The Average American: 1967 and Today (Much Wealthier)

Forbes via Yahoo ^ | 10/20/06 | Mikey_1962

[mjwise]

Productivity increases largely stem from business process and efficiency improvements. Simply working more hours out of a week will not increase productivity. It's measured in output per dollars or hours of input.

Unless, of course, you think today's workers are much harder workers than in years past. And I think some freepers would be aghast at making such a suggestion, considering how the 50's were perfect and all. :)

[netmilsmom]

>>Twenty computers??<<

Yes, but only four monitors.

Daddy collects them. Much to my chagrin except at homeschooling time. Net on the laptop, Mil in "Mission Control" on Daddy's main computer and I'm in my corner (literally a corner of the room that's mine) FReeping.

Life is good.

[pjsbro]

yeah it's the average but it really isn't a very informing figure and in no way does it reflect the 'typical' household net income as the Forbes piece implies. The median figure (which I think is less than $100,000) is better to use because it is more representative of the "typical" household, whatever that is supposed to mean.

I'm surprised Forbes used this figure rather than the median. They're usually much more precise than in this piece.

So you're doing way way better than the 'typical' household in terms of net worth. (Keep going---You'll need all of it when you retire if you aren't there already)

[FreeReign]

Sorry I looked again and the piece does indeed label the net worth figure as the average. This is still a very misleading figure since the gazzillionaires skew this number way way up.

Gazzillionaires skew the figures way up? What's the figures and source of your claim.

[Gay State Conservative]

When you factor in that the figure includes the equity in real estate it seems even more surprising since I think the median price of a home in the US these days is around $150K?

I think that the median price of all single family residences (including condos) would be more than $150K...given that the median price in the Boston-Washington corridor,south Florida,California south of San Francisco...is more like $300K...or more.

Another factor in determining net wealth is,obviously, establishing debt.

Just because a guy drives a $50,000 BMW or lives in a $750K colonial,it doesn't mean that that car does have a $45K note or that the house doesn't have a $600K principal balance on the first mortgage and $50K on the second mortgage.

[netmilsmom]

It's like pizza.
It was such a major treat for us to make pizza on Friday nights while my Dad bowled. Chef BoyArdee in a box. No pepperoni, no mushrooms, no extra cheese, no onions, no peppers. Just pushing the dough around a cookie sheet and topping with whatever was in the box.

That was a great time.

We didn't have pop either. Something that I have passed along to my kids, no pop, period.

We did have Kool-Aid with Cyclamates however. Yum!

And we would have a dozen Royal Castle (Cleveland equivalent of White Castle) as real treat once during the Christmas season! Same thing, added our own toppings.

[wideawake]

In 1967 my parents could afford to buy a nice home in a middle class neighborhood in a desirable suburb, and there were six children and only one job, (my father's). And his job was a menial laborer's job.

Well, homes were obviously cheaper then because there were fewer people inhabiting the same amount of land. yet I'm going to guess that this was not a 7-bedroom house, since the average house in 1967 was a little more than two-thirds the size of the average in 2006.

The rule-of-thumb back then with banks was that the mortgage, (and rents), should be roughly 1/4th of your monthly salary. Accept for the upper middle class today, and the wealthy, I cannot imagine a family paying only one quarter of their income for their mortgage.

Well given that the median household income is 44K and the median home price is 219K a monthly mortgage payment is 1000 and a week's salary is 660. However, you are getting almost 50% more house for almost 50% more in mortgage payments.

There are other important factors too. College education being a big one. In 1967 I think that state colleges cost about $500. per year to attend, maybe less.

Depends which state. Inflation-adjusted that's about 3000 in 2006 dollars.

Of course, state colleges back then did not have incredibly expensive sports facilities designed for television broadcasts, nor did they have extensive electronic infrastructure for starters. These things cost quite a bit of money.

Gasoline was dirt cheap, about 33 cents a gallon. A movie theatre ticket was 75 cents and the consession snacks and drinks were 10 cents. Public transportation was a nickle. A slice of pizza was a dime. Stamps were 5 cents. Candy bars were 5 cents and were twice the size of today's version.

If gas was 33 cents then, in inflation adjusted dollars that's 1.94. Gas is 1.99 right now where I live.

75 cents for a movie would 4.50 today while the average movie is 8 dollars now. However, today's movies cost much more to produce with ultra-realistic sets and advanced special effects. Plus they are exhibited in surround sound. One may argue that the artistic quality has declined, but the production quality has increased dramatically.

Drinks may have been 10 cents, or a cent an ounce for Coke in the old-style glass bottles. Inflation adjusted, that's 6 cents an ounce and thus a 48oz Coke for 5 dollars at a movie today is only slightly more expensive.

Public transportation is much more expensive now, but so are a lot of other external costs associated with operating public trasportation including lawsuits, union contracts, etc.

Pizza is more expensive on an inflation adjusted basis, but it also is more likely to have fresh ingredients that people demand.

Stam,ps are the same adjusted for inflation and they are now non-lick adhesive.

Candy bars weren't twice the size then that they are today. They are larger today and are slightly more expensive on an inflation adjusted basis.

Books were a dime a dozen

Newly printed books haven't been a dime a dozen since the 1890s.

I own a number of trade paperbacks from the 1960s and they were between 75c and a dollar. That translates to about $5-6 adjusted today, which is what I would expect to pay for a trade paperback.

Jobs were static and secure, with no need for about two or three career changes as in today's economy.

Life doesn't come with guarantees. A guaranteed lifetime job for a working-class guy was an historical anomaly of the 1950s-1970s, never before seen in American history and probably never to be seen again.

Prices were stable too, and when costs rose they were always minimal.

Very vague. Prices for 95% of staples are quite stable today. I've never gone to a store to discover that a loaf of bread cost four times as much than it did the month before.

A "usable" used car, (one that still had a dependable year left on it), could be bought for $100.00, or less.

That's $600 bucks today and you can buy a beat-up old Camry with a year left in it for that much if you search online.

Utilities were dirt cheap, and I mean dirt cheap.

Again, vague and disputable.

Restaurants did not tax your meals, state sales taxes had not yet been introduced in my state, (which meant you got to keep at least 5 - 8% more of your income then). There were no federal "line charges" on your telephones, auto inspection stickers were $1.00,;

That's all arbitrary government-imposed cost which is not a natural part of the economy. There were always federal taxes on phone lines.

There have been since the 1950s.

you could enjoy a major league baseball game in the bleacher (cheap) seats for 50 cents

Or three dollars in today's money as opposed to 12 for nosebleed seats today. Of course, salaries have far outstripped inflation as team management has bid on talent.

Not really a natural outgrowth of the economy, either.

Unless you consider electronic gadgets to be the "economy", it is laughable to claim that today's economy is better than it was in 1967.

If someone today wanted to spend their time living in a tiny house subsisting on pizza and candybars and reading trade paperbacks as their sole form of entertainment, you'd have a strong point.

But the average person today lives in a larger house, spends their leisure time surfing the internet, listening to a possible selection of 20,000 songs on their portable iPod, going on occasional vacations in the Caribbean or Hawaii, driving a car with airconditioning and anti-lock brakes, etc.

In other words enjoying a wide range of amenities that were the province of the wealthy in 1967 or indeed unimaginable to the rich or poor in 1967.

[RockinRight]

So what you're saying is that we were the best-off when Reagan was President?

Makes sense.

[seowulf]

That's right. Kool-aid or Tang (if we were extravagant). The little pop we did have was one of those store brands that tasted like aftershave.

Good stuff.

[RockinRight]

The rule-of-thumb back then with banks was that the mortgage, (and rents), should be roughly 1/4th of your monthly salary. Accept for the upper middle class today, and the wealthy, I cannot imagine a family paying only one quarter of their income for their mortgage.

I take it you live on one of the coasts. Assuming you mean one-quarter of gross income, it's VERY possible here in Ohio, right now, in 2006.

[linda_22003]

Part of that has to do with where we live; in the Washington, DC area, house values and salaries are far higher than in much of the rest of the country.

[RockinRight]

It's probably largely equity in real estate.

People on the coasts and other high-cost real estate areas skew up the average. Net worths are much higher in places like that, but there's also a greater disparity because it's much harder for a young couple just starting out to buy ANY home to build net worth in the first place since costs are so high, even if older people who bought their first home in 1975 are sitting pretty.

[Oberon]

A decent, basic car today goes for $18000 not $35000.

And furthermore, today's "decent, basic car" is a much better car than the 1965 equivalent. Look at a 1965 Ford Falcon vs. a 2005 Ford Taurus...there's just no comparison.

The Taurus is more reliable, gets better fuel economy, handles better, is safer, has more features, and will go more miles than the Falcon ever could.

[Oberon]

Assuming you mean one-quarter of gross income, it's VERY possible here in Ohio, right now, in 2006.

Here in North Carolina, I'm living in a 75-year-old, 1800-square-foot two-story house with central heat and air on a quarter-acre in a modest older neighborhood. I have a low-level white-collar job and a ten-minute commute, and my housing costs are less than 60% of my take-home...for one week.

That puts it under 15 percent of my monthly income; again, that's take-home, not gross. Of course, I'm very blessed that way too. My story isn't the typical one, and it helps that we bought within our means back when I was making next to nothing.

[winodog]

Saturdays mom went shopping while we went to the matinee once in awhile. Popcorn came in a small fold up box. All the kids would eat their popcorn and drink the soda in a hurry so that you could toss the box like a frisbee. When the lights went out everyone screamed and all the boxes and cups went flying everywhere. That was about "bad" as anyone ever got.

We never went to the movies at night but we went to the drive in. Mom would make a huge brown bag of popcorn and koolaid. Pile into the station wagon with pillows and blankets and be sound asleep 10 minutes after the second movie started. I never did see a second flick there.

[<1/1,000,000th%]

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.

These folks are watching too much TV and reading too many newspapers.

[netmilsmom]

Every big occasion like a First Communion or Baptism, we got O-So pop. They were little returnable bottles. The family would take a garbage can and fill it with O-Sos and Rolling Rock returnables with ice. During those events, we could drink all the pop we could reach. (It was bad when you were little and most of the ice melted. I remember freezing my hands to get a pop and nearly falling in) Normally grape, orange or red pop. Creme Soda too!

Mom would do all the cooking for the event. I remember her frying chicken for hours and cutting melon into a watermelon rind shaped like a whale. It was the only time we got a store bought cake.

Last year we were invited to a First Communion at a restaurant. There were about 100 people and we ate Prime Rib. Geez. I have no clue how this family will out do it for the girl's wedding.

[3Lean]

In 1965 a computer capable of managing the launch of a satellite cost $10,000,000, today I can get the same processing power in a $2.00 calculator, and it is solar powered as well.

That is why you have to consider a range of products when calculating inflation...

[netmilsmom]

>>We never went to the movies at night but we went to the drive in. <<

We just went to the Drive-In during the summer. The old Silverdome here in Detroit now has screens in the parking lot and gasoline powered projectors (I swear, you could hear the generators start up)

We did the same thing. Big bag of Popcorn and Kool-aid.

[pjsbro]

I'm pretty sure that the net worth figures cited exclude household debt.

Your example is a good one: the household that owns the $750K house (but owes $600K on it) and the $50K BMW (but owes $45K on it) would have household net income (excluding the debt) of $155K, which is sound about right for those that live that style.

So assuming that most people live considerably less opulent lifestyles (by maybe a third?), the "typical" (i.e., median) household income would be around $100K.