Everyone has to be rich now??

[hrodbert696]

So first of all, mod hat on:

There's no rule against discussing economics. But economics are closely related to politics and political discussion is not allowed on public forums. So be careful and observe the rules. So far I haven't seen anything I need to ding, but we'll keep an eye on this thread.

OK, regular commentator hat on:

A few thoughts about this. One is that we Americans tend to take the 1950s as a kind of benchmark that we treat as normal economic expectations. But the 50s were not normal; they were a boom era brought on by WWII above all, with lots of war-related employment and the fact that the world's other developed economies had been bombed to hell, leaving us as the clear manufacturing superpower. That lead wore off by the late '60s as other countries rebuilt. But before the war was the depression, and before the Depression was the age of Victorian industrialization, which had its own growth and prosperity but also a lot of urban blight and miserable living conditions. Most people were not "middle class" before the 50s, in the sense of expecting home ownership, a non-working spouse, or being able to live commuting distance from their employment.

The other is that the household that a 50s salary supported was WAY more modest than a modern one. Middle-class families today generally need both partners working, which strains the schedule and stress levels and all that. But that's because we are living in houses TWICE the size of what they were in the 50s; new home construction in the 21st century literally has double the square footage of what it was 70 years ago. We also drive more cars; the typical 50s family only had one car, if it had a car at all (a much higher percentage of households didn't). I suspect you might be able to afford to support a family on a single full-time income today, if you're willing to raise three kids and a dog in 1100 square feet, only drive one car, and do without internet broadband or cell phones or streaming subscriptions or air conditioning or any of that stuff.

 

[hrodbert696]

The thing about housing that blows my mind is the size of the new houses being built. Not McMansions, but houses intended for middle class families. My wife and I watch House Hunters a lot, and whenever a couple is looking at a house built in the last century, the immediate reaction is "oh no, this is WAY too small." Families were fine with those houses back then. I grew up in a house like that. Now it seems that every middle class family requires 6 bedrooms, 6 bathrooms, an office, a craft room, a game room, a guest room, and a 3 car garage.

Ayuh, exactly. There was an episode of the Rest is History podcast a while back where they were talking about "Swinging London" in the 60s. One thing they mentioned that hadn't occurred to me before was that, in Britain (and probably America), down to the 50s most people didn't own much more than half a dozen outfits of clothing. You had that many sets of work clothes and then your "Sunday best," maybe a small dresser for your linens and pajamas, and that was it. Houses had small closets because people didn't have much to put in them. And the clothes were made to last; sturdy, in dull colors, so that you could wear them forever and still look OK through all the wear and tear and stains.

 

[JazznFunk]

I suspect you might be able to afford to support a family on a single full-time income today, if you're willing to raise three kids and a dog in 1100 square feet, only drive one car, and do without internet broadband or cell phones or streaming subscriptions or air conditioning or any of that stuff.

A single full-time income? Not where I am, not with average rent ticking the box at around $1,500 for often less than 1,000SF. The 980SF 2BR/2BA apartment I rented with a friend in 2001 for $690/mo now goes for almost $1,600!!

Even my single musician friends have at least one or 2 roommates.

I'd wager that your specific scenario would be possible with a dual, modest income household (with employer provided healthcare), and then subtract the 3 kids. I've seen even one kid break people financially with how much a hospital birth and regular expenses add up when people are raising even one child. Sometime stuff happens and you roll with it, but there's a reason people are choosing not to have kids... for purely financial reasons.

 

[Jeff Hughes]

While both the French and American Revolutions were born from Enlightenment thinking, the French may have taken things too far.

The Britsh also beheaded their monarch only to restore their monarchy.

Perhaps this is why the framers of our constitution were so worried about tyrrany: they saw that people had a tendency to prefer the simplicity of absolute rulers and despots....at least when they absolutely agree with the ruler or despot.

We have a positive feedback loop of economic policy where the more millionaires that are created creates a larger class of political donors who are able to influence public policy to benefit the wealthy class which makes more wealthy people and so on.

But there is a breaking point. Watch "Soylent Green" for reference.

 

[hrodbert696]

One last comment (sorry for multi-posting): someone mentioned income inequality. It's certainly true that income inequality has always existed, and probably always will. It's never been more than a utopian dream that everyone's wealth level would be truly level. I'm pretty privileged in background and education, but I chose a profession that pays less than I might have gotten because I love doing it. I'm fine with that.

The issue, though, is how MUCH inequality there is. We're definitely in an era where the gap between rich and poor is widening, to a disturbing degree. The question is, if you envision a "basket of goods" (housing, food, etc.) to sustain a living in a given society, how affordable is that basket to what proportion of the population? To my understanding, those "baskets" (the "subsistence" basket, the "comfortable" basket, etc.) are indeed getting tougher to afford for many.

 

[hrodbert696]

A single full-time income? Not where I am, not with average rent ticking the box at around $1,500 for often less than 1,000SF. The 980SF 2BR/2BA apartment I rented with a friend in 2001 for $690/mo now goes for almost $1,600!!

Even my single musician friends have at least one or 2 roommates.

I'd wager that your specific scenaro would be possible with a dual, modest income household (with employer provided healthcare), and then subtract the 3 kids. I've seen even one kid break people financially with how much a hospital birth and regular expenses add up when people are raising even one child. Sometime stuff happens and you roll with it, but there's a reason people are choosing not to have kids... for purely financial reasons.

Fair point, but part of it is very much about the housing market, which fluctuates. Someone who's dependent on the rental market is way more vulnerable than someone who bought their home at a fixed mortgage just a few years ago. And of course it depends on whether "full time income" means $30k or $50k - what's affordable to whom. But yeah, definitely, people are getting crunched.

 

[FightMilk]

I’ve worked for decades and still at the bottom.

 

[JazznFunk]

Fair point, but part of it is very much about the housing market, which fluctuates. Someone who's dependent on the rental market is way more vulnerable than someone who bought their home at a fixed mortgage just a few years ago. And of course it depends on whether "full time income" means $30k or $50k - what's affordable to whom. But yeah, definitely, people are getting crunched.

The housing market has been at a sustained, inflated state since right before COVID, and buying a new construction from the ground up was the only way we could control costs and get something livable that wouldn't have required tens of thousands more in renovations at a similar price point. We lucked out in many ways... but we also didn't buy when everyone said we should have years earlier, when we could have been underwater.

The rental market has steadily inflated and outpaced real wages even more than the house buying market has. I've seen it with my own eyes, right in front of me. Most people cannot afford any apartment or home on a single income, with as many stripped down expenses as possible.

 

[hondo4life]

I am “lucky” to have bought my house three years ago. I absolutely could not buy it now. The place doesn’t suit me at all (I need less house and more yard) and it was supposed to be temporary. I’m stuck now. Trying to make the best of it

 

[jimmydean]

I'm amazed sometimes people can afford anything , it does come down to where you live . A starter home in my area is $700,000.00 , bought my first house for $124,500 . Walk into a music store and the average bass is $2-3,000.00 ...what ! Sometimes being in the right place at the right time can be more important than your skills , ect ..........wish you all the best .

 

[/\/\3phist0]

So first of all, mod hat on:

There's no rule against discussing economics. But economics are closely related to politics and political discussion is not allowed on public forums. So be careful and observe the rules. So far I haven't seen anything I need to ding, but we'll keep an eye on this thread.

OK, regular commentator hat on:

A few thoughts about this. One is that we Americans tend to take the 1950s as a kind of benchmark that we treat as normal economic expectations. But the 50s were not normal; they were a boom era brought on by WWII above all, with lots of war-related employment and the fact that the world's other developed economies had been bombed to hell, leaving us as the clear manufacturing superpower. That lead wore off by the late '60s as other countries rebuilt. But before the war was the depression, and before the Depression was the age of Victorian industrialization, which had its own growth and prosperity but also a lot of urban blight and miserable living conditions. Most people were not "middle class" before the 50s, in the sense of expecting home ownership, a non-working spouse, or being able to live commuting distance from their employment.

The other is that the household that a 50s salary supported was WAY more modest than a modern one. Middle-class families today generally need both partners working, which strains the schedule and stress levels and all that. But that's because we are living in houses TWICE the size of what they were in the 50s; new home construction in the 21st century literally has double the square footage of what it was 70 years ago. We also drive more cars; the typical 50s family only had one car, if it had a car at all (a much higher percentage of households didn't). I suspect you might be able to afford to support a family on a single full-time income today, if you're willing to raise three kids and a dog in 1100 square feet, only drive one car, and do without internet broadband or cell phones or streaming subscriptions or air conditioning or any of that stuff.

Very close to what I deleted for fear of chastisement.
Well stated.

 

[friskinator]

The new construction my wife and I bought in 2015 is 1,500 SF. 3BR, 2 BA, attached garage. Just the 2 of us.... we don't have (can't have) kids. It was $225k. Those smaller starter homes WERE being built for a time. Now, builders don't have the incentives to do it... if they build them at all. We have a major housing crisis in our area because of this, compounded by the fact that a ton of housing stock is being used for AirBnBs, and/or got decimated by Helene. At this point, our 'starter home' will likely be our 'forever home'.

But yes, the same general mindset that got people in trouble in 2008 still persists - buying more house than they really need, spending more than they should. It only complicates matters though when even a small house like the one we have is now valued at over $500k. We could not afford the house we live in now if we were trying to buy it in this market.

Same here. My wife and I (no kids) bought our place in late 2020. New construction, around 2000 square ft. It's enough room for us, but it sat on the market for awhile before we bought. The value jumped around 200K over what we paid not long after we bought, and we couldn't afford it if buying now. Fortunately, we love the house and aren't planning on going anywhere, but if we wanted to move, we couldn't afford our neighborhood now.

Ayuh, exactly. There was an episode of the Rest is History podcast a while back where they were talking about "Swinging London" in the 60s. One thing they mentioned that hadn't occurred to me before was that, in Britain (and probably America), down to the 50s most people didn't own much more than half a dozen outfits of clothing. You had that many sets of work clothes and then your "Sunday best," maybe a small dresser for your linens and pajamas, and that was it. Houses had small closets because people didn't have much to put in them. And the clothes were made to last; sturdy, in dull colors, so that you could wear them forever and still look OK through all the wear and tear and stains.

Agreed. We "require" more of everything now, and life in general is more expensive than it was 50-60 years ago. It's more expensive than it even was 25 years ago with the advent of technology that is now no longer a luxury.

 

[/\/\3phist0]

Maybe the 80s in New York, Miami, etc.... but not in Western NC. And I'm here, so there was procreation.

Los Angeles hedonism capital of the world.

 

[JazznFunk]

Los Angeles hedonism capital of the world.

So the movies tell us.

 

[/\/\3phist0]

So the movies tell us.

Lived nearby, dad was LAPD.
Played the club circuit in the 80s-90s.
Excess is normal.

So is drug abuse, poverty, crime, and rampant narcissism.

 

[buldog5151bass]

Things have changed a lot. Back in 1979, families with one income weren't that unusual.

Of course, spending habits have changed a lot as well. Back in 1979, there weren't that many families with multiple high car loans, 4 phone bills per family, multiple monthly subscriptions for non-essentials, etc.

It isn't just society that has changed.

 

[jmattbassplaya]

You understand the privilege you enjoy simply being able to possess that viewpoint, right? Literally - if your take on how to get ahead includes the luxury of investing and jumping to a new employer every 2-5 years, you are already in very rarified air.

Of course, but it doesn’t make my point any less relevant for folks who do qualify for this feedback.

 

[LetItGrowTone]

I'm a boomer.
The good news is that we lived in a dream world.
The bad news is that we lived in a dream world, with real-world consequences.

It took a miracle (figuratively speaking), but now everything has flipped in my mind. Embarrassed and disappointed that it took until the end of my life. The things I see as encouraging or continue to have a little faith in (I feel like it's the last bit of faith I have left (not talking about religion)) have all flipped to what was formerly unthinkable, and even now practically unspeakable (I mean even outside of our forum). So, I won't mention any.

There is still hope that humankind can have a decent future.

 

[Peteyboy]

My parents were born in the 40's. They were only generation in this country to do better than their own parents. No one will ever get that far ahead again.

 

[MDBass]

So first of all, mod hat on:

There's no rule against discussing economics. But economics are closely related to politics and political discussion is not allowed on public forums. So be careful and observe the rules. So far I haven't seen anything I need to ding, but we'll keep an eye on this thread.

OK, regular commentator hat on:

A few thoughts about this. One is that we Americans tend to take the 1950s as a kind of benchmark that we treat as normal economic expectations. But the 50s were not normal; they were a boom era brought on by WWII above all, with lots of war-related employment and the fact that the world's other developed economies had been bombed to hell, leaving us as the clear manufacturing superpower. That lead wore off by the late '60s as other countries rebuilt. But before the war was the depression, and before the Depression was the age of Victorian industrialization, which had its own growth and prosperity but also a lot of urban blight and miserable living conditions. Most people were not "middle class" before the 50s, in the sense of expecting home ownership, a non-working spouse, or being able to live commuting distance from their employment.

The other is that the household that a 50s salary supported was WAY more modest than a modern one. Middle-class families today generally need both partners working, which strains the schedule and stress levels and all that. But that's because we are living in houses TWICE the size of what they were in the 50s; new home construction in the 21st century literally has double the square footage of what it was 70 years ago. We also drive more cars; the typical 50s family only had one car, if it had a car at all (a much higher percentage of households didn't). I suspect you might be able to afford to support a family on a single full-time income today, if you're willing to raise three kids and a dog in 1100 square feet, only drive one car, and do without internet broadband or cell phones or streaming subscriptions or air conditioning or any of that stuff.

There are two primary issues at play here, and unfortunately they work synergistically to our detriment.

1. The economy is a house of cards built on everyone buying things they don’t need, often with debt.

We all saw the economy collapse almost literally overnight when the pandemic hit and people stopped buying anything but true necessities.

This is also true whether we’re talking about plebs buying avocado toast or the government buying fighter jets: as much as we talk about “personal responsibility” the Pentagon has failed half a dozen audits in a row, and the US government pays almost $1,000,000,000,000 in interest alone on it’s debt every year.

2. Productivity and GDP growth has increased steadily over the last four decades while wage growth has remained flat, and inflation has thrown gas on that fire over the last five years in particular.

In many metropolitan areas a 2 bedroom 1100 square foot rental now costs in excess of $3000 a month: that means to stay above the poverty line (ie spending 1/3 or less of our income on housing) a single income family needs to make in excess of $100,000 a year.

A single $100,000 income family when I was a child in the 90’s meant being able to afford a mortgage on a nice home, vacations, a college fund for your children, and retirement savings.

It’s not an excess of pleasure spending that has made life significantly less affordable for the majority of people: basic living necessities become significantly less affordable.

A $8 daily latte habit isn’t why so many people are struggling financially…AND if everyone stops buying non-essentials like $8 latte’s the economy collapses.

Rock, meet hard place.