying that the situation is the employer's fault or that employers should pay everyone the same pension regardless of years of service. I think a years of service multiplier in the pension formula is a fair policy. However, the employee lucky enough to spend a long career with one company will do much better than the employee unlucky enough to be forced to change companies. (I realize that many knee-jerk conservatives have already stopped reading are getting ready to flame me for saying that anything about layoffs could be anything but rosy and wonderful. Thank you to all who are still actually reading.)
While I don't blame the employers for this situation, those of us who are facing much lower pensions than what our peers are getting will feel that our financial outlook is less than ideal. We see our fathers who worked thirty or so years with one company and are enjoying retirement on a comfortable pension, and we know that we aren't likely to have the same experience.
The other part of the layoff picture that the editorial doesn't address is that a high salary right now doesn't add up to an overall good financial future if we expect to face another layoff someday. Many of our fathers felt reasonably secure that their jobs would be there. They may have "saved for a rainy day," but they had a reasonable expectation that they would always have that salary. Many of us today expect that we will be unemployed again and trying to live on savings while cutting expenses and finding a new job. Those higher salaries that we are supposed to be earning tend to pale when we realize that they won't last for a career and that we will be starting over from time to time.
Maybe Mr. Van Riper is a Republican trying to spin good news in front of the election. If so, he means well, but he's still spinning the facts instead of painting an accurate picture. In the long run, victories based on spin and not fact are not good for either the country or the party.
Bill
Notice the article says "typical" without defining the term and "median" as opposed to "average". It's complete fishwrap.
The higher standard of living we enjoy today comes at a price. More time spent at work, less pensions but we now have 401Ks that empoyers pay into and that we can take with us. Yes, there are layoffs but we have the opportunity to change jobs more frequently as the economy has grown.
Life is what you make it.
I know very few if any people with a net worth of 467,000 dollars. Now I may be worth that much by retirement age, if the house is free and clear, and savings don't get used up. That is a lot of dineros.
"the "good old days" -- defined by the bulk of respondents as anywhere between the 1950s and the 1980s -"
I saw all of those years. We're better off today, by far. I'm speaking here in terms of personal well-being, not in terms of culture and intellectual growth. In those areas, we're spiralling down the drain.
I remember my parents scrimping pretty hard on an airline pilot's salary. Shoes were a huge expense.
Now I buy a fresh pair any time and they're cheap.
I remember eating handfuls of raw rolled oats because I was rationed on apples, of which we couldn't afford too many.
Same with just about every item you can think of to buy. It is cheap now compared to when I was a kid.
But mainly, we have things now that never existed. The PC on which you're reading this would have cost you over $100,000 in the '70s and filled a room.
I have a crazy idea. What if we as human beings only need so much "wealth", and after a certain amount of wealth, money isn't the most important aspect in our lives.
I agree that the word "typical" is meaningless.
I think median is a better measure than average, but in reality, neither is all that descriptive. An average is going to be more skewed by a small number of very high earners. The editorial admits that the difference between the richest people and the median people is greater than it's ever been. If he used averages, the picture would be even more distorted but seem greater.
At some point in middle of the article, he said that the middle 60% of income earners are now making about 46% (I don't remember the exact figure) of the income today as opposed to 52% of the income in both 1975 and 1965. To get a real picture of what's happening, we need to see the exact distributions and not just averages or medians. The statistic about the middle 60% of earners is the closest thing to that kind of information.
Bill
Which explains why people don't seem to be as happy. Do you think the Amish are happier than the average American? I do.
Your analysis nailed it.
My Dad was the only one who worked, my Mom either was with the kids or was a volunteer worker for charities.
I never remember my father ever going into work on weekends. He only got two weeks of vacation a year, but he got to take it religiously every year. He started work every day at 8 a.m. and was home for dinner by 5.
His firm gave him a new car every two years.
They lived in a home I and my wife could never hope to afford, and they did it on one income.
In contrast, my wife and I both work 50-60 hours a week. I usually am in 6-7 days a week, my wife works 6 days a week.
Although on paper with my seniority I am entitled to 4 weeks of vacation a year, I haven't taken a vacation in 7 years, largely because the number of workers have been cut back so far there is no one to cover my position if I were out. And I never know whether my job would still be there when I returned from vacation.
There is no way I would send my kids to public school, like my parents' generation was able to do. Instead, to get any sort of decent education, I pay $14,000 a year apiece to send my kids to private school, while still getting taxed up the wazoo to maintain the public teachers' union and retirement fund they jokingly call the public school system.
A couple of months ago I was visiting an elderly aunt of my parents' generation that I don't see very often. Knowing how hard my wife and I have to work to survive, she commented that she worried our younger generation has it much harder than they did and that we may very well be working ourselves to death before we ever get the chance to retire. Her parting comment was to "take it easy and not work so hard."
The point is that we don't really enjoy a higher standard of living. We have a few more toys, but in order to pay for those toys, we're working twice as much. Forty years ago, a family was a husband, a wife, and children. The husband's productivity was geared towards bringing home money. The wife's productivity was geared towards raising children. Today, no one in the family can have primary responsibility for raising children. We've taken "one adult unit" of productivity out of raising children and had to put it towards other expenses.
More time spent at work, less pensions but we now have 401Ks that empoyers pay into and that we can take with us.
A 401k is nice, but many employers have paid bonuses and extras for years. A family that was smart enough to invest those bonuses could also "take it with them" if they wanted.
Yes, there are layoffs but we have the opportunity to change jobs more frequently as the economy has grown.
The situation of an employee changing jobs is better than that of an employee being laid off because he can bargain from a position of strength, but often, the change really doesn't improve one's financial situation. Many employers base their 401k contributions on years of service. If you leave a job where your employer is making an 8% contribution to your 401k for a job where the employer will be putting only 2% into your 401k for the next five years, you have to get 6% raise before you've even broken even on just that benefit. If the change means lowered pension benefits, the raise must be bigger. If the change means losing vacation, you can effectively count each week of vacation as 2%. It's not hard for a new company to pay you ten or twelve percent more than the old company did but you'll still end up only breaking even.
When something is wrong with one's current job situation, changing jobs is necessary. However, changing jobs is not such a great deal for the employee. I've been in that situation, and it's not positive.
The economy has grown for some people in certain paper-shuffling jobs, but the economy hasn't grown for everyone. Someone who is a smooth talker and good at hyping himself will always do well. The honest, hard-working, analytical types are not doing particularly well in today's "hype is everything" economy.
Life is what you make it.
Yes, life is what we make it, but if we're working harder to have less and enjoy less than what our parents and grandparents did, then the thesis of this editorial is wrong. We aren't better off than we were forty years ago.
Bill
I remember two prices from the 60s: Ferrari - 15K Brick house - 15K
As another poster said, the editorial says that this net worth is that of the "typical" household. He doesn't define "typical." If he speaking of the average household, then the number is skewed by the very rich. If he is speaking of the median as he does in other places, then people should know about as many with a net worth over than amount as under that amount.
Bill
I've seen a few of those years, and I'm not certain that we are better off. I've worked very hard and have a professional job, but I'm not sure that I could provide what my father provided. I can come close to having what he ended up having only because I've never married and will never raise children. A large part of the reason that I have no family is that I spent those "family years" trying to recover my career after a layoff. I'll have enough for a comfortable retirement only because I'll be alone, and being alone is not a healthy situation either. I think part of why we're failing in cultural and intellectual areas is that so many of us are spending those years trying to salvage careers hit by layoffs. We can do it, but something has to suffer.
Bill
I think many of us are living that way. I realize that I could make a little more money if I'd play political games at work. In my case, the benefit would be pretty small because I'm too honest to be good at those games, but stupid, superficial efforts could put a little more money in my paycheck. I don't take that path because I think my integrity is more important than that increase in salary. I also try to do what's right for the company as a whole and not just what will give me a marginally higher salary.
The other side of the coin is that I'm still worried about future layoffs and someday having to live on savings for a long time while I search for a new job. I'm in a very technical, very small field. Jobs are few and far between. I try to save and accumulate because I need something for security.
Bill
If this guy really wanted to make a valid comparison, he'd figure a couple of other factors.
Not only do many families have to pay for private schooling for their children in grades K-12, but everyone needs to save for college today. While a college education was becoming crucial in the 60's and 70's, I know many people from that time who've done very well without a college education. Today, very few people will do well without a college education. The family of today must start saving for college before the kids are born. Even with savings, they will often end up needing educational loans, and those loans will be a burden that cuts deeply into that extra money that we are supposedly making.
Another point is that the declining moral fiber of the country puts greater costs on all of us. I used to believe that I didn't need to live in a solidly, middle-class neighborhood to be happy. I believed that I could be happy while surrounded by poorer people. The money isn't an issue, but most less affluent neighborhoods are also places where neither my person or my property is particularly safe. If I live in one of these neighborhoods, I'll end up taking losses from more frequent break-ins. In addition to the financial loss, the loss of peace of mind would be very difficult. The answer is to pay more to live in a nicer area, but paying more usually means borrowing more. Borrowing more means that more of my life's productivity will go into paying interest on a loan and less will go into meeting my needs.
Does this mean that things are horrible today? No, it doesn't. However, it means that this guy's rosy analysis misses the most important points.
Bill
Nope the economy has grown for everyone, some just choose the doom and gloom path and wait for someone to take care of them.
I have opportunities my Grandfather could only dream about just because of this thing called the Internet.
The amount of information available at your fingertips is astonishing when you stop to consider it. And a smart person can use that info to better their financial situation with little effort. But most use it to surf porn, or see what disgusting stunt some Hollywood bimbo did. And usually they are the ones yelling about how the country is worse off now and it was better in my father's day. Well it wasn't better. Sorry but if you live in the USA and are having a hard time making it you either are just ignoring the opportunities around you or just don't want to put forth the effort.
My little town is full of business success stories. The funny thing is most of those successes are by people who were not born in this country and moved here as adults. There are two within a stone's throw of me that are millionaires and a third who will soon be one. I've discussed with them the opportunities America has to offer and they all scoff at the notion that "its too hard now to make it." I know how hard my dad worked and how hard my grandfather worked. We have it easy now, IF we use the tools available.
But few do.
Good point!
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