Overall, is the standard of living of the average American higher today than it was, say, 30 years ago?
by Mortgage Rates on Friday, November 5th, 2010 | 9 Comments
-
Mortgage Info
-
Updates
-
Useful Links
-
-
Tags
2010 About article Auctions bank banks best Business buyers change Credit Debt Equity Financial First fixed Foreclosure From good Government Help Home house Housing interest Loan Loans Market more Mortgage Mortgages Need News options qualify Rate Rates refi refinance Refinancing should this Time variable would-
Meta
It’s higher cholesterol, that’s for sure.
yes, it is. You can look at real GDP per capita and see that. That’s the best measure we have and it’s adjusted for inflation.
took me a few minutes to find it again, but i was just looking at this a few weeks ago. as you can see from the chart in my source; minimum wage constant dollars peaked in 1978, and has fallen fairly steadily since then. the last figure available is $4.41 for 2007 vs $5.95 for 30 years previous. So your belief is not relevant. the statistics are there to prove it
Most definitely. Real (inflation adjusted) GDP is 2.2x what it was 30 years ago. Population growth during that period was 17%. ergo real per capita is up almost 90% during that period.
“Standard of living” has to be defined. Today we own more, have safer cars, more tvs, ipods consumer goods in general In 1980 we worked less, had higher reading levels, were thinner and danced disco. Today more stuff and more stress.
Yes, its definitely higher…much higher.*
back in the old days when you was poor you could count on your family to help you. now its different people are spread out more and more. grandparents and great grand parents don’t live with their families any more
Real compensation for ordinary workers is a little higher, but not wages since the extra was used up by increase cost of heath insurance benefits. http://www.visualizingeconomics.com/2007/11/04/has-middle-americas-wages-stagnated/
Family incomes are up because of the increase in two income families and that women earn more than the did 30 years ago but men do not http://www.visualizingeconomics.com/2006/10/29/income-by-number-of-earners/
Gdp per capita is about 50% higher but the increasing income inequality and the larger fraction of working women caused this to effect wages for ordinary jobs very little but the top 10 % is a lot better off
We live longer and have more gadgets so some people argue we get more for our money than is reflected in the CPI, and others argue that the loss of household services that stay home wives use to provide has made the standard of living worse. The poverty rate is unchanged if you account for the variation due to the business cycle
I agree that people are drastically better off today than before for the various reasons mentioned: higher gdp, higher compensation, better goods and services but I do like to argue the counter intuitive so here it goes.
One group of people is worse off: young college educated and as a result the young as a whole. As college enrollment rates have gone up the expected value of the degree is somewhat less. Being a college graduate just ain’t what it used to be. This alone isn’t really bad but there is a second part to this change in the economy. Jobs that require college education generally value knowledge and experience more while those that don’t, while certainly valuing experience and knowledge, certainly need them less than jobs that require college. I do ductwork for a mechanical contractor during the summer and I am an economics student. When I first started doing ductwork I didn’t know anything, nearly zero, but bust my hump and was a decently productive worker. I’ve learned a lot in the 9 cumulative months I’ve worked there and can do a lot more now (which in its self says how much less experience is needed) but my marginal productivity has probably only increased by 50-75%. Now say I worked as an accountant on the other hand; with zero knowledge and experience I’d be absolutely worthless and probably a liability. This illustrates the difference.
Now working construction in probably 5 years I would easily be running work making over $45,000 a year (my company is pretty big) while right now I make $31,000 annualized. I already make more than a lot of friends who have recently graduated and got their first job and I know people who are mechanics and firefighters that already make over $40,000 a year at 21 years old. However, working construction my income would probably never get much higher than $60,000 a year in today’s dollars no matter how good I got while most people out of college will crack that at some point. This brings me to my point – The young are relatively worse off today than they were 30 years ago when relatively fewer people were working in professional jobs.
Of course today’s young may be better off when compared to the young of 30 years ago and are simply substituting current income for future income and better working conditions which, according to economic theory, they must expect to maximize their lifetime utility. This is not a damnation of the current situation but I just like to point out exceptions to the idea that EVERY group must be better off at every time just because real GDP rises – this also partially explains a growing income gap (more baby boomers into that top earning parts of their careers and greater numbers of young substituting current income for future income)