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 ...
ACtually it is a good deal. In technology your skill set can advance much faster than your promotion prospects at one company and when you can get a 40% raise by jumping, it is worth it.
The first is that the "millionaire" comparison is worthless. Being a "millionaire" became prestigious over a hundred years ago. Even 100 years ago, the median salary was probably less than a thousand dollars a year. A "millionaire" was someone who had enough money in the bank to live a middle to upper middle class lifestyle for a thousand years without having to work another day. To be in that situation is to have a feeling of security. Today, the median salary is $46,000 a year according to the editorial. A "millionaire" has only about twenty times what "Mr. and Mrs. Median" have. A twenty year cushion is not nearly as big a cushion, so being a "millionaire" is not the same as it was.
The second is that the differences between having and not having are getting bigger, and being someone who doesn't have is frustrating. I bought a house that was about a quarter to a third the cost of what I could buy according to the loan people. It's not a bad house, but as the area grows around me, I'm feeling increasingly closed in. I'm claustrophobic, so that feeling is very difficult for me. Can I survive here for the rest of my life if necessary? I probably can, but the quality of life will not be particularly good. Having nice things and doing fun things is not just about "keeping up with the Jones." There are some fulfilling things out there, but they often cost money to pursue. The whole point of trying to work hard and make something of ourselves is to be able to afford some of these nicer experiences. For many people today, the frustration is with the sense that we will work harder but get less overall return for our efforts.
Bill
You bring up another point in the equation. The guy writing the editorial was addressing people's negative feelings towards their financial situations. He tried to give some numbers that would say that people are doing better, but even then, his poor treatment of the numbers made his arguments worthless.
The other question is "what else affects people's feelings about their financial situation?" When Social Security began, the most quoted number is that 17 workers were contributing to the system for every person who was receiving benefits. I've not heard what the ratio was in the 60's or 70's, but I've heard that the ratio is 3 to 1 today. One reason that many people may feel pessimistic about finances is that they see looming problems with Social Security and other entitlement programs. We can't consume more than we produce, and someone is going to have to produce whatever Social Security is going to consume. Many workers today realize that entitlements are going to consume huge amounts of our future productivity. That realization is reason to feel discouraged regardless of what the current income figures are.
Bill
In traditional engineering disciplines, you cannot get a 40% raise by jumping companies. That kind of jump may be possible for some of the boom and bust fields if you catch the boom cycles just right, but it's not going to happen for most of us who are taking care of the business of making the things that society needs.
That kind of jump also depends on being a smooth talker and negotiator. Who is going to value you more, those who have seen your performance and worked with you over time, or those to whom you try to sell yourself as the greatest thing since sliced bread? That's a basic difference in personalities. Some people are good at hyping themselves. They can sit down with someone and paint a picture, and that picture will always be better than the real thing. Others are the opposite. We sit down and talk to someone, and we don't seem so impressive. However, those who've worked with us over time realize that we are solid performers who are worth much more than the "knights of spin and hype." Unfortunately, they can't tell from those first conversations whether we're really that good or whether we're as middling as we seem.
Bill
When he says "Mr. and Mrs. Median's $46,326," he seems to be saying that $46,326 is what they make together. Knowing that he's trying to paint a rosy picture, I'm sure that he'd double that number if the median family income were twice as large.
You are certainly correct that being worth a million isn't what it used to be. But it's still pretty good. My in-laws live a decent retired life on about 600k in net worth plus Social Security. They even manage to winter in Florida.
I have a friend who is about to retire on 2 mill net worth, which will give him a little over 100k in annual income until he starts collecting SS. He is 56. He will never have to work again. He plans to work part-time just to keep occupied, and because he likes to eat out.
I have another friend who is worth 3.5 mill, but says he can't afford to retire! He likes to live high. He also enjoys making money. At 58, he works half the month, and travels the rest of the time.
As for your neighborhood, that doesn't sound good. Mine is OK, and I already have my retirement home purchased in a great small town. It's rented for now until I am ready to use it. Building wealth takes time, discipline, and guts. I'm 57, so I've been working on this for a while. Just work on saving and investing, and realize that those "things" lose their ability to make you happy after a month or two, which is why new "things" must always be bought. Defer that for a few years, and you'll be surprised what you can suddenly afford.
Some of the comments are based on faulty understanding of how things were done. For instance, the blogger talked about houses not having air conditioning back then. What the blogger failed to realize or refused to admit was that houses were designed differently when air conditioning was not available. Houses in hot areas had to be designed with good ventilation that allowed the heat to get out of the house. On extremely hot days, those measures weren't all that effective. Undoubtedly, those people weren't quite as comfortable then as we are today when conditions are at their worst. On the other hand, a modern house with the air conditioner broken is much worse than a house would have been back when it was designed to ventilate without air conditioning.
I'm not advocating that we become Luddites of some form and try to revert to 50's era technology. The point is not that life was better when there were fewer toys to buy. The point is that maintaining anything close to a modern life requires a greater percentage of our incomes than it did in the past. In many ways, we are working harder and falling further behind. Productivity that we used to spend on the best that was available at the time is now spent on taxes for programs that are hurting our society, on the legal industry that sucks productivity from every other part of society, on a public education system that has lost much of its quality and on private education to replace what public education once did, and on a host of other things mentioned by other posters.
Bill
I like the statistic that says (correctly) that if everyone in the world stood shoulder to shoulder, the entire population of the planet would fit in Jacksonville, Florida.
Also, if everyone were grouped into a family of four taking up a 50 x 150 sq. foot lot, the entire planet would fit into the state of Texas.
To clarify, my neighborhood is not "bad" by any means. It's simply a neighborhood of moderate "starter" homes that are packed fairly tightly on small lots. There are certainly denser places in big cities, but I don't do well when I'm surrounded. Another big problem is that my area is converting from rural suburban to a more crowded suburban. I came here to escape that situation, so I'm not doing well with the change.
I agree wholeheartedly with the advice to be frugal. I try to delay every "new" purchase no matter how small as a matter of practice. If I see something that interests me, I don't try to give myself an absolute "No." I just try to say "Wait." I come home; I think; I sleep; I research. If the purchase still seems like a good idea later, I get it. There are plenty of things that I've waited years and years to buy.
On the other hand, the uncertainty of careers today makes frugality something that many of us must do for survival and not for the hope of something better in the future. We deny ourselves and deny ourselves so that we'll have a reserve if things go bad again. I have three engineering degrees. I grew up with being frugal so we could afford my college education so that I'd always "have something to fall back on." However, when I've had to fall back, I just kept falling until I hit hard ground. Saving may provide some cushion, but there comes a point where living to deny oneself seems to be a long and frustrating exercise in self-denial. I look around and say, "Do I want to live like this for another thirty years?" The answer is "not really. If I can't ever get ahead and enjoy things, what's the point?"
I'm not saying that things are bad for me. I've worked very hard, and I have a good job. I make enough to live in reasonable comfort and still save some money. However, I see many peers who haven't worked as hard as I have doing better, and I really don't see myself doing as well as my parents did. The phony numbers game of the original editorial does nothing to make me believe that things are as good as they could have been at an earlier time. I think others likely feel the same way. Even when we save, we never seem to get ahead, so what's the point?
Bill
That's a nice sound-byte, but it's silly. Houston sometimes has ozone problems with the people and traffic that it already has. If we stuck the rest of the world around it, those problems would make Houston a death trap of unhealty conditions. Much of Texas has water availability problems with the amount of people already there. If you even doubled it, those problems would be worse. Of course, during a big rain, water is too plentiful, and overdevelopment means drainage problems so that flooding kills more people and destroys more property.
The 50 x 150 foot lot model is a rough description of western Houston. I lived there for two and a half years, and it was a hell on earth for me. The crowding was horrible. I first began developing claustrophobia during that time, and the claustrophobia is still with me. If I had the choice of living under those conditions or dying, I'd rather die.
They can pack chickens into little cages where they have food and water, defecate onto conveyors that move their waste away, and lay eggs that roll into collectors for sale to the public. The chickens can stay alive that way, but it would be a miserable way for a person to live. Most of the people who cite that 50' x 150' lot statistic act as if it were a valid model for human existance. I don't see how anyone could embrace that idea. There's more to having enough room for people to live real lives than simply calculating square feet.
Bill
That leaves a lot of space to grow food, doesn't it?
Thunderous Applause!
Cheers!
The world really should be closer to a garden by now. Think of all the resources at our disposal; the technologies; the scientific advancements in the past century.
Throw in the low inflation of the past 20 years,
The cost of cars has increased tremendously, the cost of college has increased tremendously. I'm not sure where they get the idea of low inflation.
"The cost of cars has increased tremendously, the cost of college has increased tremendously. I'm not sure where they get the idea of low inflation."
...after stripping out energy, food, cars, college and everything else that matters, why, yes, inflation is quite low.
Another point to be made here: it's eroding purchasing power that's leading a lot of American families to marry later and have fewer kids. Kids have become a financial (and professional) luxury many people think they can no longer afford. This is another way in which, in nonfinancial terms, our standard of living has apparently fallen.
I think the media is to blame for a lot of America's discontent. Early TV shows were about middle class families living middle class lives. June and Ward Cleaver were not very different in their lifestyle from the average viewer. The comedians, Lucille Ball, for example, were likeable in a girl next door type of way. Famous people lived better than average Americans, but their lives were more private, not the outrageous, in-your-face-pimp-my-life way of many celebrities today.
Recently, the media has elevated class envy to an art form. TV is a constant parade of the lifestyles of the rich and famous; the shows are full of beautiful, thin people who spend lavishly. We're treated on a daily basis to homes and cars and boats and private jets the average person on the average salary will never be able to afford. One evening spent watching HGTV, the Fine Living Channel, or any of the ominipresent "beautiful people" entertainment shows is enough to depress the average person who looks around at his average life and thinks, "Is this all there is?"
Add to that the great personal and spiritual void many feel when they must move frequently for jobs, work and commute long hours away from family, or give over their lives to unsatisfactory jobs in the pursuit of material possessions that, in the end, will never satisfy. It's not hard to see why, materially, life has never been better, but Americans are more discontented than ever.
Well let us put your theory to the test.
When my grandfather had a grocery store which also sold general goods he basically had a customer base of roughly 10,000 people. His only opportunity to increase that customer base was to open another store. His opportunities were limited because of the effort it would take and investment to open a second store.
Today with the flick of my mouse I have a customer base in my online EBAY store of literally Millions of people with lower overhead than my grandfather could ever hope for.
My packages are picked up at my door and delivered in a matter of days, money is deposited in my bank account faster than I can get the package ready to ship.
I can then take that money and immediately put it in my Ameritade account and invest it in some nice blue chip dividend stocks for a fraction of what my grandfather could have done. (being that he would have had to drive an hour one way just to find a broker deposit a check with him who would have then in turn had to get in contact with his and so on and so on. wasting time and effort) Or Bonds or Mutual funds or whatever else.
Not to mention all of the info on companies and stocks available at your fingertips whereas in my grandfather's day that info was nearly impossible to get in a timely fashion for all but the rich investor class.
That is just two examples.
If I had to venture a guess, I would say you have made the same mistake many college degree holders have made for years. You actually believed the hype that a college degree will make you wealthy. Its probably one of the worst things the education movement ever did.
One needs a degree to be an engineer or Doctor or Lawyer etc. And, that is as it should be. But just because one becomes and engineer or Doctor or Lawyer does not mean everything is gonna be gravy now.
See, the dirty little secret about money that no one really talks about is "a paycheck never made anyone rich"! Instead, what you do with that paycheck is the determining factor in whether you become wealthy or not.
The opportunities to become wealthy in America now are almost limitless. And, it doesn't take a college degree to take advantage of most of those opportunities.
What it takes is a computer, an Internet connection and very little effort.
Waaay more opportunities than my Grandfather or even my Dad ever had.
Rather an interesting discussion. I have to agree with Bill that I'm not sure were any better off. Both my wife and I salary pushes us in the "high wage" income group on a national average, but we also live in an area that is extremely high cost. Taxes, gas, food, clothing all cost more than the rural areas.
For example, here the average home runs $700,000-$800,000. While these homes might be more fancier than the home I grew up in, my dad only paid $10,000 for his house. Grant it he didn't make the same salary that I make but there is absolutely no way I would be able to aford a house in this area. Even with both our incomes, had we not bought our house when we did, we would have been priced out of the market or had to resort to one of those riskier loan strategy. Somehow these numbers don't seem to tell the whole story.
That being said, could we put all those people in North Carolina rather than Ohio? It too cold. And you better put me on the end of the cube-closest to the bathroom. :O)
I've already spoken for the outside corner closest to the porta-potty. But, I'll make sure you're right next to me.
PS: don't drink a lot the night before.
:>)
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