Everyone has to be rich now??

[JazznFunk]

This is true, but then again this chart was simply a national average, which is true based on the data provided to it. Sure, you can adjust any of the factors and details in the report for a more thoughtful analysis, but now you have something different from this national average.
We can do this with any chart showing an average of anything and say 'that's not true if you do A, B, or C'.

-Mike

Agreed. My point was that if you want to talk about what's affecting the bottom 80-90% of the country (the majority) and why people who make it their living to study the economy say the economy is in trouble, you have to omit the highest earners to look at what 'real people' are dealing with. Do that, and your 'working American average' metrics will change. So yes, the full on 'national average' would lead people to say 'what's the ruckus'? I would argue this is exactly what is at play when arguments about raising minimum wages, salaries, etc to properly and pragmatically account for inflation and more are swatted down.

 

[WG Plum]

Agreed. My point was that if you want to talk about what's affecting the bottom 80-90% of the country (the majority) and why people who make it their living to study the economy say the economy is in trouble, you have to omit the highest earners to look at what 'real people' are dealing with. Do that, and your 'working American average' metrics will change. So yes, the full on 'national average' would lead people to say 'what's the ruckus'? I would argue this is exactly what is at play when arguments about raising minimum wages, salaries, etc to properly and pragmatically account for inflation and more are swatted down.

This speaks to the difference between the ‘Economy’, i.e. the investor economy, and what some refer to as the’real’ economy.

 

[MJ5150]

Agreed. My point was that if you want to talk about what's affecting the bottom 80-90% of the country (the majority) and why people who make it their living to study the economy say the economy is in trouble, you have to omit the highest earners to look at what 'real people' are dealing with. Do that, and your 'working American average' metrics will change. So yes, the full on 'national average' would lead people to say 'what's the ruckus'? I would argue this is exactly what is at play when arguments about raising minimum wages, salaries, etc to properly and pragmatically account for inflation and more are swatted down.

Thank you sir. You make great points. Thank you for doing so respectfully and keeping us on topic even as I tried to wander off into the weeds. Your comments have given me much to think about.

-Mike

 

[DirtDog]

What? Cheap junk from overseas didn’t improve your quality of life? /s

 

[DirtDog]

Wealth inequality is a recurring pattern in history. The outcomes are not always great for the poor or the rich. Teleworking had the possiblity to change this dynamic given it wouldn't be necessary to live close to your workplace or have the need to own a vehicle to take you there.

But then the commercial real estate, auto industry and O&G lobbyists had a collective hissy fit.

 

[DirtDog]

To further complicate issues, consumerism is at an all-time high. I live in a fringe (lunatic? most affordable) neighborhood in the most affluent section of VB....I see the "toys", the McMansions, etc. and, let me tell you, some of these folks are in debt up to their eyeballs. We like to covet but, overall, people are starting to wise-up.

Riis

Agree.

I like to say we’re all living now like the doctors and lawyers from 70s were living. Except we have 10x the electronics than anyone did back then. More than one phone or one TV, two NICE cars AND a double car garage….wow!

I grew up in the 70s and played hockey and was friends with those lawyers and doctors kids. What we have now makes them look the Beverley Hillbillies BEFORE Jed struck oil.

 

[hbarcat]

National averages aren't indicative of local job market or even State-level wage stagnation, specifically as it relates to the minimum wage. Here in NC, our minimum wage has stayed the same at $7.25/hr for decades. That's below the certified/recognized Poverty Wage. Certain municipalities have pushed (successfully) for businesses to be Living Wage Certified, but overall the minimum wage in NC has allowed businesses to continue under-paying workers and barely meeting (if they meet at all) adjustments for inflation.

The minimum wage isn't applicable to this discussion because we're talking about all wage earners at all income levels. According to the Bureau of Labor Statistics, 98.7% of workers earned more than the national minimum wage. The 1.3% of workers you're referring to are in no way representative of the entire labor force.

Before you ask, I did look up data sets for wage growth among each income demographic, from the lower to the middle to the upper class, and every group saw wages keep pace with inflation.

Also, your data sets (both charts) are (or are almost) a decade old.

I also checked the stats up to 2024 and found that the past trend continued, with the exception of a glitch during, immediately after, the pandemic.

At first, the massive increase in inflation caused purchasing power to spike downward, but that reversed after 2022, when inflation got under control at the same time businesses massively increased employee pay at all levels inom to entice reluctant workers back into the labor market.

Where burger flippers were making $10/hr in 2020, they're now making $18/hr.

And your 2nd chart literally states in the headlines that while wage averages may have increased, *purchasing power has hardly budged*.

If you look at the numbers, you'll see that "hardly budged" means that it's only increased a few percentage points.

An increase of a few percentage points is most certainly not the same thing as a significant decrease.

Meaning we are not keeping pace with inflation and cost in terms of wages, especially when you look at more micro-level data in areas with high costs of living.

The numbers say that all wage demographics are keeping up with inflation.

Looking at the basic numbers and what it actually takes, on average, to pay the bills is also more helpful than un-nuanced, blanket data. This is an interesting tool which you can investigate living wage requirements and average expenses State-by-State.

Living Wage Calculator

You're correct that prices depend heavily on where you live. But local wages tend to track closely with local prices. Where prices are higher, wages are higher. Where prices are lower, wages are lower. Not just for houses, but for many other goods like fuel and groceries, but also nearly all services.

I live in Northern Illinois, but in a rural area about 100 miles west of Chicago out in the corn fields. In my neighborhood the typical home is about 2,000 ft² with 3 bedrooms and 1½ baths and costs less than $100,000.

Travel 50 miles east into the Chicago suburbs and that same home is $250,000.

Except that there are almost no homes that small available. A "starter" home size there is 3,500 ft² with 5 bedrooms and 3 baths and costs almost $500,000.

When you compare wages between where I live in the sticks to 50 miles east in the suburbs, you'll see that they're roughly commensurate with prices. The suburban house costs twice as much as the equivalent size rural house, but typical wages are also twice as high. Factory jobs here start at $20 an hour. The same job in the burbs is $40.

In my first post, I made a point to say that there are reasons why it's harder for younger people to purchase a house compared to their parents and grandparents, but it has nothing to do with wage stagnation, but rather with other factors (which I dont want to go into here because that would derail this thread.)

 

[jmattbassplaya]

I remember a TBer who used to preach the bootstraps homilies. (Inactive for a few years now.) I later realized he married a doctor. I guess that's one way to do it.

I’d be curious to know who that was if you got a DM for me. I think I know who it if I had two guesses…

 

[FRoss6788]

I’d be curious to know who that was if you got a DM for me. I think I know who it if I had two guesses…

I’m certain who it is.

Good guy most of the time.

 

[klyph]

when you compare wages between where I live in the sticks to 50 miles east in the suburbs, you'll see that they're roughly commensurate with prices. The suburban house costs twice as much as the equivalent size rural house, but typical wages are also twice as high. Factory jobs here start at $20 an hour. The same job in the burbs is $40.

Huh? I would think that this would lead to a huge community of people commuting to work. I'm not trying to be a jerk here, but there are an estimated 30-50.000 people who commute every day from southern NH into Massachusetts to work at places like Raytheon and Northrup for a probably 50% increase in wages. I have toyed with the idea of a 90 minute commute (which is probably only 50 miles lol) to raise my own pay 20-30%, but that would mean giving up gigging ( and probably a large chunk of my sanity), so in the end adding 15 hours a week to my work schedule in the form of a stressful commute isn't really worth it. Of course, if I were sweating a Mortgage or the cost of children, I would be forced to swap gigs for a commute.

But a 100% wage increase "for the same job" is something that most people would make very significant life changes to effect (If I could do that, I would give up gigging, period). Which would force those employers in your community to make significant concessions (like raising wages). You are presenting normalized info from a reliable source in the form of graphs, but then we're getting bogged down in anecdotal stuff which, frankly, makes zero sense.

I think you will also find that the "burger flipper" jobs to which you referred probably paid more than you think in 2019, and much less than you think now, although the peak of 18/hr is probably spot on for your area. Those jobs in my market probably peaked at 20/hr or higher, but the starting wage has come back down to 17/hr. in just two years. The responsiveness of the job market is an amazing thing to watch, but also a little frustrating for those navigating career changes. It's due not only to the internet, (yay!) but also to the increasing corporatization of American life and the hegemony of corporate retail jobs (boo!).

I have also presented anecdotes in my posts from my personal life to counter assertions that people have drawn from "data". but filtered through an *intemperate* worldview ("houses have grown in size because these spoiled brats blah blah blah"). The data doesn't really matter if you can't think beyond your own prejudices (not referring to you or your post). The anecdotes concerning specific actions by specific people (like my friends who have been on continual house hunts for years despite earning six figures) mean a lot more than the "these fat bums who blame everyone else for their problems" small-minded viciousness. I know in an open forum these sentiments are supposed to be on the same level as rational or data driven posts, but they just aren't. They're trash.

 

[JazznFunk]

The minimum wage isn't applicable to this discussion because we're talking about all wage earners at all income levels. According to the Bureau of Labor Statistics, 98.7% of workers earned more than the national minimum wage. The 1.3% of workers you're referring to are in no way representative of the entire labor force.

Before you ask, I did look up data sets for wage growth among each income demographic, from the lower to the middle to the upper class, and every group saw wages keep pace with inflation.

Where burger flippers were making $10/hr in 2020, they're now making $18/hr.

You're correct that prices depend heavily on where you live. But local wages tend to track closely with local prices. Where prices are higher, wages are higher. Where prices are lower, wages are lower. Not just for houses, but for many other goods like fuel and groceries, but also nearly all services.

I live in Northern Illinois, but in a rural area about 100 miles west of Chicago out in the corn fields. In my neighborhood the typical home is about 2,000 ft² with 3 bedrooms and 1½ baths and costs less than $100,000.

Travel 50 miles east into the Chicago suburbs and that same home is $250,000.

Except that there are almost no homes that small available. A "starter" home size there is 3,500 ft² with 5 bedrooms and 3 baths and costs almost $500,000.

In my first post, I made a point to say that there are reasons why it's harder for younger people to purchase a house compared to their parents and grandparents, but it has nothing to do with wage stagnation, but rather with other factors (which I dont want to go into here because that would derail this thread.)

I think if you would have read farther back on all of my replies on my thread you'd find that we are in agreement on quite a few things, especially about few to no small homes available in an affordable price range for first time (or thrifty) buyers.

Respectfully, where we diverge - greatly - is when you say the 'minimum wage doesn't matter.' Of COURSE it matters, and it's hard to take much else seriously on that topic when you discount it.... because local businesses decide how much above the minimum wage they are going to offer workers to be competitive - hence, depressed wages in areas where the minimum wage is already below the poverty line. That matters. As for 'local wages tracking along with local prices', this isn't necessarily true. Where I am wages are still very much depressed compared with State and National averages, but cost of living and cost of goods and services have risen to meet 'market demands' - a.k.a. premium pricing to take advantage of tourists in a tourism and service-based economy. Meaning: local workers can barely afford to live here, much less eat at the establishments where they work (if they're in food service or hospitality). I am lucky to now work in a job (where I have been for 13.5 years) where I have a wage and compensation package that is much higher than many other jobs - but my job is rare here, and I don't take it for granted, especially after going through COVID and Helene and still stayed employed. And I spent well over a decade in service/retail, on top of gigging. So I have a huge amount of empathy for my fellow workers in that respect.

I don't doubt that there are several areas where your data sources line up and say 'wages are keeping pace with inflation', but without nuance or listening to workers and looking and even DEEPER data, you may be missing the reality of how it is affecting workers in terms of boots on the ground. I feel like your cut and dry analysis is an attempt to discount the deeper details.

“Inflation continues to drive up the cost of living, with 85% of workers expecting increasing salaries to offset these pressures; however, only 11% have received raises commensurate with inflation, so far, creating a significant gap,” Giacomo Santangelo, a Monster economist, said in a statement. “The financial strain is evident.”

Eight-two percent of workers have had to tap into their savings to stay afloat, and 8% more think they will need to in the near future, the report found. At the same time, 69% of employees have cut back their spending on non-essentials, 43% have leaned more heavily on credit or loans, and 41% have reduced their retirement contributions.

Apart from wages not being adjusted for inflation, more than a third of workers also said they didn’t receive a bonus they expected in the past year, and 15% had their salaries cut, the report found."

HR Dive: Are wages keeping up with the cost of living?

 

[klyph]

Where we diverge - greatly - is when you say the 'minimum wage doesn't matter.' Of COURSE it matters, and it's hard to take much else seriously on that topic when you discount it.... because local businesses decide how much above the minimum wage they are going to offer workers to be competitive - hence, depressed wages in areas where the minimum wage is already below the poverty line. That matters. As for 'local wages tracking along with local prices', this isn't necessarily true. Where I am wages are still very much depressed compared with State and National averages, but cost of living and cost of goods and services have risen to meet 'market demands' - a.k.a. premium pricing to take advantage of tourists in a tourism and service-based economy. Meaning: local workers can barely afford to live here, much less eat at the establishments where they work (if they're in food service or hospitality).

It's been twenty-five years since I've seen a job offered at the minimum wage in the state where I live. In that period, it's been raised at least three times. In most locales in the state (including mine) it's been a rearguard action, making it a meaningless gesture for all but the very poorest in very few municipalities. I am actually surprised that the number of people nationally working at minimum wage (as described by hbarcat) is that low. Considering the vicious disinterest in the working poor in this country and the isolation in many poor communities, I expected it to be double that.

 

[JazznFunk]

It's been twenty-five years since I've seen a job offered at the minimum wage in the state where I live. In that period, it's been raised at least three times. In most locales in the state (including mine) it's been a rearguard action, making it a meaningless gesture for all but the very poorest in very few municipalities. I am actually surprised that the number of people nationally working at minimum wage (as described by hbarcat) is that low. Considering the vicious disinterest in the working poor in this country and the isolation in many poor communities, I expected it to be double that.

Yeah, NC is woefully behind the curve, especially when you add in how hostile NC is towards unions for any industry.

The last time the minimum wage was raised here was in 2008, when it increased from $6.55 to $7.25 per hour. Appalling, and that's why I hate it when people say the minimum wage doesn't matter. It does in some places, when it's used as an excuse to keep wages lower than they reasonably should be.

 

[spiritbass]

I worked in an industry for decades where I could chat with the bosses in the executive offices about the company's 3, 5, and 10 year plans to remain profitable and grow.

In the last 20 years, those plans disappeared. The company has focused on each quarterly report and maybe a year-long plan and it focuses on stocks and dividends and buybacks, not on profit and growth. It's about the activist investors, market harvesting and stock manipulations pretty much across the board, from IBM to Boeing.

It's a very different world from when I had hair and it was dark.

I'm glad to still have hair, even though it has all turned silver. I am also thankful that the mortgage on my humble abode was paid off long ago, so all I have to pay is property tax and insurance coverage. I'll be seventy years old (God willing) on my next birthday. All I have seen during my life is increasing devaluation of our currency. It's the way of the world. Still, I have more than enough for myself, and some to bless others in need.

 

[klyph]

I'm glad to still have hair, even though it has all turned silver. I am also thankful that the mortgage on my humble abode was paid off long ago, so all I have to pay is property tax and insurance coverage. I'll be seventy years old (God willing) on my next birthday. All I have seen during my life is increasing devaluation of our currency. It's the way of the world. Still, I have more than enough for myself, and some to bless others in need.

*Sigh* With all due respect... Inflation and devaluation are two different things. What we are seeing is people conflate things that are plentiful by design (electronic gadgets, processed food, plastic clothing) with prosperity, and things that are scarce by design (housing, health care, education) with responsibility. People who acquired the latter and don't fully understand the former seem anxious to defecate upon those younger than themselves whose lives can only contain the former BY DESIGN. This cognitive dissonance is basically what this whole thread is about.
Thank you for looking out for the needy.

Edit; I lost my hair in my twenties, maybe that's why I'm such a jerk!

 

[ajkula66]

My hometown is 9 hours away from JFK airport on a direct flight. So no, I'm not an American but have lived in the States for 23 years and likely have a slightly different perspective from quite a few people here...

I could say I was lucky in landing a (union for the most part) job which had enabled me to raise three kids on a single income, with their mother staying home 90% of the time during our life together. All of them also managed to get through college with no student loans, which is a huge plus.

The problem is that I wouldn't be entirely honest.

I still had to hustle to make ends meet, and there were numerous months which I would describe as financially tough nevertheless.

I'd also never want my kids to live as I have for 16 years, spending an average of 6 hours a day commuting.

Nor would I want them to be as physically broken at my age as I am right now. A lot of my health issues were caused by the very lifestyle described above.

You see, I was lucky to have a place to go back to where living on SS alone - presuming that I get to see it - won't be an issue the way things stand right now.

Had I worked for another few years and retired with a full pension I still wouldn't have been able to survive in the States combining it with my SS benefits. There is also a very good chance that I would've never made it to the "full pension" date, realistically speaking.

I'm not complaining. If I were to drop dead five minutes from now, I could state that I've never been bored for a single second in my entire life, which is a lovely thing in its own right.

Having said that, my kids will have it much tougher than I did.

Not because they are a part of the entitled generation which spends 80% of their time staring into the screen.

Because "the good jobs" started disappearing once the stock buybacks were allowed back in the '80s. One could trace a *lot* of current problems back to that decade if they chose to do so, I'll stop here before I cross the line...

One last thing: my in-laws bought a two-family house in a nice area of Brooklyn, NY for $65K back in '81. Middle class folks with two kids at the time. That same house is valued at $1.5M right now. There's no way a middle class couple - if such a thing still exists - would be able to pull that off today.

My $0.02 only...

 

[Bevan777]

*Sigh* With all due respect... Inflation and devaluation are two different things. What we are seeing is people conflate things that are plentiful by design (electronic gadgets, processed food, plastic clothing) with prosperity, and things that are scarce by design (housing, health care, education) with responsibility. People who acquired the latter and don't fully understand the former seem anxious to defecate upon those younger than themselves whose lives can only contain the former BY DESIGN. This cognitive dissonance is basically what this whole thread is about.
Thank you for looking out for the needy.

Edit; I lost my hair in my twenties, maybe that's why I'm such a jerk!

Great summary

 

[hrodbert696]

Just to throw some long-term historical data into the conversation:

Share of Spending on Household Basics Declines

As American households grew wealthier during the 20th century, they spent an ever-smaller proportion of their incomes on the basic necessities of food, clothing, and housing. In 1900, the average U.S. family spent $769 per year (in 1900 dollars), and nearly 80 percent of that went to pay for...

humanprogress.org

In 1900, the average American household spent 80% of their income on "basic necessities," those being defined as food, clothing, and housing.
43% on food,
14% on clothing,
23% on housing.
Only 19% of families owned their home. The average new home was 700 square feet.

In 2018, basic necessities occupy just under 50% of the average household budget;
13% on food (a third of that on eating out),
3% on clothes,
33% on housing.
Homeownership rate is 64%. The average new home is over 2600 square feet.

The food and clothing figures particularly surprised me.

Obviously a lot of this shifts if you exclude high-earning households, but I presume that would be as true of Gilded Age 1900s households as of current ones.

A couple of obvious things to consider also. One is that one could argue that "necessities" have shifted. Transportation would be the big one; In 1900, around 40% of workers were in agriculture, down to under 2% today. Maybe a third of the remainder were industrial workers. Presumably most farmers lived on their farms, and factory workers in dense cities or company towns where they walked or rode public transportation to work. Cars were originally luxuries for the well-to-do but have become a largely mandatory cost of living for many. It occurs to me that much of the American "space between houses" obsession I posted about earlier may derive more from this than from any supposed "frontier spirit." Unlike Europe, where compact villages were traditional, American company towns were capitalist creations and often exploitive (you'd get paid in "scrip" you could only spend at the overpriced company store, for instance). So there may be an unconscious assumption that getting OUT of the walkable community was an escape from that exploitation, to something that was superficially reminiscent of an independent family farm.

Education is another. Couldn't get figures offhand for 1900, but in 1940 less than 40% of the American population completed high school and less than 6% had college degrees. As of 2013 those figures are 90% and 37%, so the cost of college affects a lot more people.

And the third is health care. Life expectancy at birth has gone from 48 to 78. A lot of things would have killed you in 1900 that there were no real treatments for, so there wasn't much to spend money on (EDIT: the original "health insurance," at least what I know in German history, was really more what we would call "disability" today - not payment for medical care but insurance against being unable to work while ill). We live a lot longer, to a great degree, because we have much better treatments available for lots of diseases; but those treatments have to be paid for. Also, since a lot less of the population is dying of measles or dysentery or typhus now, a lot MORE of the population is living with chronic ailments, often non-communicable ones like hypertension or diabetes. We have treatments to manage all this stuff; but the treatments cost. Health care spending is over 8% of the average household budget now (and rising fast).

 

[nutdog]

A lot of economic expertise on display in this thread. Here’s some of mine. My credentials are without question. Sources cited when known.

“Life’s not fair.” Hulan Webb, one of my high school math teachers. Usually in response to someone in the class saying, “but Mr. Webb that’s not fair.” He said it a lot.

“Everything you own is in the process of breaking.” Larry Winter, CPA. If you think the car breaking down was some sort of unanticipated emergency, you’re not living in reality.

“Do you see a man skillful in his work? He will stand before kings". Ancient Proverb. Get good at something people need.

“Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.” The Preacher. Diversify. Don’t put all your eggs in one basket.

Get married young and stay married. I’ll attribute this one to Scott Galloway. Most wealthy people are in long-term monogamous relationships. “The team is a great way to build wealth.”

Don’t borrow a bunch of money to go to college. Me.

“Do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” Jesus. Quit worrying and get to work.

“The poor you will always have with you…”. Jesus. Much thought, action and treasure has gone in to trying to prove him wrong. Yet here we are.

“Make it your ambition to lead a quiet life: You should mind your own business and work with your hands…so that you will not be dependent on anybody.” Paul. Self-explanatory.

“Everything would be fine if people would just do what I tell them to do.” Pretty much every human being ever.

“You can’t tell me what to do.” Pretty much every human ever.

This is the loan contract for my first car bought in 1982. A little two-door coupe with 6000 miles on it. Stick shift, no ABS, no airbags, no cruise control, no power windows, no power door locks. Check out the interest rate.

 

[Bassdirty]

When the first season of The Simpsons aired in 1989,
Homer was considered a loser. Same with Al Bundy from Married with Children, which started in 1987.

Both of these guys were able to support a family with stay at home Mom, two cars and a house, even though they worked a job they hated and were not particularly good at.

That WAS tv, btw.



But yea, The point stands.