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 ...
I was amazed when the guy claimed that we paid less in taxes back then. I noticed that he didn't give any numbers to support that claim, and I suspect that the statement was highly spun. Maybe the top rate was lower, but that doesn't mean that most people actually paid less of their productivity in taxes.
Bill
I consider myself an average middle-class person, and I don't know any of the people I hang around that have a net worth of $467,000. Of course I'm 32, just starting out - as are most of my friends.
I guess this guy is figuring on home equity in the net worth figures, but the US home price average is around $220,000. So for someone to be worth $467,000 they would have to own an average home outright - plus have another $247,000 in assets.
Most of my friends are in debt up to their nose, and don't have a whole lot of equity - especially the one that took out home equity loans.
I don't think we have it as bad as most people think, and our best days are ahead; but this guy's figures are off.
So what? There's plenty of information available, but most of it has nothing to do with actually producing anything. I'm in an engineering field, and I google all kinds of topics that come up in my day to day work. Rarely do I find anything published on the internet that actually helps me make engineering decisions. The useful information is in the same journals and reference books that were available forty years ago. These references contain updated information, and there are more of them. However, the task of doing the research and finding the answers hasn't changed significantly. The only thing that the "information superhighway" does is allow the bean counters to think that they can do the same technical work with fewer people.
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.
Sorry, but this statement simply isn't true. If you've got "the gift of gab" and are a good salesman, you'll always be able to make a living. If you are good at sucking up to the right people and playing political games, you can do very well. There are jobs for paper-shufflers, what Margaret Thatcher used to call "the chattering class." For more technical people, the situation is not as good as it once was.
If you bother to read carefully, you'll see that I never said that people couldn't make it. Yes, most people who put forth a great effort will do well enough. However, we are getting a lower return on our efforts than our fathers and grandfathers did. The internet may allow you to do different things than what your grandfather did, but the overall return on effort will not necessarily be better.
Bill
We all have different opinions about how good or bad things are, and that's okay. Honorable people can disagree. You make a good point about the guy's figures. He is trying to cheerlead for the modern economy, and he used sloppy figuring to do so. If he wants to be optimistic, I'm happy for him. If he wants to be taken seriously, he needs to do more serious research and consider the facts more carefully.
Bill
In case you are interested
Uh, I'm pretty sure there were pedophiles, gays, drug dealers, and crappy television in 1960. They weren't invented in 1961. The social guidance films of the 1950's are rife with these topics, actually. Even kids bringing guns (in a bad way) to schools.
I think everyone tends to idealize the environment they grew up in because they were largely unaware of what went on outside the immediate confines of their family at the time. I find myself having strangely idealized notions about the 1980's too, because that decade formed a great deal of my childhood. It really doesn't make sense - everyone seems to think the generation they grew up in was simply ideal. But the 1980's were not ideal and neither were the '50's.
If you stand each American in a space that is 5 ft on 4 sides (square), you have each one in a comfortable standing space. In other words, each person has a bit of room to the left and right and to the front and rear. Not too many are wider than 3 ft across, nor deeper than 3 ft deep. We add 2 feet in each dimension to get our five feet.
If we then make a row of people one thousand people across, we would stretch about one mile wide. (5280 feet = mile.) If we also make a column one thousand people deep, then we would be about a mile deep. If we fill in each row with a column, then we'd have one thousand people wide and one thousand people deep. Add that up and we've got one million people in that one square mile.
The square root of 300 = about 17.321 OR 17.321 x 17.321 = ~300.
Therefore, if we can get one million people in a one square mile area, then we can get 300 million people in their above-mentioned 5 ft area, in a square that is 17.3 miles wide and about 17.3 miles deep. (Please don't ask why we'd do this? :>)
That is about one fourth the size of the average-sized county in the average-sized state of Ohio in which I live.
In short, MATHEMATICALLY (certainly not practically) we can put the entire population of the USA in an area one fourth the size of an average county in an average state.
Heaven help the guy in the middle of that crowd who has to pee.
"Her parting comment was to 'take it easy and not work so hard.'"
Geez, talk about twisting the knife. Did she add, "But make sure you don't cut my Social Security, or forget to pick up the tab for my Medicare and free drugs...and while you're on the way out, would you mind sending in my AARP dues check?"
Yes it's what you make of it but it's undeniably true that for anyone over 50 who has been in a good job, performing well then gets "downsized" will find it very difficult indeed to switch into anything even close in salary and benefits (of course there are always exceptions), let alone retrain where you will of course be on or near the bottom again even assuming you can get hired.
Another factor is that old style "defined benefit" pensions tended to ramp up very sharply in one's 50s so an early "out" can be enormously expensive in terms of lost payout growth. In lump sum equivalent terms that lost payout can easily exceed a million bucks for an averaga professional - and that is nearly impossible to make up, simply not enough time left.
One thing about that article for starters the "typical net worth" figure of about $465k is meaningless. I have no idea where the writer got that figure, and no idea what he means by typical.
I submit that the posters here have missed the main problem of today's American lifestyle. There is so much to buy, and most people have so little resistance. They see their friends with possessions and new cars and big houses, and they feel that they must keep up.
There's a very good book written in the mid-90's entitled "The Millionaire Next Door." It details the lives of hundreds of millionaires interviewed by the authors. The average person interviewed had a net worth of around $3.5 million, yet most of these people had never made more than $80k in any one year.
To make a long story short, they simply lived well below their means, invested their savings, and over time, reaped the benefits. Most of them owned their own small businesses, bought used American cars, had married young, and had not divorced.
There is a formula in the book which can guide you as to whether you live too high. Take your annual income, lets say $50k, multiply that by your age, let's say you are 40. 50,000 X 40 = 2,000,000. Divide that number by ten, and you have your projected net worth, assuming you live within your means and invest your savings in a reasonable fashion. The person in the example above should have a net worth of $200k. Some people detailed in the book have double the net worth predicted by the formula, simply by avoiding the new cars, big houses, plasma TVs, expensive eating out, etc.
You can either have money, or look like you have money. Doing both is very difficult, and requires a very large income. Doing one or the other requires only the median income, resistance to keeping up with the Joneses, and time. The peace of mind gained by living this way outweighs all the houses, toys, cars, and expensive meals you will give up. At least, it has worked that way for me.
Some really thoughtful and disturbing commentary on this topic. My work increasingly allows me to telecommute, so I'm looking abroad, including Central America (Costa Rica and Panama) and South America (Argentina and Chile). These areas are far from perfect, but they offer a lower cost of living (much higher purchasing power on a US salary) and much of the good traditional family-friendly culture of the 50s and 60s that this country has lost. Also, much lower taxes and other expenses. Not to mention little or no nuclear terrorist threat. I suspect more and more Americans with families who can afford to do so -- that is, who can telecommute and dont require a lot of face time with bosses to do their jobs -- are going to be looking abroad for a much better lifestyle. Outside parts of the midwest, south and southwest, the U.S. just doesn't cut it any more. Among other things, too many markets have become saturated -- certainly along the east and west coast.
Bill, I'm surprised that in your excellent commentary, you neglect to mention the financial ravages of health care. Soaring medical costs are eating up purchasing power for many of us at an alarming rate -- and we're getting nothing (in fact, less) for the dramatic rise in price. That's the very definition of eroding living standards.
Thanks for heads up Bill.. will "digest" tomorrow..just got in& have a splitting headache & so can't do anything involving more than one grey matter brain cell..
You're right on all counts. I tend to run towards long posts, and I tried not to go too far with my analysis. I'm sure that I left out other things as well. A part of the rising cost of healthcare and every other rising cost is lawsuits. A hundred or so years ago, when you bought a product, you were pretty much buying just the product. Today, you are buying the product plus the cost of the lawyers for the retailer, the wholesaler, various transportation companies, and the manufacturer. Each of these companies in the chain must have more lawyers than it needed in the past. The costs for those lawyers are passed to the consumer. Again, if you are in the law industry, you are doing better than you were forty years ago. If you are in any of the productive businesses that are being bled by the law industry, you could be doing worse.
Bill
I'm claustrophobic. If you put me somewhere with only five feet separating me on each side from even a hundred people, our population will soon be back to 299,999,999. The idea of being around that many other people gives me chest pains just to read it posted.
Bill, just to emphasize your point -- check out the David Wessel column today in the Wall Street Journal. He writes what we already know -- even a college degree now is not enough to stay ahead of inflation. It takes a graduate degree/doctorate:
----
CAPITAL
By DAVID WESSEL
Why It Takes a Doctorate
To Beat Inflation
October 19, 2006
The typical American worker with a four-year college degree earns a lot more money than a similar worker who didn't go beyond high school -- 45% more.
Education does pay. But in today's economy, getting a bachelor's degree is no longer a guarantee of raises big enough to beat inflation.
WALL STREET JOURNAL VIDEO
[Video Report]
David Wessel discusses a growing disparity in the salaries of workers in America.
CAPITAL EXCHANGE
[Capital Exchange]
Send comments on this week's column to capital@wsj.com.
Although the best-paid college grads are doing well, wages of college grads have fallen on average, after adjusting for inflation, in the past five years. The only group that enjoyed rising wages between 2000 (just before the onset of the last recession) and 2005 (the most-recent data available) were the small slice with graduate degrees.
Think about that: Even though the economy and productivity have been growing smartly, lots of workers who played by the rules and went the distance to get a four-year college degree aren't getting ahead.
[...excerpt...]
And of course, in reality, people are better off today by a fair amount. See Are You Better Off Today than you would have been 25 or 50 years ago?
" You're right on all counts. I tend to run towards long posts, and I tried not to go too far with my analysis. I'm sure that I left out other things as well. A part of the rising cost of healthcare and every other rising cost is lawsuits. A hundred or so years ago, when you bought a product, you were pretty much buying just the product. Today, you are buying the product plus the cost of the lawyers for the retailer, the wholesaler, various transportation companies, and the manufacturer. Each of these companies in the chain must have more lawyers than it needed in the past. The costs for those lawyers are passed to the consumer. Again, if you are in the law industry, you are doing better than you were forty years ago. If you are in any of the productive businesses that are being bled by the law industry, you could be doing worse."
Which gets to an implicit point underlying my earlier posts: The US has become overregulated and sclerotic. Other countries offer an increasingly more competitive climate not only in which to do business but to simply live. It's no surprise a growing amount of our productive activity is being outsourced, so to the point where growing numbers of Americans are even seeking healtcare, adoptions and surrogate mothers abroad. We've overregulated and over-lawyered ourselves out of an increasing share of economic activity and other countries are not standing still.
I'm not claustrophobic, but I was wondering where I'd park their cars.
My question is ... that $46,326 is that EACH or both together?
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