Wages compared to 30 years ago

[jackace]

Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

 

[StageLeft]

Ohhhhhhhhhhhhhhhh, I am not sure anything in the world pisses me off more than a statistically incompetent journalist writing an article used to get some idiotic point across. My only rebuttal, the only one required to this article, especially with its title of Every generation does better? Don't count on it is: What do the numbers look like for women?

 

[Jhhnn]

What do the numbers look like for women?

They've improved, for sure, but it seems likely that a median two income family still does no better, likely a little worse than a generation ago... traditional single income families obviously poorer.

Of course, if you're in the top .1%, you're doing a whole lot better... if you're in the top .01%, you're riding the space shuttle into financial orbit...

Trickle down? More like reach around...

 

[Stunt]

Considering inflation is 1-3% a year compounded annually, 12% isn't all that bad.
Inflation is typically measured with commonly bought items like food, clothing, etc. It doesn't take into account big ticket items which are much less expensive today than they were 30 years ago. Example: cars, house.

Today everyone can buy 2-3 cars and the vehicle represents about a third of their income; unheard of in the 70's. Housing while it has appreciated in value (expensive to buy, has still made people more wealthy) is much less to buy today. Consider the long term mortgage rates. Here is a chart showing the low interest rates compared to the 70's/80's. Compounding of these rates have a significant impact on how much people will pay for their house. A $250,000 house with a 5.5% rate will cost you $507,500 after all payments, but at a 13% rate, this balloons to $971,800.

 

[blackangst1]

Originally posted by: Stunt
Considering inflation is 1-3% a year compounded annually, 12% isn't all that bad.
Inflation is typically measured with commonly bought items like food, clothing, etc. It doesn't take into account big ticket items which are much less expensive today than they were 30 years ago. Example: cars, house.

Today everyone can buy 2-3 cars and the vehicle represents about a third of their income; unheard of in the 70's. Housing while it has appreciated in value (expensive to buy, has still made people more wealthy) is much less to buy today. Consider the long term mortgage rates. Here is a chart showing the low interest rates compared to the 70's/80's. Compounding of these rates have a significant impact on how much people will pay for their house. A $250,000 house with a 5.5% rate will cost you $507,500 after all payments, but at a 13% rate, this balloons to $971,800.

Come on man. Real numbers have no place here and you know it. We are here to bitch and moan about Bush destroying (in this case) the economy. We dont need people like YOU showing us the economy is actually good.

Be gone!

 

[ProfJohn]

link
Go to this link and you will that income peaked in 1973 for almost every age group.

What happened in that year that lead to the long slow decline of income?

 

[Jhhnn]

Please, Stunt, the part you forgot to figure in is the fact that the house in question probably sold for $60K in 1975, if that, and that the people who bought it likely paid a lower % of their income to live there, regardless of the interest rates...

Anybody who thinks that current real estate prices are sustainable has rocks in their head, imho, unless they're anticipating a huge wave of inflation and wage increases to balance the current outrageous share of income required to buy a house in many markets...

And the sad truth is that buyers are better off when prices are low and rates are high compared to vice-versa... interest rates will fluctuate over time, providing opportunities to refi, but only if the owner isn't upside down on equity... that's when you're screwed, and what's happening with increased frequency...

 

[Stunt]

Originally posted by: Jhhnn
Please, Stunt, the part you forgot to figure in is the fact that the house in question probably sold for $60K in 1975, if that, and that the people who bought it likely paid a lower % of their income to live there, regardless of the interest rates...

Anybody who thinks that current real estate prices are sustainable has rocks in their head, imho, unless they're anticipating a huge wave of inflation and wage increases to balance the current outrageous share of income required to buy a house in many markets...

And the sad truth is that buyers are better off when prices are low and rates are high compared to vice-versa... interest rates will fluctuate over time, providing opportunities to refi, but only if the owner isn't upside down on equity... that's when you're screwed, and what's happening with increased frequency...

I agree it was less expensive relative to income to buy a home in the past but during that time period where housing prices have appreciated, with home owners benefiting. This is only an increased cost to those who have never owned a home; houses are not consumed. While the principle cost of housing has gone up, the demand and population density has increased as well, so it's not a fair comparison to take a city like LA with almost twice the population as it had in the 70's.

The total cost of a house is the equity plus the interest; the equity in a home is very stable, you very seldom see any more than a 10% decline in value (even in a "crash") but interest has a significant impact on the total cost of the home because most people have mortgages. No matter what the equity level is, it's still an investment, unlike the interest.

 

[StageLeft]

FWIW, the average family is living in a substantially bigger house than they used to, if we're going to talk about houses. I read this a while back--average middle-class house used to be like a 3 bedroom pissant little thing compared to now 3-4 bedrooms, 2000+ square feet, etc.

 

[jackace]

Originally posted by: Skoorb
Ohhhhhhhhhhhhhhhh, I am not sure anything in the world pisses me off more than a statistically incompetent journalist writing an article used to get some idiotic point across. My only rebuttal, the only one required to this article, especially with its title of Every generation does better? Don't count on it is: What do the numbers look like for women?

Women do better now then in 1974, but if you read the article you would see that the actual family income had not changed from 1974. What does this mean? More women are FORCED to work in order for the family of today to make the same income as the family of 1974. This leads to more children in day cares and/or less family time just to maintain the same standard of living. I know its only statistics and a lot has to be interpreted, but if you are an older person look around you and see how things have changed. I'm a younger person myself, but my grandparents and parents were all working in 1970's and I ask them all the time about the changes and they all agree things are worse for the family now then they were in 1970's

 

[ProfJohn]

Can anyone explain WHY this is happening?

 

[Jaskalas]

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

Really puts the tax scales of the federal government in a much different light. Wonder how much more employees could be paid if the companies didn't have to pay the Feds instead.

 

[IEC]

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

That would also be known as the "inflation tax". Unfortunately this journalist is a statistical moron and doesn't present his case very well. There's also the BIG issue of the change from a nuclear family where the man is the primary breadwinner to our present-day reality of dual-income families as well as single-parent households. This has had a large impact on spending on automobiles, for example. When both men and women are working oftentimes in different locales, two automobiles becomes the norm. This is just a small example of the many changes since the '50s and even the '70s.

 

[Hacp]

Originally posted by: Jaskalas

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

Really puts the tax scales of the federal government in a much different light. Wonder how much more employees could be paid if the companies didn't have to pay the Feds instead.

Zero, since they would outsource the jobs?

 

[IEC]

Originally posted by: Hacp

Originally posted by: Jaskalas

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

Really puts the tax scales of the federal government in a much different light. Wonder how much more employees could be paid if the companies didn't have to pay the Feds instead.

Zero, since they would outsource the jobs?

Winnar!

A wonderful way indeed to shoot ourself in the foot. Short-term gain for long-term suffering. What we really need to do is revive the prestige of "Made in USA"

 

[jackace]

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

Can't say I know for sure, but I would attribute a lot of it to globalization. Our jobs (most of the higher paying ones anyway) are easily outsourced to workers who make far less money. Because of this outsourcing most the companies in the US need the worker much less then the worker needs employment with the company.

At-will employment, right to work, and all these other types of schemes that broke or continue to break the unions also play a big part. I will agree unions are a double edged sword, but until we can think of anything better I believe they are the only real way employees can influence change from their employer.

 

[jackace]

Originally posted by: Spartan Niner

Originally posted by: Hacp

Originally posted by: Jaskalas

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

Really puts the tax scales of the federal government in a much different light. Wonder how much more employees could be paid if the companies didn't have to pay the Feds instead.

Zero, since they would outsource the jobs?

Winnar!

A wonderful way indeed to shoot ourself in the foot. Short-term gain for long-term suffering. What we really need to do is revive the prestige of "Made in USA"

I totally agree with the bold part, but its hard to tell whats actually made in the USA anymore with all the parts and things being made in other countries and only assembly done in the US, or vice versa.

I have heard the idea of requiring a company of a certain size (ie fortune 500 or something) to employ a certain percentage or number of American employees in America or a tariff is imposed on those goods. Not sure I like that idea for our current state, but if things get real bad I might just support such drastic measures. I personally wish we never went away from the tariff system. It was a great way to protect jobs in your own country. If every country did this we could easily adjust the cost of goods based on labor costs in different areas. Then the corporations would not go to where the cheapest workers are, but where the largest demand and best workers are located. So they can either avoid the tariffs altogether or produce the best possible product they can in the quickest amount of time.

 

[ProfJohn]

Originally posted by: jackace

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

Can't say I know for sure, but I would attribute a lot of it to globalization. Our jobs (most of the higher paying ones anyway) are easily outsourced to workers who make far less money. Because of this outsourcing most the companies in the US need the worker much less then the worker needs employment with the company.

At-will employment, right to work, and all these other types of schemes that broke or continue to break the unions also play a big part. I will agree unions are a double edged sword, but until we can think of anything better I believe they are the only real way employees can influence change from their employer.

I think you missed the stories about the outsources jobs coming back, especially the higher paying ones.

Next!

 

[jackace]

Originally posted by: ProfJohn

Originally posted by: jackace

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

Can't say I know for sure, but I would attribute a lot of it to globalization. Our jobs (most of the higher paying ones anyway) are easily outsourced to workers who make far less money. Because of this outsourcing most the companies in the US need the worker much less then the worker needs employment with the company.

At-will employment, right to work, and all these other types of schemes that broke or continue to break the unions also play a big part. I will agree unions are a double edged sword, but until we can think of anything better I believe they are the only real way employees can influence change from their employer.

I think you missed the stories about the outsources jobs coming back, especially the higher paying ones.

Next!

If you read my post again I never said I knew for sure. You could argue no one really knows the entire reason.

You also only acknowledge half of my post. You mentioned nothing about the Unions and other forms of organized labor that are being broken.

Yes, I did hear about the return of SOME jobs, but I have yet to see any real numbers on how many have returned and if it even keeps up with the increase in the low and mid range jobs we are losing.

 

[nergee]

Originally posted by: Jaskalas

Originally posted by: jackace
Not sure if its a repost but what the heck.

http://www.msnbc.msn.com/id/18868904/

A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That?s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts? Economic Mobility Project.

Really puts the pay scales of companies today in a much different light.

Really puts the tax scales of the federal government in a much different light. Wonder how much more employees could be paid if the companies didn't have to pay the Feds instead.

Enough to make up for the increased taxes on employees..therefore it is a wash....

 

[ViRGE]

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

I don't have an answer, but I'm assuming you have an idea. Care to share?

 

[ProfJohn]

Originally posted by: ViRGE

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

I don't have an answer, but I'm assuming you have an idea. Care to share?

I don?t have THE answer, but I have a few ideas.

I looked at Federal spending and taxes and they are very similar today to what they were in 1974, so that can?t be a direct cause. However, we do have a LOT more regulations and polices to follow so that could be a drag on the economy.

If you look at that link you will see that real incomes stopped going up at the same time the war in Vietnam ended. This could be a result of all these soldiers coming home and entering the job market thus freeing up labor. More labor means less pay for said labor.

There is more to this theory. The US limits the number of visas for highly skilled workers, but essentially allows unskilled labor to flow into the country by the millions. Canada on the other hand, from what I have read, is far more liberal with their visas for highly skilled workers, but limits the number of lower skilled workers, and they don?t have a massive problem with illegals.
Thus in Canada highly skilled works make less than their American counterparts, but their low skilled workers make more.
In the US it is the opposite. Computer programs and engineers (high demand, low availability) make huge amounts of money, while low skilled works make very little.
Now it is hard to tell if this would have any effect on median incomes, but it certainly contributes to the income disparity in this country.

Beyond these two ideas I am not really sure what could be causing this problem.
Based on my understanding of free market economies I would be led to believe that it is government regulations that are to blame for this more than anything.
Every time we put a new rule in place it cost money that would otherwise go into profits and to the workers.

The price of oil has gone up drastically since 1973; we would have to chart the increase to see if it matched with the drop in real income. This is hugely complicated issue, we can?t just pull out chart A and Chart B and say ?AHH there is our answer.?

 

[Jhhnn]

Please, PJ- the answer is obvious, and entirely contrary to your own rightwing predelictions. The tax structure has changed radically- corporate and high echelon income taxes are much, much less than in the 70's, and have been for 25 years. The cumulative effect is that those at the top take a much higher % of total income for themselves, with strong disincentives to let anybody else get a nickel of it. Yep, the economy has grown, and the rewards of that have gone straight to the top, and stayed there, even as the fortunes of those of lesser rank have dwindled.

Add the hobbling of the Labor movement and the rise of rightwing thinktank rhetoric to the mix to arrive at a point where many Americans believe in ideas that are contrary to their own interests. They vote and suffer accordingly.

There's only one way to preserve the illusion, and that's with increasing debt, both governmental and private. There's a limit even to that, however. When the time comes to try to sell supply side trickle down economics w/o deficits is forced upon us, America will be in for a very rude awakening- very rude, indeed.

 

[Hacp]

Originally posted by: ProfJohn

Originally posted by: ViRGE

Originally posted by: ProfJohn
Can anyone explain WHY this is happening?

I don't have an answer, but I'm assuming you have an idea. Care to share?

I don?t have THE answer, but I have a few ideas.

I looked at Federal spending and taxes and they are very similar today to what they were in 1974, so that can?t be a direct cause. However, we do have a LOT more regulations and polices to follow so that could be a drag on the economy.

If you look at that link you will see that real incomes stopped going up at the same time the war in Vietnam ended. This could be a result of all these soldiers coming home and entering the job market thus freeing up labor. More labor means less pay for said labor.

There is more to this theory. The US limits the number of visas for highly skilled workers, but essentially allows unskilled labor to flow into the country by the millions. Canada on the other hand, from what I have read, is far more liberal with their visas for highly skilled workers, but limits the number of lower skilled workers, and they don?t have a massive problem with illegals.
Thus in Canada highly skilled works make less than their American counterparts, but their low skilled workers make more.
In the US it is the opposite. Computer programs and engineers (high demand, low availability) make huge amounts of money, while low skilled works make very little.
Now it is hard to tell if this would have any effect on median incomes, but it certainly contributes to the income disparity in this country.

Beyond these two ideas I am not really sure what could be causing this problem.
Based on my understanding of free market economies I would be led to believe that it is government regulations that are to blame for this more than anything.
Every time we put a new rule in place it cost money that would otherwise go into profits and to the workers.

The price of oil has gone up drastically since 1973; we would have to chart the increase to see if it matched with the drop in real income. This is hugely complicated issue, we can?t just pull out chart A and Chart B and say ?AHH there is our answer.?

One Word. Globolization. The jobs of the middle class are being taken away by much cheaper labor in India and China. CEOs are taking advantage of this, and padding their pockets with huge amounts of cash, while at the same time, cutting American Jobs left and right. Its time we stop giving corporations huge tax breaks, and start caring about the middle class, and the poor.

We need to increase funing in education, increase social programs like daycare, afterschool, food stamps, and affordable housing, and stop the tax cuts that big buisinesses get. We need to give those tax cuts to the backbone of America, the middle class.

 

[JACKHAMMER]

Originally posted by: Jhhnn
Please, PJ- the answer is obvious, and entirely contrary to your own rightwing predelictions. The tax structure has changed radically- corporate and high echelon income taxes are much, much less than in the 70's, and have been for 25 years. The cumulative effect is that those at the top take a much higher % of total income for themselves, with strong disincentives to let anybody else get a nickel of it. Yep, the economy has grown, and the rewards of that have gone straight to the top, and stayed there, even as the fortunes of those of lesser rank have dwindled.

Add the hobbling of the Labor movement and the rise of rightwing thinktank rhetoric to the mix to arrive at a point where many Americans believe in ideas that are contrary to their own interests. They vote and suffer accordingly.

There's only one way to preserve the illusion, and that's with increasing debt, both governmental and private. There's a limit even to that, however. When the time comes to try to sell supply side trickle down economics w/o deficits is forced upon us, America will be in for a very rude awakening- very rude, indeed.

X2.