How Much Worse Off Are We?

[charrison]

linkage

"?millions of low wage American workers are earning less in real, inflation-accounted for dollars today than they earned in the 1970s."
-- Vermont Congressman Bernie Sanders


Today, there are two Americas. One America agrees with Congressman Sanders and Senator John Edwards that life is getting harder for working Americans, that things have been going down hill for thirty years, and that our only hope is bigger government. The other America realizes that it is nonsense to suggest that the middle class is disappearing and that the standard of living is eroding for working Americans.



This essay consists mostly of a deluge of statistics. But before I get to that, let me just ask you to consider what you can see with your own eyes. Is your family worse off than it was in the 1970's? Are many of the families that you know worse off? Do the people that you see in shopping malls, on vacation, on the highway, or in restaurants look like they are worse off than they were thirty years ago?



In the 1970's, ordinary working people drove Vegas and Pintos. They did not eat out much. They rarely traveled by airplane. Many of their jobs were dangerous. Do you really think that there are many working Americans today who would trade places with their 1970's counterparts?


The Disappearing Lower Class



What disappeared between 1970 and today was not the middle class but the lower class. The table below shows the percentage of households without certain basic middle-class necessities in 1970 vs. today.



Item
Percent Lacking in 19701
Percent Lacking Now2,3

telephone
13.0 %
2.4 %

complete plumbing
6.9 %
0.6 %

refrigerator
17 %
0.1 %

Stove
13 %
0.3 %

color television
66.0 %
1.1 %

Vehicle
20.4 %
10.3 %




Today, 68.6 percent of households own their own homes. This is an all-time record, four percentage points higher than in the 1970's.

Lots of good stats in this article.

 

[Jhhnn]

Well, Charrison, I guess it all depends on how you look at it. This statement, for example-

Today, 68.6 percent of households own their own homes. This is an all-time record, four percentage points higher than in the 1970's.

Which all sounds peachy, except that the don't actually own those homes, they merely owe on the mortgages. If anything, middle America is deeper in debt than ever before, and depend on the ability to liquidate home equity to make ends meet... Few will ever actually own those houses outright...

Oh, yeh, color tv's weren't everywhere in 1970, they were relatively new, and parts of America, particularly black southern america, were extremely backward. America's poorest are better off today, while the rest of us, except for the wealthy, really aren't, at all. Most of the changes you''ve described are a result of the welfare programs decried by the right, anyway, so what's your point?

 

[charrison]

Originally posted by: Jhhnn
Well, Charrison, I guess it all depends on how you look at it. This statement, for example-

Today, 68.6 percent of households own their own homes. This is an all-time record, four percentage points higher than in the 1970's.

Which all sounds peachy, except that the don't actually own those homes, they merely owe on the mortgages. If anything, middle America is deeper in debt than ever before, and depend on the ability to liquidate home equity to make ends meet... Few will ever actually own those houses outright...

I would say most people own their homes eventually. It takes most people 20-30 years to get there, but they do eventually own it. But I guess you would also complain if people did not have mortgage and were being abused by landlords.


Oh, yeh, color tv's weren't everywhere in 1970, they were relatively new, and parts of America, particularly black southern america, were extremely backward. America's poorest are better off today, while the rest of us, except for the wealthy, really aren't, at all. Most of the changes you''ve described are a result of the welfare programs decried by the right, anyway, so what's your point?

My point is that things are not nearly as bad as people like yourself claim them to be.

 

[PsharkJF]

three words - credit card debt.

 

[SSibalNom]

Originally posted by: PsharkJF
three words - credit card debt.

68% who own the homes..... its highly unlikely the credit card debt exceeds their home equity

 

[Helenihi]

Who cares if they have a mortgage? You don't want to pay off your mortgage anyway. It's cheap to finance and you're usually better taking out a loan that way rather than getting a car loan or putting it on credit cards.

The point is that they do own the home. They can do what they want with it, they can't get kicked out as long as they make their payments (which won't go up at the end of a lease like an apt), and their monthly payments are going towards their equity, not just to a landlord's pocket.

 

[Stunt]

First of all interest rates are so low that people are able to go out and spend the bank's money on their houses. Hopefully they chose to lock in at these rates, because when they go up...a lot of americans will get the shaft.

Consumer Loans
Sitting pretty at 20% of income. Not a good thing unless they bought things worth something in case they want to sell to avoid personal bankrupcy with higher interest rates. (these things are bought on credit)

Consumer Spending
Look at the last three years, personal spending (consumption) has gone up dramatically, whereas the personal income has not followed the trend as in the past.
Keep in mind that this is a percent change graph. So the longer the spending is above the personal income level, comsumers are increasingly going into debt.

 

[Jhhnn]

Much of the celebrated "growth" in the third quarter of '03 was achieved through home refinancing. Refi at a new lower rate, take cash out, pay off the creditcards, buy a new boat, go on vacation kind of thinking. Few realize that they just financed the furniture over 30 years, same with the boat. Think you'll still have either one in 30 years? probably not, but you'll be paying for it, anyway...

Not to mention that the ultralow rates have created a real estate bubble in the wake of the dotcom bubble... Anybody who was around in the late 80's, early 90's saw what happens when rates go up and values fall. Overextended consumers take a bath... Much of the current home "buying" situation ignores the basic rule of maintaining positive equity. Nobody will loan you more on the house if you already owe 125% of valuation... Housing has become a speculative market, and anybody with a lick of sense realizes that somebody will eventually get left holding the bag in that kind of environment.

Flat or decreasing income and increasing debt loads aren't any sane person's definition of economic health. That applies to the govt, as well, even though our current leadership would deny it with their dying breath...

 

[bozack]

Originally posted by: Jhhnn
Much of the celebrated "growth" in the third quarter of '03 was achieved through home refinancing. Refi at a new lower rate, take cash out, pay off the creditcards, buy a new boat, go on vacation kind of thinking. Few realize that they just financed the furniture over 30 years, same with the boat. Think you'll still have either one in 30 years? probably not, but you'll be paying for it, anyway...

Not to mention that the ultralow rates have created a real estate bubble in the wake of the dotcom bubble... Anybody who was around in the late 80's, early 90's saw what happens when rates go up and values fall. Overextended consumers take a bath... Much of the current home "buying" situation ignores the basic rule of maintaining positive equity. Nobody will loan you more on the house if you already owe 125% of valuation... Housing has become a speculative market, and anybody with a lick of sense realizes that somebody will eventually get left holding the bag in that kind of environment.

Flat or decreasing income and increasing debt loads aren't any sane person's definition of economic health. That applies to the govt, as well, even though our current leadership would deny it with their dying breath...

one reason why I love mass, no matter what happens housing will always be in demand as the area is overcrowded as it is...

 

[Gravity]

We also have the wealthiest lower class/impoverished in the world. Folx here on public assistance often own televisions, cars and many "toys" that would be attributed to middle class elsewhere on the planet.

Are we spoiled?

 

[Train]

Originally posted by: Gravity
Are we spoiled?

yes

 

[piasabird]

Anyone that can afford a TV is not poor.

 

[MonstaThrilla]

This is more of the politics of the "we can't do much better" that will destroy the Republican party. This is the exact message that today's Republicans are trying to convince the American people of, and it won't work. Its pessimistic and goes against the American dream. Of course the poor are better of than they were 30 years ago. Its called PROGRESS. But they're still poor. The standards of living change in 30 years. You can pick and choose statistics all you want to convince yourself that your partisanship is the correct one. But that won't matter to the voters come November, when they realistically look at where they are and compare it to where they should be. Most Americans are grounded in the reality of their everyday lives, not a collection of statistics that cheap-labor conservatives use to justify their selfish policies.

 

[irwincur]

Anyone that can afford a TV is not poor.

They can still be poor, but their priorities are really messed up. The point is, they may be poor in America, but poor in America is actually not all that bad. Plus our government hands out so much cash, who cares if you are poor - the average working Joe can take care of part of your cable bill, your phone bill, heat, etc... The only burden increasing on the middle class, is the burden of paying for welfare. Actually, that goes for everyone that is not colllecting - even the hated, successful, enterprising, rich bastards.

 

[conjur]

Item
Percent Lacking in 19701
Percent Lacking Now2,3

telephone
13.0 %
2.4 %

complete plumbing
6.9 %
0.6 %

refrigerator
17 %
0.1 %

Stove
13 %
0.3 %

color television
66.0 %
1.1 %

Vehicle
20.4 %
10.3 %

What a lame analogy!! For starters, the basis of the percentages from 1970 are based on claims from a book (1 W. Michael Cox and Richard Alm, Myths of Rich & Poor) while the percentages from today are based on (2 Census Data Sample in 2000 and 3 Department of Energy Appliance Survey in 2001)

Telephone - People used to write letters and actually physically visit their friends and neighbors. Now people drop a 5-min. phone call to "keep in touch"

Complete plumbing - We've evolved more into an urban society than a rural one. This hardly shows we're "better off". Are there not people living in poverty in the cities who have "complete plumbing"?

Refrigerator - Features such as automatic defrost and ice makers were introduced in the 50s/60s and refrigerators were still rather expensive in relation to annual salaries. Refrigerators now are a much lower percentage of our incomes than they were 35 years ago.

Stove - I can only assume the authors of the book mean electric stoves. Most people had gas stoves (or wood-burning stoves) until the introduction of the electric stove. Then, microwave ovens came about and about everyone has one now as, just like with refrigerators, the relative cost of the item compared to annual incomes is a fraction of what it was 35 years ago.

Color television - Again, just like the last two items, the relative price of color TVs was much higher compared to a person's income than it is now.
http://inventors.about.com/gi/dynamic/offsite.htm?site=http://ieee.cincinnati.fuse.net/reiman/11%5F1995.html

From 1954 to 1964, color television sales stagnated, and David Sarnoff, whose RCA Company was dominant, had high costs but small sales and revenue. In 1964, sales rose from one to nineteen million in 1985, and he gloried in the success and marvelous climax of his career.

Color television was a luxury in 1970.

Vehicle - People didn't live miles away from their work in 70s. Sure, some did, but, in general, people worked closer to where they lived. According to the EPA, commuter miles have doubled since 1970. The number of miles of paved road has more than doubled since 1970. Back then, more people used public transportation or car pooled or even rode bicycles or walked. We also had a higher % living in rural areas and working farms.

Also, all that shows are a few select consumer goods. It shows nothing of wealth or the number of people living poverty. It also doesn't show any previous downward trends that may have existed before 1970.

And, why was 1970 arbitrarily chosen? Why not something more recent like 1990 or even 1980?

And, some comments from reviews of the book on Amazon:

The authors clearly have a good grounding in basic economic concepts, which they discuss clearly. They make a number of excellent points, but it is sometimes hard to find them among the spin.

Early in the book, the careful reader will notice that many of the statistics that they use to demonstrate improved living standards across the economic scale are significantly dependent on a variety of social programs such as welfare, food stamps, unemployment insurance, and social security. This is particularly true of the statistics used to show that "Even the Poor Have More". Although it is not mentioned as explicitly, the government role in education has also been very important, whether for public schools, public colleges, or even the G. I. Bill. All of these have played a large role in bringing prosperity to many people, not just the rich.

At the end, however, they forget about any helpful role of government and give all of the credit to free enterprise. Perhaps they had forgotten the first chapter of the book by the time they wrote the last chapter. Even accepting the facts as given, they don't justify the spin. The FACTS given here show the benefits of both free enterprise and the role of government.

This book places a lot of emphasis on material goods that we enjoy in America: TV's; dishwashers; cars with air conditioning; refrigerators; airplane travel; computers; VCR's; long distance calls; microwave ovens; washing machines; etc. It also emphasizes the easy availability of common medicines: penicillin; over-the-counter aspirin; cough syrup; etc. Much of these things, when they were created, and initially brought before the public, were expensive. They were considered "luxuries". Therefore, only the rich could benefit from these goods.

However, through mass marketing, Americans at all social-economic levels, could purchase, and "improve" their lives, with these goods. Poor people have computers at home, just like the rich. Poor people have cars, just like the rich. Poor people have access to medical care, just like the rich (though it may not be as good). And so on, and so on.

"Myths" tackles this materialism to emphasize two points. First, Americans today enjoy a level of comfort and convenience that their parents and grandparents didn't enjoy until later, or never at all. Before the refrigerator, our grandparents used an "ice box". Before the convenience of washing machines, our grandparents used scrubbing boards to clean clothes. And so on, and so on. Second, even the poorest in America enjoy comfort in ways that poor people in third-world countries do not. Necessties such as clean water, schooling, and immunization are considered luxuries to third world people, let along air conditioning and cable TV.

Cox and Alm emphasize that very few people live in abject poverty in America, the way that some in 3rd world people are suffering. Therefore, why do we complain so much.

However, many people in America go overboard in their quest for the good life. Therefore, they spend above their means. What are the results? Credit card debt. Bankruptcies. Evictions. Foreclosures. Virtually no savings. Almost no money to fall back on. Living in your air-conditioned mansion with satellite cable, the SUV in the driveway, and computer with laser printer do not suggest financial stability. Many people get this stuff on credit, and they go under. The book does not deal with that, the consequences of overconsumption.

Hunger is a fact of life in America. So is homelessness, lack of proper medical care, poor education, and joblessness. This book deals far too much with frivolous material goods, and tries to convince the world that owning a vacuum cleaner makes your life complete. I think not.

Think we're better off now??

Poverty rises and middle-class incomes fall for second year running
http://www.epinet.org/content.cfm/webfeatures_econindicators_income

September 26, 2003

Poverty deepened and household income fell in 2002, according to the latest report by the U.S. Bureau of the Census. These data mark the second consecutive year in which poverty rose and real income fell for middle-class households, suggesting that both the recession and ensuing weak recovery have eroded Americans' living standards.

Today's report from the Census includes annual data on household income, as well as information on the number and share of the population in poverty. The poverty rate rose to 12.1% in 2002 from 11.7% in 2001, adding 1.7 million to the ranks of the poor. The number of poor grew to 34.6 million people last year, including 12.1 million children. Since 2000, poverty is up by just under one percentage point (11.3% to 12.1%).

Median household income?the income of the household in the middle of the income scale (half have lower incomes; half have higher incomes)?fell 1.1% after adjusting for inflation last year, and it has dropped 3.3% over the past two years. This decline represents a loss of $491 (2002 dollars) in income for these households last year and $1,439 over the past two years.

 

[MonkeyK]

standard of living = higher

rich vs middle class vs poor will always be a relative thing

 

[Gravity]

Conjur = too much time to nefff

 

[conjur]

Haven't been posting up here today near as much as lately 😉 Been busy...got a slow point waiting on some feedback. 😉

 

[arsbanned]

Well, when I gauge my own economy, I can say that I am not as well of as I was under Clinton. My portfolio doesn not
do nearly as well. I have less to spend. Intrest rates have been good, true, and I took advantage of that (4.65% 15 year
mortgage on my primary residence). But I'd love to again have the expendable income like I did under Clinton.
So, I think what is happening-if anything- is the middle class is merging into the lower class.

 

[charrison]

Originally posted by: conjur
Haven't been posting up here today near as much as lately 😉 Been busy...got a slow point waiting on some feedback. 😉

I knew you would take a good news article and try to make it sound bad. You really need to quite having such a bad outlook on life.

This article basically states that over the past 100 or so years, things that we require for life consume a far smaller fraction of our budgets and luxarys are spreading to all classes, even the poor. There will always be rich and poor, but the poor are not doing so bad in the grand scheme of things.

And yes, there is still room for progress.

 

[daveshel]

Originally posted by: arsbanned
Well, when I gauge my own economy, I can say that I am not as well of as I was under Clinton. My portfolio doesn not
do nearly as well. I have less to spend. Intrest rates have been good, true, and I took advantage of that (4.65% 15 year
mortgage on my primary residence). But I'd love to again have the expendable income like I did under Clinton.
So, I think what is happening-if anything- is the middle class is merging into the lower class.

I noted during the Reagan years how my buying power had slipped away compared to the Carter Years.

 

[conjur]

Originally posted by: charrison

Originally posted by: conjur
Haven't been posting up here today near as much as lately 😉 Been busy...got a slow point waiting on some feedback. 😉

I knew you would take a good news article and try to make it sound bad. You really need to quite having such a bad outlook on life.

This article basically states that over the past 100 or so years, things that we require for life consume a far smaller fraction of our budgets and luxarys are spreading to all classes, even the poor. There will always be rich and poor, but the poor are not doing so bad in the grand scheme of things.

And yes, there is still room for progress.

The portion you posted is based on a book that skews perceptions.

I am not taking good news and making it sound bad.

I'm exposing distorted truths and pure fiction and showing reality.


However, I will take your lack of a rebuttal as acknowledgement that I am correct and your OP is worthless.

 

[charrison]

Originally posted by: conjur

Originally posted by: charrison

Originally posted by: conjur
Haven't been posting up here today near as much as lately 😉 Been busy...got a slow point waiting on some feedback. 😉

I knew you would take a good news article and try to make it sound bad. You really need to quite having such a bad outlook on life.

This article basically states that over the past 100 or so years, things that we require for life consume a far smaller fraction of our budgets and luxarys are spreading to all classes, even the poor. There will always be rich and poor, but the poor are not doing so bad in the grand scheme of things.

And yes, there is still room for progress.

The portion you posted is based on a book that skews perceptions.

I am not taking good news and making it sound bad.

I'm exposing distorted truths and pure fiction and showing reality.


However, I will take your lack of a rebuttal as acknowledgement that I am correct and your OP is worthless.

I am not sure how the reports numbers are skewed. Things that were once considered luxarys are now can be afforded by a large portion of the population, even those considered poor.

 

[conjur]

Originally posted by: charrison

Originally posted by: conjur
The portion you posted is based on a book that skews perceptions.

I am not taking good news and making it sound bad.

I'm exposing distorted truths and pure fiction and showing reality.


However, I will take your lack of a rebuttal as acknowledgement that I am correct and your OP is worthless.

I am not sure how the reports numbers are skewed. Things that were once considered luxarys are now can be afforded by a large portion of the population, even those considered poor.

That's the distortion.

Take a modern example: HDTVs

The first HDTVs that came out cost well over $10,000 and, thus, were quite out of the purchase possibility for just about everyone but the hard-core enthusiast or someone with plenty of cash (or good credit 😉 )

Now, HDTVs are all over the place.

Have people suddenly become rich enough to afford $10,000 TVs? No...the prices have dropped dramatically. Now HDTVs can be had for several hundred dollars.

See how truth can be distorted?

 

[charrison]

Originally posted by: conjur

Originally posted by: charrison

Originally posted by: conjur
The portion you posted is based on a book that skews perceptions.

I am not taking good news and making it sound bad.

I'm exposing distorted truths and pure fiction and showing reality.


However, I will take your lack of a rebuttal as acknowledgement that I am correct and your OP is worthless.

I am not sure how the reports numbers are skewed. Things that were once considered luxarys are now can be afforded by a large portion of the population, even those considered poor.

That's the distortion.

Take a modern example: HDTVs

The first HDTVs that came out cost well over $10,000 and, thus, were quite out of the purchase possibility for just about everyone but the hard-core enthusiast or someone with plenty of cash (or good credit 😉 )

Now, HDTVs are all over the place.

Have people suddenly become rich enough to afford $10,000 TVs? No...the prices have dropped dramatically. Now HDTVs can be had for several hundred dollars.

See how truth can be distorted?

So tell me, is HDTV a luxury or a necessity. This article was about the luxurys the poor in this country have. There is no distortion in the article, unless you distort hdtv as a necessity in life.