In quiet suburbs white children played on the lawn with Hula Hoops and Slinkies. Teenagers visited the soda shop for a chaste night out. Mothers had dinner on the table when dad came home from work. Elvis Presley and Marilyn Monroe were the most scandalous influences in popular culture. Even terrorism was relatively wholesome, the near-exclusive preserve of good Catholic boys in Ireland.
The year 1957 is important for reasons that extend beyond our soft-focused nostalgia. It marked an empirical high point in the history of America’s Middle Class. That was the year when the percentage of national income taken home by middle-earners peaked. Since that time incomes in America have been relentlessly drifting toward the ends of the spectrum.
Were we better off as a country in an era of relative middle-income equality? Establishing some common ground for comparison among eras is as difficult as making comparisons across cultures. In the end, as in any assessment of values, subjective factors will tend to prevail. We can, though, establish a few empirical markers. One of the simplest comes from comparing our almost mythical imagination of 50’s middle class buying power to our present experience.
Looking at published prices and known typical incomes from that period we can establish a loose baseline against inflation. Here’s what common incomes looked like in inflation-adjusted terms from 1957.
In 1955 (it’s tough to get good data for one year in particular), average earnings in the nation’s most lucrative manufacturing center, Detroit (taken from the book Ford: Decline and Rebirth) were about $75 a week, or a little over $30,000 a year today.
The highest-paid blue-collar workers in the world in the 1950’s were Ford’s Detroit (actually Dearborn) assembly line workers. In 1955, his average weekly wage was $106, or about $45,000 a year in today’s terms, above the national median of about $40,000. Those relatively well-paid blue-collar workers were almost entirely white and male, thanks to government and union policies that kept them that way. Median incomes today come in around $52,000.
Most blue-collar families in 1957 took home earnings around $1.25/hour, a little less than $10/hour today. For reference, that’s what you’d earn as a barista, where you will never be run over by a fork lift or fall in a vat of boiling steel. And they generally had larger families than would be common today.
In the golden age of middle-income work, relatively few workers blue collar or white, earned as much in inflation-adjusted terms as a store manager at Chipotle today (about $55K). Your job was probably dirty, painful, dangerous, and shortened your lifespan while polluting the community around you.
But what about all the glorious things you could purchase with your modest earnings in 1957? Almost everything cost more than today, and in most cases cost vastly more. The first challenge is merely to find comparisons, since most of the things we take for granted now were not available in 1957 at any price.
Here’s a list of items available in 1957 with their present, inflation-adjusted costs:
$2,500-$4,000: A clothes washer and drier
$150: An electric can opener
$2,100-4,000: 24″ black and white TV (and you better know a good repairman, cause you’re gonna need him)
$600: An FM radio
$675: A record player
$7.50: A single record with a B-side track
$50: A pair of children’s shoes
$2.60: A gallon of gasoline
$125: A child’s tricycle
$1,700: A window-mounted air conditioning unit
$11: A mens haircut
$50: A ten minute phone conversation with Grandma in the next state.
$18,000: Base model of the most popular car in ’57, the Ford Fairlane. It had standard transmission, no power steering or brakes, no air conditioning, an AM radio and no seat belts. Interestingly, the price of a modest car is still almost exactly same as it has always been even though the value built into new models has skyrocketed.
Here are a few things you couldn’t have at all in 1957: a home with central air conditioning, a large library of recorded music, an affordable means to communicate quickly with people at a distance, accurate information about sex or birth control, effective treatment for almost any ailment not caused by bacteria or an accidental injury, a no-fault divorce or a safe, legal abortion.
If you were black or a single woman, there were a few additional things you couldn’t have, including a mortgage, admission to most universities, a job in most of the country’s unions, or a government job in any but the most menial or humiliating positions outside the military or the Postal Service.
There were a few notable things that were cheaper in 1957 than they are today. One of those pretty new homes in the suburbs would rarely cost more than $80,000. That house price hides some important financing details that help explain the low top-line cost. Mortgages were generally for 15 years with rates around 5%. More importantly, a buyer usually needed a cash down-payment of at least 25-40%. That helps explain why even at lower prices, home ownership rates were only just over 50%.
Also notable were the lower cost of health care and higher education. A year of tuition and fees at the University of Pennsylvania was only $17,000 and people spent barely a quarter as much on health care. There are a few obvious explanations for the cheaper price of both in the relative quality of what you were buying. There was almost nothing that your family doctor could do for you in 1957 that isn’t done by a nurse today. If you had any ailment more serious than a laceration, broken bone, or bacterial infection there was almost no treatment available at any price.
And as for college, there wasn’t a university in the country in 1957 that could teach a fraction of what a student learns in a decent modern high school. Comparing these activities across time is difficult, but that still doesn’t account for the most powerful cost differential between these eras.
What we notice most of all in the difference between what is cheaper or more expensive in comparison to 1957 is revealed in the price of one mundane item: a haircut. Your haircut is actually slightly more expensive on average now than it was then for reasons that explain most of the rest of sixty years of price shifts. What was cheaper in 1957 than now? People.
Everything that requires the skilled attention of a human being is more expensive now that it was at the peak of the middle class era. That extends from education through medicine down to your weekly trim.
What makes our economy now so much more promising than in previous generations is the value we have come to place on people, especially people who have developed a unique skill. That is also what makes this economy so much more consistently uneven in its outcomes.
As we grow more concerned about the impact of income inequality it is important that we not lose focus on the other side of the ledger. The same forces that have fed more dynamic economic outcomes have brought us a new world of value. Our products and services are cheaper, safer, of higher quality, and produced in a more environmentally sensitive manner than ever before. Our economy is also more open to the contributions of people who were excluded in the past. We have accomplished a great deal worth preserving and continuing.
In particular, whatever we do in address concerns about rising inequality should avoid stunting one of the most promising developments of modern capitalism – the ability to capitalize labor – using education and talent to earn capital-style returns on one’s work. Navigating this challenge might be easier if we could resist our urge toward nostalgia. Our past was not better than our present. When we glorify it, we imperil our future.
***
A few sources which are also endless fun for a history nerd:
http://www.thepeoplehistory.com/1950s.html
http://www.livinghistoryfarm.org/farminginthe50s/money_01.html
Inflation calculator from the Bureau of Labor Statistics
Chris Ladd is a Texan living in the Chicago area. He has been involved in grassroots Republican politics for most of his life. He was a Republican precinct committeeman in suburban Chicago until he resigned from the party and his position after the 2016 Republican Convention. He can be reached at gopliferchicago at gmail dot com.
GOPLifer 
[…] 1957 […]
“And as for college, there wasn’t a university in the country in 1957 that could teach a fraction of what a student learns in a decent modern high school. ”
I’m not sure how you can argue this. My dad got his PhD in chemistry in 1963, an advanced degree built on one of those university educations in the late 1950s. My mother got a bachelor degree in chemistry, and she worked on the development of instant tea. (At least she did until my father finished his graduate degree. Then she became a housewife.)
Today we are concerned that high schools are graduating people who can’t write a well-formed paragraph or pull the mathematical information out of a word problem. I don’t see modern high school graduates having the tools necessary to design spacecraft or transistor radios. Engineers who graduated in the 1950s did. It’s not just the ‘hard’ fields like engineering and chemistry — I daresay that Francis Ford Coppola learned more in 1950s art school than any high school offers today.
This new Pew poll on the economy bears on this blog piece. It supports comments by several commentators that even those in professional careers are not as optimistic about the economy despite their job situation.
http://www.people-press.org/2015/12/22/as-election-year-nears-public-sees-mixed-economic-picture/
Also, CNN, in its latest poll, finds Trump holds a commanding 39% lead with Cruz second at 18% and Rubio/Carson trailing.
Americans are not an introspective bunch.
But Obama, a black president, forced a lot of white people to look inward and ask, “What does it say about me, my track record, now that a black man is elected president?”, implicitly admitting the negative impact of dark skin in this country.
Since we have so little experience with both the inward gaze and responses to it, chaotic conspiracy theories and rage resulted. Perhaps it is easier to live inside those than to come to terms with being an ordinary resident of the universe.
I have no problem with Chris’ discussions of economic matters and race.
I’m not sure where I am on this issue, other than it is possible that everyone is right to some extent (which probably also means everyone is a little bit wrong as well).
Lifer has a particular interest in race issues, much to the chagrin of Doug (and a few others).
I do tend to think that that race issues today are bigger than most (White) people believe. It was a much more in-your-face issue in the 60s and 70s, but just about the only folks who get to say, “You know, I just don’t think about race” and, “I wish people wouldn’t bring up race all the time” are White folks (and I do realize that the few non-White commenters we have may disagree with that statement as an absolute).
Way, way, way back, in one of those psychology classes 50 so despises, there was an interesting theory/article about racism or just bigotry in general. I would never find the reference from this long ago, but the general conclusion was that folks did not develop real animosity towards another group (Black folks in that research) until they had to compete with them for resources or jobs. Men may not have thought much of women, but it wasn’t until men started to compete against women for jobs that they became “ball-busting bitches”. Sure, the Black folks over whom my dad was a foreman were generally “lazy and good for nuthin”, but holy hell was it bad when “one of them” became a supervisor. Now, the young Black kid joining the plant has a college degree, and is much more likely to be the supervisor or manager than the 20-year hourly employee.
Still, back in the day, you could take comfort that everyone reading you the news at night, everyone in congress, everyone in the mayor’s office, and everyone who ever thought about thinking about being President had little pigmentation and a penis. Now, all bets are off there too.
I think our picture of the “middle class” in the 1950s generally wasn’t so middle class. Howard Cunningham on Happy Days owned a hardware store, lived in a nice two story house, and had a stay-at-home wife. If that was “middle class” then, then folks in the top 10% in the US today are middle class.
Someone below described Hillary Clinton as being raised “middle class”, and while her campaign bio says she was raised in a middle class neighborhood, it was Park Ridge, a relatively affluent Chicago suburb, in a two-story brick house her father paid cash for out of money he saved from owning a drapery business. Again, not middle class.
My wife and I are incredibly fortunate to have one of those dual, professional income families, and we’ve been doing it long enough that we are compensated well. However, it doesn’t always feel like we are doing all that well and it drives my wife nuts when I point out where we are in the income distribution. If someone asked my wife if she feels income insecurity, she would absolutely say yes, as we are planning our annual January trip to Hawaii. If asked, she would incorrectly label us middle class because she knows lots of people who make a lot more money than we do.
There have always been a huge chunk of people living paycheck to paycheck, with only the luck of not getting sick or injured away from a world of financial hurt. They just didn’t make a lot of shows about those folks (with maybe the exception of the Honeymooners and then All in the Family).
Like Lifer, I think I’m putting together my thoughts on this.
Right now, I’m on the side of race playing a bigger role in this than White folks would care to admit, and that income insecurity or inequality is no greater for the person at the median income in 2015 as it was for the person making the median income in 1957, 1967, or 1977. The family of four with a median household income of $53,000 can be hurting if even the smallest thing goes wrong, but that has always been true.
The thing that sticks out to me (and I’m too lazy to really dig into the data) is the issue of job security as it relates to income insecurity. For most of my career, my company was small, I owned part of it, and I wasn’t going to be fired unless I did really bad things (and probably had to do them more than once to get fired). After a few mergers and acquisitions, I now work for a huge company, and any one in the six to ten levels above me could decide tomorrow that I need to go. It would be insane to consider my family’s income level as income insecurity and we are on the evil side of wealth inequality, but if I lost my job, man it feels like it would hurt (even if that “hurt” would seem absurd in comparison to others).
Folks have somewhat accused Lifer of saying that complaints about income inequality are, “all in their heads”, but when you have my wife saying she feels income insecurity or inequality, then some of it is in the heads of some people.
To Lifer’s point of people moving in and out of the top 20% or top 10% over the course of a career, once your household income cracks $100k, you are in the top 25%. Hit $157k, and you are in the top 10%.
Two young geeky engineers falling in love under a yellow florescent glow at Dow are going to hit the top 10% as soon as they get married. The refinery operator at Shell and her elementary school teacher husband will crack the top 25% pretty easily, and the top 20% with a little overtime pay.
Both of those couple may feel income insecurity or inequality, but that may be more job insecurity than true income insecurity. If we are classifying the top 20% of earners as middle class, we have some warped frames of reference.
I’m not smart enough to have big discussions of gilded ages or falls of various empires due to income inequalities, but our situation in 2015 feels different to me. Maybe I’m doomed to repeat history because I haven’t learned from it, but I think we are closer to a revolution or mass chaos because of a bug in Apple software that shuts down all our phones or because the evil folks at SAP finally decides to flip some switch in Germany that shuts down all the company software in 90% of US companies.
“Our past was not better than our present. When we glorify it, we imperil our future.”
There are elements of our past that we had better glorify right now, or there will be no future. The most obvious of them are the conservation efforts to preserve and protect the American wilderness, the post WWII dedication of workers and employers to coexist as a life long American standard of excellence without comparison, and the export of meaningful language and diplomacy which catapulted the U.S. into a true world power regardless of our formidable military might.
I could go on about the glorious past, but maybe in the future if we can attain it!
I wonder if those who are achieving great success today in their personal lives and careers find it difficult to look back and acknowledge the strength that built this nation. It’s easy to get caught up in a world filled with scientific advancements and overlook the simple building blocks of labor, sacrifice, honor, and family that helped make these times possible. We have come so far in so many ways to not meet the needs of more of our people. We are better than that. The anger and challenges we are witnessing may offer an opportunity for positive change – if we are wise enough to not screw it up.
It is always fun to pat ourselves on the back for being so cool and all, but I’m not sure there are a whole slew of sites where you would find a set of conversations nearly this civil.
I don’t regularly plow through many sites with commentors, but those that I do stumble into can be very dark places.
I’m not sure we are all that productive in our discussions, and we probably don’t accomplish 1/100th of the ideas knocked around, but you all are generally a good natured, informed and informative bunch.
Lifer probably deserves some small part of credit for that with his original posts, but those posts on a hundred other websites would quickly devolve into some bad comments, so I suspect it has as much or more to do with the gang of commentors.
Lifer might prefer a larger audience, but it is nice to have this little corner of internet civility, even with you disgusting idiots who disagree with me.
Gosh, Homer, you really had something nice going there until the “disgusting” part (-;
I’ve been waiting for you to weigh in. As usual, you manage to make me smile. And, I agree and I really believe Lifer wouldn’t have it any other way….nor would most of us.
Merry Christmas my friend, along with all the little Homers…
Food for thought:
Here is a somewhat outdated video (2009) that is a good illustration of how wealth is distributed in the US. I think the graphic helps explain just how great the inequality has become.
My take on income inequality:
If you earn enough that you are not living paycheck to paycheck, but instead have income that can be set aside, all kinds of benefits accrue to you. You have money that can be put aside in 529s to help pay for your kids education, you can set up Roth IRAs to get tax advantages down the line, you get more favorable rates on home equity loans, you earn higher interest rates on savings etc. It is more likely that your job provides decent benefits.
But if you are living paycheck to paycheck, you may be one health disaster, one car accident, one job loss away from losing your financial footing because you have nothing in reserve. It is a scary way to live, and far too many people in this country live this way.
Would a basic income solve this? I don’t know.
Maybe we should spend less time thinking about the 1950s, an unusual historical convergence of being the only developed nation intact after a devastating world war coupled with pent up consumer demand, plus higher education being available for the first time to a large swath of the (white male) population. Maybe instead we should talk more about the Gilded Age and its outcomes since that seems to be where we’re headed.
http://www.pbs.org/wgbh/amex/carnegie/gildedage.html
Some might say that the 2009 video was still very much on point, Mass Dem.
Interesting video Mass, and it probably is as relevant today as it was when it was distributed.
My problem with the video is that it is about people’s perceptions of a correct or appropriate distribution rather than what is the reality of an appropriate distribution.
First, the initial graph of an equal distribution, “dreaded socialism”, isn’t even remotely feasible since never will the top 20% only have 20% of wealth (even under socialism). So, I’m always skeptical when someone leads with “data” to set a perception rather than to reflect reality.
Then, the presentation slides to what a survey of Americans believe would be an “ideal” distribution of wealth across the quintiles. While this is a moderately interesting question, the vast majority of Americans would not be able to define the word quintile or have any idea of how the math of wealth distribution works.
So, comparing today’s wealth distribution with what a survey of Americans believe is an ideal distribution of wealth is a moderately meaningless exercise, unless your only goal is to say that this is why some Americans are a little pissy right now.
The video suggests we need to move towards something that is a bit closer to the “ideal”, and that may be absolutely accurate, but just because a survey of people believe it is ideal does not mean that the ideal distribution is what actually would be best or appropriate for the country.
To continue on from a post above, for me, this feels more like the angst and uncertainty that comes along with any “normal” industrial-type revolution. Moving from farms to factories caused significant turmoil and massive changes to the way Americans lived (just moving from rural areas to cities was a huge change in the way the country was building). Plenty of people felt they were left behind with that change.
Over the past 30 years, we’ve been moving from factories to offices (and service industries), and plenty of people are feeling left behind with that change.
I do keep coming back to the issue that Lifer posted a while ago. At some point, we are not going to need as many people working as we have people of working age in the country. What do we do with all those people? Idle hands and devils and all that?
Is it the side of good angels where there is a resurgence of art and literature when thousands and thousands of talented people realize that they don’t have to be a geologist or a middle manager for 40 years and can spent time pursuing their true passions? Do some of these engineers working for massive organizations decide to spend more of their time tinkering on their own leading to the next revolutionary technologies? Do we morph into a society the effectively balances work and leisure? Do we go back and have a parent or parents stay at home with children because there just are not enough jobs available to have both spouses in the majority of households working?
Does Lifer’s minimum income help that transition?
I read a piece by David Frum about the civil war between the elite of the GOP and the rank and file Republicans.
http://www.theatlantic.com/magazine/archive/2016/01/the-great-republican-revolt/419118/
Maybe the roil happening right now is not just about money. The interest of the working class and the elite are not the same and the working people have been ignored for many decades by the Republican party. The workers are pissed, I especially found interesting his propose directions the GOP might go. The workers want a government that honors their ideas of work and family and what is fair. The elite want more tax cuts, more regulation that favors them and destruction of anything that benefits the working class or gives them the ability to have influence. This play is a rerun. The same conflict happen at the end of the 19th century till the middle of the 20th century. If history is any guide the elite are going to lose. And blue collar workers are not going away just will have black, hispanic and asian faces along with white ones.
Stephen, the Atlantic article by Frum is most interesting. If you pull up Lifer’s other recent post: Income Inequality…..you’ll see that two other commentators also posted this article and it spawned a great deal of discussion. I think this may be the first time I’ve seen three references to the same article in Lifer’s posts. Lifer has an end point here that he’s working towards but I admit that I am unconvinced of his theory that “identity” supersedes “wealth inequality” as primary to the political outcry we see happening in the Presidential election. I’m listening and it is unusual that so many who post on Lifer’s blog seem to be thinking along such different lines. There have been some very thoughtful counterpoints by many who seem to share the view that economic issues are the root problem, not race or identity. We haven’t heard from some folks who usually contribute insightful observations – Homer, Fly, Fifty, EJ to name a few, so maybe their views will more closely parallel Lifer’s.
David Frum’s article was interesting, and while I don’t disagree with his points broadly, I also don’t think they paint an entirely accurate picture of what’s happening here. To put it bluntly, I think it’s a whole mess of different factors coming together to create a near perfect political storm.
We have many White people in this country that feel, intentionally or unintentionally, that the world that they grew up in, as one that favored Whites and granted them certain privileges as opposed to African Americans and other minority groups, has left them and there is a palpable sense of fear and anger about that. Trump is feasting on that and it’s one of, if not the single greatest source of his political strength in the Republican Party right now.
It’s not his only strength though. As Frum noted in his article, Trump has gone out of his way to talk about programs like Social Security and how he’ll “save” it, pumping in money and putting a stop to those politicians and elites up in Washington who want to do away with it. Same with Medicare.
It’s true, as both Lifer and Frum have said repeatedly. Most Republicans aren’t nuts and when push comes to shove, they want a government that pays attention to their interests and acts in ways befitting of that. It’s actually quite ironic, but Mitch McConnell and John Boehner’s strategy of riding Tea Party extremism to control of Congress gave someone like Trump exactly the opening he needed to take advantage of the paralysis they caused to get his economic message (and I use that term lightly, mind you) across to Republican voters.
Of course the problem goes back much further than that though. There’s long been a segment of Republican voters that feels like they’ve been continually shafted by the establishment, forced to swallow nominees like Dole in ’96, McCain in ’08, Romney in ’12. It was only ever a matter of time before the bubble finally burst and they’d had enough.
And then, of course, and more so than anything else, is the detestable weakness of the Republican Party as a whole which has led to our current predicament. Their inclination to short-term political gain, whether it comes in the form of co-opting Ronald Reagan’s “government is the problem” schtick, taking in the Dixiecrats to bolster their presence in the South and splinter the former Democratic coalition, or whatever else; all of it gave the extremists and people like Donald Trump the opening they needed to come in and wreck havoc.
And here they find themselves with few options except to watch the whole damned charade collapse into pieces while they just stand with their mouths hanging open, wondering: “Where the hell did we go wrong?”
Good riddance to bad rubbish.
Ryan & Homer, You’ve made some very good points. I crossed the racial bridge so long ago that I hope it hasn’t blinded me to relating to other people’s fears and concerns on this issue. If one believes in equality as a principle of life, race, gender, sexual orientation, job opportunity, etc. are not threatening, they are simply differences. Those who choose loud and angry responses are contrasted with others for whom identity is a settled position and is simply accepted. There are extremes which test and appall one, but, fundamentally, if you believe in equality, it informs and guides you all your life – imperfectly, but surely. Maybe this is why it is difficult for me to accept Lifer’s suggested thesis that “identity” aka “race and all its encumbrances” is more significant than wealth inequality. Which is the cause and which is the result? And, for those for whom the issue of “identity” is resolved, is it possible to misunderstand the anger being demonstrated by those who are coming to grips with this fundamental issue for the first time in their lives? Because – they can no longer ignore it and because it is threatening their personal security and forcing an honest appraisal of self. If we can answer this question, likely we’ll find the nexus of the problem.
The Republican Party has chosen the path of willful ignorance on this subject when they have not outright exploited it to attain other goals – winning elections, gaining political power. They are blind to the deeper issues of those they have co-opted and this group is finally speaking up. The Republican Party will either face some unpleasant truths, or it will destroy itself.
Wealth inequality will persist as it has since the beginning of time, but surely it is time to sever it from identity.
Great analysis, very thoughtful. One thing, though, the price of education. At the risk of golden-aging, I think it was probably a lot better then, even if they didn’t have certain disciplines. Certainly, the humanities were more sophisticated and better-taught then, and a well-read person was probably much better read than a well-read person today. As for high-school, the simple lack of computers probably led to much more complete learning in every field except computer science. Simply having to write and calculate by hand led to better learning.
Of course, you’re right that access to this fine education was more limited than it is today.
And since TV was not so prevalent then, and the internet non-existent, people devoted more of their free time to reading books.
And, there was more thoughtful, discerning conversation and discussion of different points of view. Even though the internet admittedly opens up a panoply of possibilities, there is nothing quite so provoking as a personal, intelligent debate on opposing views. Until computers start engaging (HER) in an exchange, human discussion still is pretty hard to beat.
If I may take a stab at what your final thesis is, I’m thinking you’re going to say:
1) income inequality has gradually worsened since the hoary 50s, so it isn’t a specific political policy (e.g. Reagan), but a trend due to something else.
2) That something else is a good thing, namely the ability of people to invest in their own productivity through education, and the changing economy rewarding knowledge industries over manufacturing. After all, there are limits to human strength, but no limits to human intellect.
3) Despite there being “losers” in this changing economy, overall, the average American has benefited enormously from this change.
4) This was never a political issue as long as it was only blacks, women, and other minorities who were the “losers”, as they always have been.
5) But now that those groups are actually succeeding as much as the rest of America, and it’s low-skilled white males who are the economic “losers”, this is becoming a political issue giving rise to people like Trump who recognize that it isn’t income inequality per se, but that the losers from the current inequality are what were traditionally the winners (white men) that’s fueling the anger. Which explains why white males angry at losing out would support a billionaire who inherited a fortune from his father (although he did grow it from there) over a black man (Obama) or a woman (Hillary) who was born in the middle class and even now is only worth a fraction of Trump. It’s not that he’s a billionaire, it’s that he’s a white male billionaire that’s important.
I’ll give you the benefit of the doubt while you put your entire thesis together (plus I’m learning a ton from your sources too), but I still think you may be barking up the wrong tree. This may explain the Angry White Man syndrome of the past few decades, but it doesn’t explain why the rest of us feel the economy is failing us too. Even people in the New Economy, like tech workers, doctors, lawyers, etc. complain bitterly about their careers and plan for their exits as soon as they can.
John Rawls, the famous philosopher, posited that people will accept income inequality as long as the tide lifts all boats (even if some boats get lifted higher). I think this is a better explanation for why income inequality is a bigger issue now. Economic growth since the Clinton years has been anemic at best. That’s 15 years of stagnation, with most employees losing bargaining ground despite the GDP growing. And if income inequality grows while your own income goes down, people become very upset about it.
Couple this with the fact that, IMHO the *wrong* type of people are benefiting from income inequality these days. In the 1990s, no one cared about 25 year old internet wunderkinds making a billion dollars, first, because everyone was doing well, and second, they were truly creating revolutionary new products. Even in this lousy economy, very few people begrudge Zuckerberg having >$30bil off Facebook, or Elon Musk getting rich off PayPal, Tesla, and SpaceX. What we begrudge is Lloyd Blankfein (CEO of Goldman Sachs) and Jamie Dimon (CEO of JP Morgan) not being shackled in Rikers Island for crimes that required the rest of us to bail them out.
When people rail against the 1%, they’re not talking about doctors, lawyers, and tech workers. They’re just the human shields that protect the true villains from the villagers’ pitchforks. They’re railing about guys who seem to get rich through corruption, government lobbying, and market manipulation. Whether we have more or less of those types of “undeserving rich” then in previous eras, I’m not sure, but viscerally, it sure feels like the Age of the Robber Barons to the rest of us hoi polloi…
Sadly, what makes many people miss 1957 is scenes like this: http://hotelworkers.org/images/uploads/eckford_large.jpeg
If you ask me, no image better summarizes the spirit of the 50’s than that one.
I disagree that in 1957 you couldn’t have “a large library of recorded music” AT ALL.
I guess it depends on how you define “large.” By 1957 LPs, especially those of the jazz and classical variety, were readily available, if expensive.
Thanks to Spotify, my kid’s music library is somewhere in the neighborhood of twenty million titles. That would be a physically dangerous stack of vinyl…
It costs him $10 a month. Or in 1957 terms, five quarters.
Ah, but is this gigantic library of recordings truly his? Somehow, just having “access” to millions of recordings, be it via streaming or actually downloading copies, isn’t the same as truly owning them.
Of course, this would matter only if owning is important to you. However, having access is not the same as owning.
Can a race of creatures who live only 70-80 years on average ever truly “own” anything? I know its obtuse, but I couldn’t resist.
I guess you can’t take it with you, right?
We are all living on borrowed time.
Sorry, I couldn’t resist the clichés.
Back in 1957 people had this thing called “FM Radio” and they played all kinds of music on a dozen or more stations you could pick up and it was all free once you had a radio.
Not saying that its not amazing what we can have instantly today at prices undreamed of back in the 1957, but pointing out why people who lived at that time didn’t feel deprived and even look back fondly on those years.
And, since I was around in the 50s, there were very few commercials interrupting our music programming. Ah, we keep coming up with good things about the middle years….maybe it really was a good time after all….Just think….no talk radio, only music and real news…newscasters reporting what “had happened” instead of what they want us to believe happened…..
Fezz, in 1957 it would have been AM radio that most people had. FM didn’t become mainstream until the early 1970s.
Another thing not addressed in your post: the inflation-adjusted salaries for your hypothetical 1957-era workers, while somewhat lower than the median for today, were largely earned by one adult in the household. Two-income households were largely unheard of following the end of WWII. Dual-earner households – led largely by women moving into the workforce in the 1960s and 1970s – became more common, but many families continued to live, some even comfortably, on one person’s income. Single-income families do still exist today – I’m in one of them – but it’s a damned harder slog than it was in times past. I think your analysis of consumer power relative to today obscures that things have gotten materially harder for the middle class, and that this trend is accelerating, rather than the gradual decline your past couple of columns would indicate.
But are there actually that many two-income families today? And are they doing the same as the single-income families of 1957?
That’s an important question. While a lot of married couples have two incomes today… there are also fewer married couples than there were in 1957. The single-income family of 1957 was a male breadwinner with a stay-at-home wife; the single-income family of 2015 may follow that pattern but it’s probably more likely to be a single or divorced mother (or a single person with no kids.)
There was also a different type of CEO back in the late 50s, as evidence by the fact that the President of American Motors Corp., George Romney, actually turned down a bonus that he thought was too much, and, from this story he was not the only CEO to do something like this:
Click to access georgeromneypay.pdf
There’s an irony in it too, as you compared the careers of George and Mitt, both politically and at work.
Let me just note that had Barack Obama been running against a George Romney vs. Mitt Romney, he would not have been elected. Second generation wealth doesn’t always incorporate wisdom and humility of the forefather.
“Navigating this challenge might be easier if we could resist our urge toward nostalgia. Our past was not better than our present. When we glorify it, we imperil our future.”
What is your point, Chris? Are you denying that there is a legitimate reason for people to be angry? That the impact we are seeing on our lives has no legitimacy, that people should be happy with what they have, and that they just need to shut up? I don’t want to put words into your mouth.
Here is an article from NYT on life expectancy: http://www.nytimes.com/2012/09/21/us/life-expectancy-for-less-educated-whites-in-us-is-shrinking.html. Read that knowing that the census bureau reports that only 32% had a bachelor’s degree in 2014, 30% of whites.
Whether you feel good about your life and the economy or not is very individual and not always shaped by rational factors only. But it seems very obvious that a significant group of people both on the right and on the left feel left behind.
Instead of arguing whether the anger is legitimate or not, I think time is better spent arguing about how we fix what is an obvious problem. With an 11% approval rating of congress we don’t seem to have a lot of hope that anyone is listening.
I’m going somewhere with this and I accept my direction it isn’t entirely clear yet. Working on it. Gonna take some time. Holidays give me a little extra runway to work on something that was two challenging to pound out in half an hour stolen during a flight.
All these things are true. But what if a different dynamic is at play?
What if, income inequality is a problem REGARDLESS of what absolute incomes are? If that’s the case, then pointing out that the average middle class earner used to make is irrelevant.
I’m asking rhetorically, as I don’t know. I strongly suspect though, that the distribution of wealth in a society is the most important factor in the health, dynamism and satisfaction of that society regardless of absolute incomes.
I’ve got a suspicion that if you could lower overall incomes, but reduce inequality greatly, much of the anger, resentment, and social upheavel were seeing would disappear. And vice versa, you could greatly increase average and median incomes, but if you ALSO increased inequality, things would be just as bad.
In other words, income inequality isn’t a symptom of a problem. It IS the problem. I suspectYou could double incomes today and if the share of income going to the top 10% didn’t change, nothing would change.
Arguments like this (“well, the middle class can actually buy more stuff, therefore, things are better”) makes the common economist mistake that Home Economicus is a real species and people are purely economic creatures, without factoring in the incredibly complex dynamic of human emotions, behaviors and motivators.
We often look at CEO pay and wonder “when is enough enough for these people? How can they possibly think they’re worth that?”. The issue is not one of absolute terms, but relativism. The CEO of a major multinational would be happy to make $5 million per year in 2015…..if that made him the highest paid CEO in America.
By the same token, the same guy would be furious and may feel a lot of angst and resentment if his total compensation was lowered to ” only ” $20 million when the average of his peers is $40 million.
That’s just human nature. On a smaller scale, if you make $50,000/yr and you get a raise to $60,000/yr, from a purely economic standpoint, tgats a good thing. But if your colleague who does the exact same job, at the exact same hours, to the exact same performance level gets a raise to $100,000, what is your job satisfaction level going to be?
Its a mistake to point out how things are better now in ourely economic terms because they COULD and SHOULD be even better, because the middle class sees the top 10% gain a far larger share.
One more example: lets say your boss calls you in and says due to your hard work this year, hes giving you a $5000 bonus. Youre happy and satisfied and feel glad to be recognized for your hard work. But let’s say you somehow find out that head office actually sent an $8000 bonus to your boss to hand out, but your boss pocketed $3000 and gave you $5000.Do you still feel the same? Do you still say “well, hey, I’m still $5000 richer then I was this morning , so I really can’t complain”. Do you nod in agreement when your boss brings out the charts and graphs and spreadsheets to show (factually correctly) that you’re better off now then you were last month due to that $5000 bonus?
Or do you feel cheated because someone with more power then you took something that you feel belongs to you that you worked your ass off for?
My guess is the latter. And that’s the anger and injustice the middle class is feeling now. It doesn’t matter that the top 10% have granted them a pittance more then they made 40 years ago because in that 40 years, the top 10% have enriched themselves enourmously larger off the hard work that the working class has put in. Its not a matter of pure economics. Its a matter of justice, of power and of humans acting like humans.
If absolute incomes had gone down but gone down for everyone, there would not be this anger. People don’t mind not making as much money. They absolutely do mind being stolen from, and that’s what the middle class is feeling right now.
***I’ve got a suspicion that if you could lower overall incomes, but reduce inequality greatly, much of the anger, resentment, and social upheavel were seeing would disappear. And vice versa, you could greatly increase average and median incomes, but if you ALSO increased inequality, things would be just as bad.***
Bingo!. And this is a bit of a problem for someone who wants to optimize outcomes across the board. It is likewise a problem for someone who cares a great deal about individual freedom.
We have pasted over this problem in the past with a kind of invented racial solidarity among white people (more coming here) which victimized everyone else. That isn’t going to work anymore.
Now we have to figure out how to maintain freedom in an environment where public envy can be a powerful political force and do it without the oppressive tools we used in the past.
For me, this comes back to a basic income and a similar basket of solutions. For some, the answer is Donald Trump.
I’m guessin’ you don’t see many of these cats up in Congress having the moxie to confront this problem? As long as the status quo is to focus on tax cuts, loopholes and winning every seat in every election, real problems faced by real people of whatever color will take second place. I was certainly disappointed in Democratic Senator Reid for his swan song. All the town halls in the world have not seemed to connect our elected officials with the real world. People now see this – clearly, and they are finally getting mad, as well they should. I totally believe racial inequality is a big problem, but I am not yet convinced that it is more fundamental than wealth inequality. But, I’m listening and thinking. Lifer you are getting some really good, honest feedback from your commentators. I hope as you inform us, you are equally benefiting from other points of view.
Wherever you are going, I hope you get to relax. This problem ain’t goin’ anywhere so deal with it at your leisure.
Merry Christmas, btw (-:
Rob Do you agree with this? That our feelings of resentment are local? I don’t resent Trump’s or Gate’s billions or the CEO of the company I worked for making over 20 million in salary and stock. Those people and those numbers are too far distant for me to relate. Someone will have to show me proof income/wealth disparity causes the angst we see in the political process.
I am just not sure that inequality is the key to the dis-satisfaction today. Not saying it is not harmful, just saying I haven’t understood the mechanics of how it is evil. Other than this, I do have a problem with Presidential wannabes sitting at the knee of Sheldon Adelson, selling themselves.
I first heard rumblings about the middle class getting the shaft in the 70’s. Along with “problems” with entitlements. I am fairly sure both of those phrases were code. I am sure that those speaking about entitlements thought they were talking about “those people getting a hand up” unfairly. I’m convinced they were not talking about SS and medicare.
I have always thought that once past a certain amount, money is just a way to keep score. And how much more important it is, the closer to zero. That is why I have no problem with a very progressive tax.
Hey, Unarmed, that’s what happens when you live in a tavern…..it messes with your mind (-:
Hi Rob
You are correct
See – The Spirit Level
https://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better
And the reason is quite simple
We became human as part of a small group (not a tribe that came later)
A solitary hominid was “cat food” – only as part of a group could he/she survive
For hundreds of thousands of years the main skill a pre-human needed was to be part of that group
That has resulted in a strong sense of “Fairness”
We have evolved to require “fairness”