If inflation averaged 3%/yr, then I barely got a pay raise over 1994 salary?

[FIPurpose]

I do not see that as reality as our dollars today buy so much more luxury as compared to 50 years ago.  I do agree with the cost of education being ridiculous but that is propagated by the idiotic system of government subsidized student loans to anyone for any useless degree.  When initial price doesn't matter costs will always rise.

Also, corporate profit margins are no higher today than they were 50 years ago which means the money is indeed trickling down throughout all company staff.  I will admit that CEOs of fortune 500 companies are making more today than 50 years ago, but the same Fortune 500 companies are grossly bringing in more profits as well.

1. These were decisions not made by Millennials. I chose a state school, and received a large number of grants/ scholarships. But I still had a 25k bill to pay for my degree.

2. I don't see how that is relevant. Just look at a GDP per capita vs. Average median household income. Not hard to see. The profits are collecting at the top and not with labor. There is indeed no trickle.

Sol, in the 70's and 80's families were content with 1 car and smaller house.  We all know that the biggest financial mistakes a family can make is buying too much house and buying too much car.  Today the average home is almost twice the size from 1970 and families have 2+ cars. No wonder quality of life is getting worse as our society is more and more consumerist driven.

Yes.  Many millennials are pansies compared to generations past when discussing work ethic.  As an employer I have seen it over and over and over again.  Praising a child for doing their best is great.  Rewarding success or improvement is equally great. Giving out an award for just showing up is lunacy.  One positive I can give to the younger generations is that some are starting to appreciate work life balance and are willing to be less consumerist so that they can enjoy life more.

3. No this is factually wrong. Car ownership is going down in the US, and Millennials are much more frequently not owning a car at all.

4. You don't understand real estate trends. It's not that people wouldn't love to buy a "starter" home. But they aren't being built. Because land prices are too high, it's not worth it for construction companies to build smaller homes. And Millennials weren't the ones for whom these large houses were built for, nor who bought them. That would all be the older generation. As my own anecdote. My parents despite being empty nesters own a house 2-3x the size of me or any of my siblings. I have looked at new construction, but it honestly isn't 20-35 year olds buying.

5. You don't have a perspective to judge "compared to generations past". Honestly, get off your high horse.

[EnjoyIt]

I do not see that as reality as our dollars today buy so much more luxury as compared to 50 years ago.  I do agree with the cost of education being ridiculous but that is propagated by the idiotic system of government subsidized student loans to anyone for any useless degree.  When initial price doesn't matter costs will always rise.

Also, corporate profit margins are no higher today than they were 50 years ago which means the money is indeed trickling down throughout all company staff.  I will admit that CEOs of fortune 500 companies are making more today than 50 years ago, but the same Fortune 500 companies are grossly bringing in more profits as well.

1. These were decisions not made by Millennials. I chose a state school, and received a large number of grants/ scholarships. But I still had a 25k bill to pay for my degree.

2. I don't see how that is relevant. Just look at a GDP per capita vs. Average median household income. Not hard to see. The profits are collecting at the top and not with labor. There is indeed no trickle.

Sol, in the 70's and 80's families were content with 1 car and smaller house.  We all know that the biggest financial mistakes a family can make is buying too much house and buying too much car.  Today the average home is almost twice the size from 1970 and families have 2+ cars. No wonder quality of life is getting worse as our society is more and more consumerist driven.

Yes.  Many millennials are pansies compared to generations past when discussing work ethic.  As an employer I have seen it over and over and over again.  Praising a child for doing their best is great.  Rewarding success or improvement is equally great. Giving out an award for just showing up is lunacy.  One positive I can give to the younger generations is that some are starting to appreciate work life balance and are willing to be less consumerist so that they can enjoy life more.

3. No this is factually wrong. Car ownership is going down in the US, and Millennials are much more frequently not owning a car at all.

4. You don't understand real estate trends. It's not that people wouldn't love to buy a "starter" home. But they aren't being built. Because land prices are too high, it's not worth it for construction companies to build smaller homes. And Millennials weren't the ones for whom these large houses were built for, nor who bought them. That would all be the older generation. As my own anecdote. My parents despite being empty nesters own a house 2-3x the size of me or any of my siblings. I have looked at new construction, but it honestly isn't 20-35 year olds buying.

5. You don't have a perspective to judge "compared to generations past". Honestly, get off your high horse.

1) What does millennials and high cost of education decisioning have to do with this conversation.  I am agreeing with you that education is expensive and stating this is because of a poorly devised government program.

2) Each dollar we spend today buys more compared to 50 years ago with regards to quality of life.  Look at small handheld computer that make phone calls.  Safer more fuel efficient cars, plane travel, air conditioning, we are definitely living a much more comfortable life today as compared to 50 years ago and those comforts cost less was my point.

3)  Again, I pointed out that something that the younger generation is doing well is realizing the benefits of work/life balance and are less consumerist compared to just a few years ago.  I believe 2008/2009 had a lot to do with it just as the great depression paved savings for decades afterwards.

4)  I will admit I am not a real-estate expert.  What I do know is that for whatever reason including reasons you described the average home size is almost twice as large as in the 70s which explains why they are less affordable.  Maybe if people stopped buying too much house developers would stop billing bigger houses.  Allas, we are consumerists and keep wanting more and more and more and then suffer the consequences.  If people are willing to keep paying developers will keep building.

5)  I think you are reading what I write and just making things up as you go along.  If I am on a high horse, you are on the same horse riding backwards.

[TomTX]

Huh.

Inflation adjusted, and with my most recent raise (showing up in a paycheck near me on April 1)  I'm apparently making ~28% more than when I started with my current employer in 2005.

[FIREin2018]

Also, corporate profit margins are no higher today than they were 50 years ago which means the money is indeed trickling down throughout all company staff.

what?
link to this?

[EnjoyIt]

Also, corporate profit margins are no higher today than they were 50 years ago which means the money is indeed trickling down throughout all company staff.

what?
link to this?

I searched, was wrong and will correct my wrong with this graph.  Looks like companies are running more efficiently compared to 50 years ago as evidenced by the .com revolution in the beginning of the 21st century.  Without that data margins were shrinking.  Not that I think any data point should be thrown away, just stating what I am seeing.

[sol]

Looks like companies are running more efficiently compared to 50 years ago

I thought this was common knowledge. 

And the prior point still stands, too.  That extra profit has not flowed to all workers proportionally.

[EnjoyIt]

Looks like companies are running more efficiently compared to 50 years ago

I thought this was common knowledge. 

And the prior point still stands, too.  That extra profit has not flowed to all workers proportionally.

Why should it flow to all workers proportionately? I don't understand. Shouldn't those who add more value reap more of the rewards? 

Seems like as an investors we have reaped some nice rewards as well.  I like that also. It is good for all of us who want to FIRE.

[sol]

Why should it flow to all workers proportionately? I don't understand. Shouldn't those who add more value reap more of the rewards? 

If it flowed to those who added more value, that would be proportionately.  Instead, it flows to the owners of capital who provide little to no value, and not at all to the people who actually do the work of creating 100% of the value.

[EnjoyIt]

Why should it flow to all workers proportionately? I don't understand. Shouldn't those who add more value reap more of the rewards? 

If it flowed to those who added more value, that would be proportionately.  Instead, it flows to the owners of capital who provide little to no value, and not at all to the people who actually do the work of creating 100% of the value.

So you are saying people who add more value to the company don't get raises above inflation?  People don't get promoted for good work?  People don't move up in the company into larger and larger leadership positions?

So yeah.  owners make the most profit that would make sense as they are owners and take on the most risk.  Good employees get promoted. Bad employees stay stagnant and maybe really bad empties get fired.  The world seems right to me.

[FIREin2018]

So yeah.  owners make the most profit that would make sense as they are owners and take on the most risk. 
Good employees get promoted. Bad employees stay stagnant and maybe really bad empties get fired.
  The world seems right to me.

silly theory:
-hard working employees seem stressed out more. they burnout, then realize they have alot of $ and FiRE.
-avg employees that cruise through the job just staying avg have the minimum amount to FiRE. they are the same age as the hard worker.
-bad employees that are just 1 step ahead of being let go are even less stressed because they dont care. they might FiRE a year or 2 after the above 2 worker types.

so FiRE with alot of $ but stressed. he doesnt FiRE years earlier because he loves to work.
or FiRE with the minimum amount but less stressed
or FiRE a couple of years later than the above 2 types and be the least stressed

[EnjoyIt]

So yeah.  owners make the most profit that would make sense as they are owners and take on the most risk. 
Good employees get promoted. Bad employees stay stagnant and maybe really bad empties get fired.
  The world seems right to me.

silly theory:
-hard working employees seem stressed out more. they burnout, then realize they have alot of $ and FiRE.
-avg employees that cruise through the job just staying avg have the minimum amount to FiRE. they are the same age as the hard worker.
-bad employees that are just 1 step ahead of being let go are even less stressed because they dont care. they might FiRE a year or 2 after the above 2 worker types.

so FiRE with alot of $ but stressed. he doesnt FiRE years earlier because he loves to work.
or FiRE with the minimum amount but less stressed
or FiRE a couple of years later than the above 2 types and be the least stressed

FIRE community is a small group.  The rest of the US judges success based on what car they drive and how big their house is.  I don't think we should look at it from our perspective.  I will admit that I was very gun-ho when I started my career.  Climbed pretty quickly and improved my income which came with tons of hours and lots of stress.  Then I learned about FIRE and my life changed.  Luckily I already was making good money and was always frugal.Today I am semi-retired in a low stress environment that I enjoy.  There will be no more raises for me. 

[sol]

People don't get promoted for good work?  People don't move up in the company into larger and larger leadership positions?

All of the people chasing promotions and paychecks are the one who have NOT benefited from the changes we've discussed here.  They're fighting over the scraps.

Your chart suggests corporate profitability when from ~5% in the 80s/90s to ~10% today.  That's a 100% increase in profits.  Did average wages increase 100% for workers who fight for promotions?  No, that money went right into the pockets of the owners.  Wage increases since then have not kept pace with inflation, much less mirrored anything like corporate profit increases. 

[Bloop Bloop]

Why should it flow to all workers proportionately? I don't understand. Shouldn't those who add more value reap more of the rewards? 

If it flowed to those who added more value, that would be proportionately.  Instead, it flows to the owners of capital who provide little to no value, and not at all to the people who actually do the work of creating 100% of the value.

I don't think there's a strict dichotomy between those who supply labour and those who own capital. For example, when I used to work in a big firm, as you got more senior, you started accruing points in the partnership, so that you gradually transformed from a labourer to a capital owner. I should say that the partners in the firm didn't "provide little or no value" as it was they who brought in the clients. If they weren't hauling in big fish they got fired fairly quickly. I would suggest that is providing value. And as the "little people" do more and better work, "creating the value", they got more points in the partnership.

Then you have guys like me who weren't content with the partnership model and waded away from the mothership in order to become self-employed. Am I a labourer or a capital owner? A bit of both really.

At the end of the day, profits should go to whoever's good enough to demand them. Whether that's the partner/owner, the business owner, the consultant, or the employee with a stake in the company, or just an employee with a good bonus scheme, the point is that the market is well placed to sort it out. If more and more profits are going to those at the top of the hierarchy it's probably because those at the bottom aren't good enough to warrant any of it - probably because now they have to compete with technology and international labour. I don't see any problem with this at all. Life should be a bit of a competition. It wouldn't be fun otherwise.

[sol]

If more and more profits are going to those at the top of the hierarchy it's probably because those at the bottom aren't good enough to warrant any of it

I'm pretty sure the French monarchy made this exact same argument for most of the 1700s.  "Well of course we deserve to have more, we're rich and noble!  And smart and fashionable!  Poor people are poor because they are lazy miserable failures, not like us!" 

But you can only tell them they should just eat cake for so long, and eventually they start building guillotines.

[Bloop Bloop]

That's fine. Give them just enough bread and circuses to ensure it doesn't lead to guillotines. Or just blame Wall Street and let them unleash their frustrations in that manner.

[LennStar]

I still can't decide if he is trolling or just a fierce believer in neoliberal meritocracy.

Anyway, fresh from twitter / Bloomberg:
https://t.co/uYbevnoxYj


1946-1980: Virtually everybody in the U.S. saw their post-tax income double, apart from the very wealthy. 1980-2014: Almost half the population failed to register any growth in their income at all, while the top 1% have enjoyed extraordinary growth bloom.bg/2FwutSd

[BicycleB]

Great graph!

[BTDretire]

Sol, in the 70's and 80's families were content with 1 car and smaller house.  We all know that the biggest financial mistakes a family can make is buying too much house and buying too much car.  Today the average home is almost twice the size from 1970 and families have 2+ cars. No wonder quality of life is getting worse as our society is more and more consumerist driven.

 True in my case, my childhood home was 720sqft until I was 12, mom told dad. "time to get another room for these kids", my sister and I had the same bedroom until I was 12. Dad built two more rooms on the house increasing it to a whooping 960sqft. Always only one car.
 Today I live in 1600sqft and have 3 cars.
 There truly was much less to spend money on in the 60s, 70s, and 80s.
I'll start the list, cable TV, internet, Cellphones, gym memberships, computers, printers, fridges with water and ice from the door...
 

[FIPurpose]

Sol, in the 70's and 80's families were content with 1 car and smaller house.  We all know that the biggest financial mistakes a family can make is buying too much house and buying too much car.  Today the average home is almost twice the size from 1970 and families have 2+ cars. No wonder quality of life is getting worse as our society is more and more consumerist driven.

 True in my case, my childhood home was 720sqft until I was 12, mom told dad. "time to get another room for these kids", my sister and I had the same bedroom until I was 12. Dad built two more rooms on the house increasing it to a whooping 960sqft. Always only one car.
 Today I live in 1600sqft and have 3 cars.
 There truly was much less to spend money on in the 60s, 70s, and 80s.
I'll start the list, cable TV, internet, Cellphones, gym memberships, computers, printers, fridges with water and ice from the door...

Mentioning modern tools as though they are simply the new toys of today. You're not alone in this in this thread. but honestly you mixed modern utilities and necessities with pleasantries??

Do the people over 50 on this forum realize that you can't attend high school today without a computer? You can't finish high school without access to the internet? Kids have it so much better today because uhh smartphones. Yeah that's all just play money right?

I'll continue the list:
toilets, electricity, trains, bricks, carpentry, year-round banana access.