Wages compared to 30 years ago

[zephyrprime]

Originally posted by: ProfJohn
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.

Ridiculous. Any such effect would only be very temporary. You make the same mistake the people who used to think that a feather would fall slower than a lead ball because it weighed less. Although more labor would increase the labor supply , it would also increase demand for products. The two effects naturally balance each other. If this were not the case, then an increasing population in a country would inexorably make the country poorer.

Beyond these two ideas I am not really sure what could be causing this problem.
Based on my understanding of free market economies

Which is incredibly pathetic. You seem to understand economics only through republican talking points.

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.

But who implements the rules? Employees do. Having more rules causes people to be employed and hence enriched also. But it causes products to require more labor to produce which would cause inflation . And besides, do you honestly think that the amount of regulation is enough to explain the strength of the effect? Inflation adjusted GDP has increased by about 100% since then. The burden of regulations would be largely included in inflation so the decreased income is completely unexplained by the idea that increases in regulation is the cause.

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.?

That's a form of inflation also which is already included in these numbers.

The causes for what's happening are this in my opinion:

In 1971, nixon closed the gold window. Banks can basically create money in this country and without the fiscal restraint of the gold standard (which is an archaic system I admit), they have been creating money for the financial classes in this country at the expense of a populace too stupid to understand what is going on. At the same time, middle class jobs leave the nation and are replaced by low wage service jobs. Yes, some jobs are reimported. Big deal. China alone has hundreds of millions of people who work in export industries. What's more, the profligancy of government spending and our system of currency based on debt have given other countries to manipulate their currency thus preventing Adam Smith's invisible hand from working to rebalanace the global economy.

 

[PrinceofWands]

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.

Reality check.

42% of the people make less that 25k a year. While you can certainly buy Saturns or used cars for that price no one making 25k a year can designate any portion of their income to a luxury like a car. So please don't make ridiculous statements like 'everyone can buy 2-3 cars and the vehicle represents about a third of their income'.

Housing is not much less to buy today, regardless of interest...because the total monthly payment is a higher percentage of your monthly income. 30 years ago my house was appraised at 65k. At the interest of the day payments were $600 a month, out of a monthly earning of about $3300.00...or about 18% of your monthly income. People could pay that. Today my house is appraised at roughly 200k. If it were purchased today payments would be $1300.00 a month, out of a monthly earning of about $3000.00...or about 43% of your monthly income. Very few people can afford that. In other words the amounts are totally irrelevant because of the percentage of available (which is the only thing that really matters).

 

[jackace]

Glad to see I'm not the only one that contributes a lot of the problem to globalization. I also feel the breaking of unions and other organized labor have led to all the "good" jobs going away and them being replaced with many service type jobs that pay MUCH less.

Another problem I see, and it relates to my degree, is investment capital. Look back in time and see how much easier it was to get capital to start a "good" business when you have little or no experience. Today unless you have a partner with a good amount of specific industry experience it's almost impossible to start a business that brings "good" paying jobs to a community. Most the businesses people are creating now seem to be service based or internet based because they do not have the large up front capital investment requirement other businesses require. Both these types of businesses only require low wage jobs and maybe a little outsourced programming and coding to be successful.

 

[dmcowen674]

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.

For years I saw this happening and for years I put up with abuse from the radical righties insisting I was full of it.

Well here is the wrting all over the perverbial walls being echoed by many and no longer just by me.

I'd like to see the resident righties continue to spew the same lie that this is not happening.

 

[dmcowen674]

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

Ask your handlers, they put this all into place and you support them.

It's called 110% pro-business at the expense of a nation.

When you give total control of a country to businessmen you no longer have a country.

 

[Stunt]

Originally posted by: PrinceofWands

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.

Reality check.

42% of the people make less that 25k a year. While you can certainly buy Saturns or used cars for that price no one making 25k a year can designate any portion of their income to a luxury like a car. So please don't make ridiculous statements like 'everyone can buy 2-3 cars and the vehicle represents about a third of their income'.

Housing is not much less to buy today, regardless of interest...because the total monthly payment is a higher percentage of your monthly income. 30 years ago my house was appraised at 65k. At the interest of the day payments were $600 a month, out of a monthly earning of about $3300.00...or about 18% of your monthly income. People could pay that. Today my house is appraised at roughly 200k. If it were purchased today payments would be $1300.00 a month, out of a monthly earning of about $3000.00...or about 43% of your monthly income. Very few people can afford that. In other words the amounts are totally irrelevant because of the percentage of available (which is the only thing that really matters).

The US Census Bureau says ~21% of people make less than $20k a year and ~34% make less than $30k a year, so I don't know where you are getting your "42% making less than $25k"...sounds like you need a reality check.

As for the housing comments, I doubt your income hasn't changed in 30 years. The study uses real (inflation adjusted) numbers, the median income has gone up from $8,853 to $31,275 in the last 30 years. This is a 250% increase for people's income and you are complaining about a increase of 110% in mortgage payments? Ridiculous. Not to mention you are spending more money on the equity rather than interest.

Americans have far more disposable income today than they did 30years ago after house payments. Where people have been getting into trouble is when they buy a larger house than they need or borrow against the equity for consumer purchases.

link
link2

 

[miketheidiot]

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

because the world market (now open) has a shortage of capital and an excess of labor. Labor is relatively less scarce than capital, so people how own capital are making asinine returns and laborers lose.

 

[PrinceofWands]

Originally posted by: Stunt

Originally posted by: PrinceofWands

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.

Reality check.

42% of the people make less that 25k a year. While you can certainly buy Saturns or used cars for that price no one making 25k a year can designate any portion of their income to a luxury like a car. So please don't make ridiculous statements like 'everyone can buy 2-3 cars and the vehicle represents about a third of their income'.

Housing is not much less to buy today, regardless of interest...because the total monthly payment is a higher percentage of your monthly income. 30 years ago my house was appraised at 65k. At the interest of the day payments were $600 a month, out of a monthly earning of about $3300.00...or about 18% of your monthly income. People could pay that. Today my house is appraised at roughly 200k. If it were purchased today payments would be $1300.00 a month, out of a monthly earning of about $3000.00...or about 43% of your monthly income. Very few people can afford that. In other words the amounts are totally irrelevant because of the percentage of available (which is the only thing that really matters).

The US Census Bureau says ~21% of people make less than $20k a year and ~34% make less than $30k a year, so I don't know where you are getting your "42% making less than $25k"...sounds like you need a reality check.

As for the housing comments, I doubt your income hasn't changed in 30 years. The study uses real (inflation adjusted) numbers, the median income has gone up from $8,853 to $31,275 in the last 30 years. This is a 250% increase for people's income and you are complaining about a increase of 110% in mortgage payments? Ridiculous. Not to mention you are spending more money on the equity rather than interest.

Americans have far more disposable income today than they did 30years ago after house payments. Where people have been getting into trouble is when they buy a larger house than they need or borrow against the equity for consumer purchases.

link
link2

Because it's nicely set up I'll link this. If you'd rather you can follow the works cited to the actual raw data from the census bureau however. It's the same numbers, regardless of form.

As to the rest you're right. I just realized that I compared the adjusted incomes but the actual dollars for payments, which gave a skewed percentage of income. My bad. Carry on. I also just remembered that I made that same error in a previous discussion on this. For some reason my brain just won't latch on to it. 8-(

 

[Stunt]

Originally posted by: PrinceofWands

Originally posted by: Stunt

Originally posted by: PrinceofWands

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.

Reality check.

42% of the people make less that 25k a year. While you can certainly buy Saturns or used cars for that price no one making 25k a year can designate any portion of their income to a luxury like a car. So please don't make ridiculous statements like 'everyone can buy 2-3 cars and the vehicle represents about a third of their income'.

Housing is not much less to buy today, regardless of interest...because the total monthly payment is a higher percentage of your monthly income. 30 years ago my house was appraised at 65k. At the interest of the day payments were $600 a month, out of a monthly earning of about $3300.00...or about 18% of your monthly income. People could pay that. Today my house is appraised at roughly 200k. If it were purchased today payments would be $1300.00 a month, out of a monthly earning of about $3000.00...or about 43% of your monthly income. Very few people can afford that. In other words the amounts are totally irrelevant because of the percentage of available (which is the only thing that really matters).

The US Census Bureau says ~21% of people make less than $20k a year and ~34% make less than $30k a year, so I don't know where you are getting your "42% making less than $25k"...sounds like you need a reality check.

As for the housing comments, I doubt your income hasn't changed in 30 years. The study uses real (inflation adjusted) numbers, the median income has gone up from $8,853 to $31,275 in the last 30 years. This is a 250% increase for people's income and you are complaining about a increase of 110% in mortgage payments? Ridiculous. Not to mention you are spending more money on the equity rather than interest.

Americans have far more disposable income today than they did 30years ago after house payments. Where people have been getting into trouble is when they buy a larger house than they need or borrow against the equity for consumer purchases.

link
link2

Because it's nicely set up I'll link this. If you'd rather you can follow the works cited to the actual raw data from the census bureau however. It's the same numbers, regardless of form.

As to the rest you're right. I just realized that I compared the adjusted incomes but the actual dollars for payments, which gave a skewed percentage of income. My bad. Carry on.

Looking at personal income is useless as it includes many part time workers who are not primary income earners. Household incomes are a much better measure, especially in the context of home ownership.

I quite clearly pointed out that the median income has gone up 250% in the last 30 years and you said mortgage payments went up 110%; this means people are spending less of their income on housing. The study says income is flat AFTER INFLATION, so when comparing housing costs and income you have to talk in 1970 dollars and compare to today's dollars.

If payments were X in 1970, median income was Y, payments today are 1.1*X according to you and median income is 2.5*Y. What else do you need help understanding?

 

[PrinceofWands]

Originally posted by: Stunt

Originally posted by: PrinceofWands

Originally posted by: Stunt

Originally posted by: PrinceofWands

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.

Reality check.

42% of the people make less that 25k a year. While you can certainly buy Saturns or used cars for that price no one making 25k a year can designate any portion of their income to a luxury like a car. So please don't make ridiculous statements like 'everyone can buy 2-3 cars and the vehicle represents about a third of their income'.

Housing is not much less to buy today, regardless of interest...because the total monthly payment is a higher percentage of your monthly income. 30 years ago my house was appraised at 65k. At the interest of the day payments were $600 a month, out of a monthly earning of about $3300.00...or about 18% of your monthly income. People could pay that. Today my house is appraised at roughly 200k. If it were purchased today payments would be $1300.00 a month, out of a monthly earning of about $3000.00...or about 43% of your monthly income. Very few people can afford that. In other words the amounts are totally irrelevant because of the percentage of available (which is the only thing that really matters).

The US Census Bureau says ~21% of people make less than $20k a year and ~34% make less than $30k a year, so I don't know where you are getting your "42% making less than $25k"...sounds like you need a reality check.

As for the housing comments, I doubt your income hasn't changed in 30 years. The study uses real (inflation adjusted) numbers, the median income has gone up from $8,853 to $31,275 in the last 30 years. This is a 250% increase for people's income and you are complaining about a increase of 110% in mortgage payments? Ridiculous. Not to mention you are spending more money on the equity rather than interest.

Americans have far more disposable income today than they did 30years ago after house payments. Where people have been getting into trouble is when they buy a larger house than they need or borrow against the equity for consumer purchases.

link
link2

Because it's nicely set up I'll link this. If you'd rather you can follow the works cited to the actual raw data from the census bureau however. It's the same numbers, regardless of form.

As to the rest you're right. I just realized that I compared the adjusted incomes but the actual dollars for payments, which gave a skewed percentage of income. My bad. Carry on.

Looking at personal income is useless as it includes many part time workers who are not primary income earners. Household incomes are a much better measure, especially in the context of home ownership.

I quite clearly pointed out that the median income has gone up 250% in the last 30 years and you said mortgage payments went up 110%; this means people are spending less of their income on housing. The study says income is flat AFTER INFLATION, so when comparing housing costs and income you have to talk in 1970 dollars and compare to today's dollars.

If payments were X in 1970, median income was Y, payments today are 1.1*X according to you and median income is 2.5*Y. What else do you need help understanding?

I totally disagree and feel that household income is absolutely useless as a measure of anything because it doesn't account for number of income earners in the home. Furthermore wages are a far more important statistic than total income since only some persons have income from sources other than a job paycheck. If you tell me that two people earning a total of $30,000 a year for their household are doing better than one person earning $20,000 a year for their household I'll laugh you off the forums. The costs associated with multiple wage earners FAR exceed the benefits of the added income (childcare, stress, more vehicles (with insurance and gas and upkeep), less time to care for the home resulting in higher ownership costs, etc); even if it was truly doubling the income (which it isn't because for most people wages are lower once adjusted for inflation, as this study shows) having two primary earners in a house is nothing but bad - for them and for the country. I'm sure this might draw a comment but obviously here I'm comparing pre-50s to current since that was the last time the country was predominately single income homes.

As to my error I know, that's exactly what I said when I apologized for the error. So I don't need help understanding anything, I just made a mistake as I already admitted...so what part of that don't YOU get?

 

[Stunt]

I didn't know you had edited your message...I just noticed now that it's different than what I read.

Personal/Household income debate is useless, I already made my point; housing is cheaper for people today than it was in the 70's.

 

[jackace]

Originally posted by: Stunt
I didn't know you had edited your message...I just noticed now that it's different than what I read.

Personal/Household income debate is useless, I already made my point; housing is cheaper for people today than it was in the 70's.

I haven't been able to find a 30 year chart, but here is a 20 year chart that shows after inflation housing costs have actually gone up almost $100k.

http://mysite.verizon.net/vodk...bble/united_states.png

Edit- here is another chart I found that goes all the way back to 1890 factoring out inflation

http://askmerv.choice3realty.c...ges/27leon_graph2.html

 

[Stunt]

Originally posted by: jackace

Originally posted by: Stunt
I didn't know you had edited your message...I just noticed now that it's different than what I read.

Personal/Household income debate is useless, I already made my point; housing is cheaper for people today than it was in the 70's.

I haven't been able to find a 30 year chart, but here is a 20 year chart that shows after inflation housing costs have actually gone up almost $100k.

http://mysite.verizon.net/vodk...bble/united_states.png

Edit- here is another chart I found that goes all the way back to 1890 factoring out inflation

http://askmerv.choice3realty.c...ges/27leon_graph2.html

No doubt housing prices have gone up, but because of lower interest rates, mortgage payments are much less relative to income today than in the past.

You want to compare housing costs in europe with 50 year mortgages? The US housing market is nothing compared to other first world nations.

 

[dmcowen674]

Originally posted by: Stunt

Americans have far more disposable income today than they did 30years ago after house payments.

Where people have been getting into trouble is when they buy a larger house than they need or borrow against the equity for consumer purchases.

Both 110% bullshit statements that you have no facts or personal expereience to back up.

Again with this nonsense from a foriegner not even here.

What gives you the right to spew lies about a place you are not even here?

I don't get it.

Who are you trying to defend?

What is your agenda for this country that you are not even here?

Please explain, like the Enquirer I really want to know.

 

[dmcowen674]

Originally posted by: Stunt
I didn't know you had edited your message...I just noticed now that it's different than what I read.

Personal/Household income debate is useless,

I already made my point; housing is cheaper for people today than it was in the 70's.

You're on drugs man.

You have no facts to back this kind of nonsense up especially being in a different country.

Why are you spewing this nonsense?

Have you tried to get a house down here on working wages?

Didn't think so.

I firmly believe there should be citizenship rules before commenting on things you have no knowledge about in a country you are not in.

You don't see me spouting nonsense and lies about Canada that is not true.

Again, what is your agenda? Who is paying you across the border and why?

 

[Stunt]

*newsflash dave*...things cost money

If people are going to come out with a study stating "Median income dropping for men, slowing for households", it only makes sense to understand what is being measured. They are taking incomes and adjusting for inflation, but inflation calculations do not take into account some items like housing costs. So there are some things that are less expensive that the study fails to address.

 

[PrinceofWands]

Originally posted by: Stunt
I didn't know you had edited your message...I just noticed now that it's different than what I read.

Personal/Household income debate is useless, I already made my point; housing is cheaper for people today than it was in the 70's.

Oh yeah, heheh, forgot. I hit reply just as it dawned on me what I'd done wrong. My bad.

 

[Hacp]

Originally posted by: Stunt
*newsflash dave*...things cost money

If people are going to come out with a study stating "Median income dropping for men, slowing for households", it only makes sense to understand what is being measured. They are taking incomes and adjusting for inflation, but inflation calculations do not take into account some items like housing costs. So there are some things that are less expensive that the study fails to address.

I'm sure health care costs alot less than it did back in 1970.

 

[jackace]

Well I did some quick numbers in excel using median home prices in 1974 and 2004, median income for 25-45 year old males in 1974 and 2004, and the average interest rate in 1974 and 2004. After i run the math (which I admit could be wrong) I got a 30.53% of a 1974 males income goes towards mortgage payments, and a 43.70% of a 2004 males income goes towards mortgage payments.

edit- used a 30 year fixed rate.

 

[dmcowen674]

Originally posted by: jackace
Well I did some quick numbers in excel using median home prices in 1974 and 2004, median income for 25-45 year old males in 1974 and 2004, and the average interest rate in 1974 and 2004. After i run the math (which I admit could be wrong) I got a 30.53% of a 1974 males income goes towards mortgage payments, and a 43.70% of a 2004 males income goes towards mortgage payments.

edit- used a 30 year fixed rate.

Thanks for you efforts.

At least you post some personal experience here stateside unlike other posters.

 

[jackace]

numbers I used

median income 1974 - 11,542
median income 2004 - 35,763
median home price 1974 - 35,900
median home price 2004 - 221,000
average interest rate 1974 - 9.1875%
average interest rate 2004 - 5.8416%

I put the numbers into an online mortgage calculator and got

monthly payments 1974 - 293.72
monthly payments 2004 - 1302.36

I then multiplied those numbers by 12

1974 - 3524.64
2004 - 15628.32

Then divided for a percentage

1974 - 0.305375152
2004 - 0.436996896

 

[Stunt]

Jackace, I agree with your math...except your incomes are off;here your 2004 income is off.

Median income was $11,197 in 1974, and $44,334 in 2004.
This means 31% in 1974, 35% in 2004.

Keep in mind that 2004 was the peak of a housing bubble and right after a recession (incomes lagged, housing prices accelerated). Also, a mere 6 years later and the interest rates were 15%; same math in 1980 it's 55% of people's incomes (based on $17,700 income, 15% interest, $64,600 avg. house cost); much much higher than 1974/2004.

Needless to say, housing prices haven't inflated faster than incomes.

 

[jackace]

I got my numbers for income for males age 25-45 not households. Thats about the age the study was looking at. The link is posted by PJ a page or 2 back. I took the 25-35 and 35-45 ranges and averaged them.

Housing prices have inflated though do the math on your numbers.

median income 1980 - 17700 (your number)
median income 2004 - 44334 (your number and is not the age and gender group mentioned in the study)

median house cost 1980 - 64600
median house cost 2004 - 221000

1980 the median home cost was 3.64971 times the median income
2004 the median home cost was 4.98488 times the median income

The cost of a house has gone up faster then the median income, so houses have inflated faster than incomes.

Keep in mind the year you chose (and the years around it) had the highest interest rates recorded in the last 40 years.

 

[ProfJohn]

Originally posted by: jackace
I got my numbers for income for males age 25-45 not households. Thats about the age the study was looking at. The link is posted by PJ a page or 2 back. I took the 25-35 and 35-45 ranges and averaged them.

Glad someone is at least looking at the real data instead of just spew stuff out based on how they feel.

 

[jackace]

Here is a look at rental costs. As you can see they are adjusted for inflation and 2000 is still higher then any of the previous years. You will also notice that the change from 1990-2000 was not very much. The reason....interests rates had changed and it was now affordable to buy again.

http://www.census.gov/hhes/www...storic/grossrents.html

Basically other then factoring in the HIGHLY inflated interest rates of 1979-1985 housing costs have been going up as a percentage of median income and not down as you claim stunt.