The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ender on June 08, 2016, 04:48:27 PM
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All these gloom and doom threads about "everyone makes less" or "can't provide for family the way you used to be able to" makes me wonder:
- How much money would you actually need now to live with the same standard of living as 1950?
- What would the additional costs be, that didn't exist then (for example cell phones)?
- What are the additional luxuries/needs that people include as mandatory now that were not in that time (level of healthcare? home size? etc)?
Yes 1950 is arbitrary.
My biggest problem with using the CPI is that it doesn't keep standard of living constant. It adopts an approach which they call hedonic quality adjustment. Which attempts to account for situations like TVs got cheaper but better and the overwhelming majority of consumers still purchasing them.
It does not, however, effectively take the level of luxury in 1950 and keep it constant - it adjusts, based on what people are purchasing.
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I quite like the idea, but how do you propose to measure standard of living? For example, I live in a house built in 1939, and the surrounding homes are similar, 2 bedroom, originally 1 bath homes. Now of course most have had a second bathroom put in. We DINKs with dogs live in a house that once was home to a family with multiple kids. Older neighbors remember in the 60s when the whole street was kids running around. 4 or 5 people in my 1,600 sq. ft. home when it had 1 bathroom. How do we compare standard of living? Would we price a current house with one bathroom?
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3br/1bath houses in my town can be had on a 30 year mortgage for ~ $600 a month, PITI. That's for a house that's actually better than most 1950s houses.
A $13,000 new car on a 5 year loan, including taxes and insurance, can be had for ~ $350 a month. And that's a way better car than a 1950s car (except possibly the styling... :) ).
That would be one car, not two or three.
So, housing and transportation cost, not counting maint and fuel, would run $950 a month.
The two biggest items, not counting health insurance, could be had for less than $12,000 a year.
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Growing up there were 5 of us in a 1200 sq ft house and I shared a room. But we did have 2 baths. I raised my kids in a 1600 sq ft home with 5 people, 1 bath and 2of the kids always had to share a room.
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I quite like the idea, but how do you propose to measure standard of living? For example, I live in a house built in 1939, and the surrounding homes are similar, 2 bedroom, originally 1 bath homes. Now of course most have had a second bathroom put in. We DINKs with dogs live in a house that once was home to a family with multiple kids. Older neighbors remember in the 60s when the whole street was kids running around. 4 or 5 people in my 1,600 sq. ft. home when it had 1 bathroom. How do we compare standard of living? Would we price a current house with one bathroom?
I'm not sure. But these are the sorts of questions I am curious about.
I do not have a good feel for what size homes most families had around 1950, but I can say that of houses in my area nearly all that were built before then were considerably smaller than the neighborhoods being built now. The neighborhoods from the 50s or earlier are around 2-3 BR at most -- newer developments are nearly all 3+ BR.
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And I have nice large front and back yards, in '39 they built to give you some outside space. There is a recent teardown/rebuild in my neighborhood, a giant house that fills the lot. I can't imagine trading my yard for inside space. But how we compare priorities across time, who knows? I assume the large yards were for kids to play in and now there are no kids playing outside, just my dogs and my vegetable garden. I think trying to measure standard of living gets a bit philosophical. However, I know there must be people who study this stuff...off to Googland.
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I quite like the idea, but how do you propose to measure standard of living? For example, I live in a house built in 1939, and the surrounding homes are similar, 2 bedroom, originally 1 bath homes. Now of course most have had a second bathroom put in. We DINKs with dogs live in a house that once was home to a family with multiple kids. Older neighbors remember in the 60s when the whole street was kids running around. 4 or 5 people in my 1,600 sq. ft. home when it had 1 bathroom. How do we compare standard of living? Would we price a current house with one bathroom?
I'm not sure. But these are the sorts of questions I am curious about.
I do not have a good feel for what size homes most families had around 1950, but I can say that of houses in my area nearly all that were built before then were considerably smaller than the neighborhoods being built now. The neighborhoods from the 50s or earlier are around 2-3 BR at most -- newer developments are nearly all 3+ BR.
I think most of these are soluble problems with a bit of research. We could all pitch in and do a bit to figure this out. For example I found this article which said the average new house built in 1950 was 983 square feet: http://www.npr.org/templates/story/story.php?storyId=5525283
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I quite like the idea, but how do you propose to measure standard of living? For example, I live in a house built in 1939, and the surrounding homes are similar, 2 bedroom, originally 1 bath homes. Now of course most have had a second bathroom put in. We DINKs with dogs live in a house that once was home to a family with multiple kids. Older neighbors remember in the 60s when the whole street was kids running around. 4 or 5 people in my 1,600 sq. ft. home when it had 1 bathroom. How do we compare standard of living? Would we price a current house with one bathroom?
I'm not sure. But these are the sorts of questions I am curious about.
I do not have a good feel for what size homes most families had around 1950, but I can say that of houses in my area nearly all that were built before then were considerably smaller than the neighborhoods being built now. The neighborhoods from the 50s or earlier are around 2-3 BR at most -- newer developments are nearly all 3+ BR.
I think most of these are soluble problems with a bit of research. We could all pitch in and do a bit to figure this out. For example I found this article which said the average new house built in 1950 was 983 square feet: http://www.npr.org/templates/story/story.php?storyId=5525283
Wow. It looks like average house size went from about 1000 square feet to 2400 now.
Houses that size in my town top out around $150k. In the bigger metro area near me, looks like $100k is about median for homes that are between 900-1100 square feet. Assuming 0% down that results in around $620/month with PMI. Not a 1-1 comparison since most of those houses are older (whereas would have been new in 1950s) but I suspect there were also older houses available then, too.
Pretending that you spend 20% of takehome pay for your mortgage/taxes/PMI amount, you need an aftertax income of $37k/year to own a house that size. Obviously a bit more including taxes, so around $45k/year salary.
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http://www.shmoop.com/1950s/society.html
Suggests most families were single car even in 1960 (only 15% of households had 2+ then).
This shows about the same breakdown in 1956 in Milwaukee area - https://news.google.com/newspapers?nid=1499&dat=19560523&id=dx8aAAAAIBAJ&sjid=ayUEAAAAIBAJ&pg=6208,992329&hl=en
So it's very likely that in 1950 a family had only a single car (though this was fairly quickly in process of changing)
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The two biggest items, not counting health insurance, could be had for less than $12,000 a year.
If we were limiting ourselves to the quality of care & state of medical advancement available to the general public by 1959, even a catastrophic health plan (which are no longer available due to ACA rules) and access to a nurse-practitioner's clinic (as can be found in almost every Wal-Mart & Walgreens these days) would likely exceed the target model. It would certainly be less than what I can get via my high deductible HSA plan, so I'd have to say we should limit the cost of comparable health care to about $3500 per year.
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The two biggest items, not counting health insurance, could be had for less than $12,000 a year.
If we were limiting ourselves to the quality of care & state of medical advancement available to the general public by 1959, even a catastrophic health plan (which are no longer available due to ACA rules) and access to a nurse-practitioner's clinic (as can be found in almost every Wal-Mart & Walgreens these days) would likely exceed the target model. It would certainly be less than what I can get via my high deductible HSA plan, so I'd have to say we should limit the cost of comparable health care to about $3500 per year.
Healthcare is a really interesting piece of this because it'd be pretty hard to break down "what would you pay in 2016 to get the same level of care you could get in 1950."
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The two biggest items, not counting health insurance, could be had for less than $12,000 a year.
If we were limiting ourselves to the quality of care & state of medical advancement available to the general public by 1959, even a catastrophic health plan (which are no longer available due to ACA rules) and access to a nurse-practitioner's clinic (as can be found in almost every Wal-Mart & Walgreens these days) would likely exceed the target model. It would certainly be less than what I can get via my high deductible HSA plan, so I'd have to say we should limit the cost of comparable health care to about $3500 per year.
Healthcare is a really interesting piece of this because it'd be pretty hard to break down "what would you pay in 2016 to get the same level of care you could get in 1950."
That really is hard. As in PhD in Economics hard. The best we are likely to do is guess, unless someone has done similar work.
EDIT: Also, the age of our theoretical couple matters as well. since it is well established that a significant portion of the medical costs that occur in one's own lifetime do so in the last 3 years of life. Yet, in 1950, these kinds of geriatric medical care were generally unavailable at any cost.
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The life expectancy in 1950 was 68, too, so keep in mind that that health care was significantly worse, particularly during early childhood. The death rate from cars was also 6 times higher back then than it is now, which is also highly reflective of vast improvements in car safety now compared to back then.
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The life expectancy in 1950 was 68, too, so keep in mind that that health care was significantly worse, particularly during early childhood. The death rate from cars was also 6 times higher back then than it is now, which is also highly reflective of vast improvements in car safety now compared to back then.
I think in a lot of categories it is going to be impossible to really "remove" all improvements from 1950, cars (and probably healthcare) being two areas.
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If we had the same level of health care now as we did in 1950, I would most likely be dead. My nephew would be for sure.
In the early to mid-60's. Our family of 5 lived in a 1000 sf 3bed/1bath, my mother had to quit her job as a teacher when she <gasp> got pregnant with my older sister, and we only had one car. And one TV, one phone, etc.
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About 1960 my grandparents had a house built while my mother and uncle were still little kids. It was a rancher with a living room, dining room, kitchen, three bedrooms, and one bathroom upstairs. My grandfather had another bathroom with a shower added in the basement. The square footage was probably 1600 plus the basement. One car garage. Vacations were trips to lakes and parks. I think once of twice during my mother's whole childhood they vacationed somewhere grander like a trip out West or something. International travel wasn't even a consideration. One car, one TV.
It's not hard to see why people feel like they have less money when you compare that to how most folks feel inclined to live today.
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I'm afraid this is very much an apples to oranges comparison.
I have a personal home theater (big screen tv) with access to virtually every tv show and movie ever made (amazon, hulu, netflix). I have access to the world's knowledge in my personal expansive library (internet). I can buy the freshest fruits, vegetables and meat from around the world. Regardless of where I live in the US, I can order virtually any item I want and have it in 2 days or less without leaving home. I can drive with firm knowledge of how to get where I'm going, detour around traffic (GPS). I can keep my home at the most comfortable temperatures regardless of weather. I carry a small computer device that gives me access to the same entertainment and information from my vast library and allows me to communicate around the world for free. These amazing luxuries are available to the vast majority of Americans.
1950s? No thanks.
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gonna put this here it was my post from the thread that started this discussion. with people complaining about what it costs to live now compared to then . but this is what a median income gets you in my city. seems fairly bloated IMO as well. and still more frugal than most americans.
Median Income 51329
Family of 4 - i'll include daycare in this too as thats the most expensive time in their life b/c they are in one of the top 2 school districts in the KC area in this home
Housing
http://www.reecenichols.com/homes-for-sale/3213-SW-Tiara-Lane-Lees-Summit-MO-64082-179017919
Monthly payment 1060 including taxes an insurance and HOA fees
Food
600/month
Childcare
1000/month - 125 a week per child. i have friends paying this in this area for affordable and great in home care.
Gas
300/month
Health Insurance
200/month
House maint
150/month
Car maint
100/month
Misc.
300/month
Taxes are basically nothing for this family.
Monthly spend - 3610
annual spend - 43320
amount available to save - 8009 savings rate = 15.6% and thats not counting if we can get them the savers credit which would get them a little bump. thats a pretty sweet saving rate for a family spending quite a bit of money on a middle class life in america. and we didnt even optimize their life yet. plus once the kids get to school that 12k a year on childcare can be pumped into savings. and all this is done by both parents making an avg of 12 dollars per hour each. thats not an insanely high wage to make for someone who has decided to start a family.
they dont need a house this expensive on this income ... the daycare cost will largely go away in a few years. so how is it so hard to live now adays? they are blowing 300 a month on either cell phones/dinners/cable/clothes/travel etc. they are spending a ton on groceries.
so how i ask you is this not possible to live what i would say is a reasonbly baller life on 12bucks an hour 2 income family that could be optimized even further if they chose to be more frugal.
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so how i ask you is this not possible to live what i would say is a reasonbly baller life on 12bucks an hour 2 income family that could be optimized even further if they chose to be more frugal.
Since you asked:
Healthcare costs could be a factor. My 27 year old girlfriend pays around $150/month for her high deductible plan, and has to pay out of pocket for pretty much everything up to her $5000 or so deductible. I'm not sure where you're getting a $200/month cost for a family of 4. Even if their insurance is that low, that means they're paying out of pocket for every health event/prescription.
You also haven't factored in the down payment they need for the house, the purchase price of the car (more likely, 2 cars since they're both assumed to be working), utilities, and things like clothes/school supplies/other costs for the kids. That would all have to come out of the $300/month misc. fee or the savings. They may not have income tax (I didn't run the numbers), but they still pay social security and medicare to the tune of 10% ($5,000) or so per year. Factor in a job loss, or a car breakdown/wreck, maybe add some student loans and I can see how their budget would get tight.
This is not to say it's impossible to live well with that salary. I'm merely pointing out that you simplified/minimized a few costs that could make/break a budget, and are painting a very rosy picture that may not be realistic.
As for the OP, I think it's an interesting question that sound simple but is probably really complicated. Off the top of my head, small house, one car, antenna TV, no cell phone (maybe 1 to replace house phone), mostly local/in season food. Healthcare is probably the biggest change.
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so how i ask you is this not possible to live what i would say is a reasonbly baller life on 12bucks an hour 2 income family that could be optimized even further if they chose to be more frugal.
Since you asked:
Healthcare costs could be a factor. My 27 year old girlfriend pays around $150/month for her high deductible plan, and has to pay out of pocket for pretty much everything up to her $5000 or so deductible. I'm not sure where you're getting a $200/month cost for a family of 4. Even if their insurance is that low, that means they're paying out of pocket for every health event/prescription.
You also haven't factored in the down payment they need for the house, the purchase price of the car (more likely, 2 cars since they're both assumed to be working), utilities, and things like clothes/school supplies/other costs for the kids. That would all have to come out of the $300/month misc. fee or the savings. They may not have income tax (I didn't run the numbers), but they still pay social security and medicare to the tune of 10% ($5,000) or so per year. Factor in a job loss, or a car breakdown/wreck, maybe add some student loans and I can see how their budget would get tight.
This is not to say it's impossible to live well with that salary. I'm merely pointing out that you simplified/minimized a few costs that could make/break a budget, and are painting a very rosy picture that may not be realistic.
As for the OP, I think it's an interesting question that sound simple but is probably really complicated. Off the top of my head, small house, one car, antenna TV, no cell phone (maybe 1 to replace house phone), mostly local/in season food. Healthcare is probably the biggest change.
yeah so cut their house in half to a 100k home and there is another 500 a month to cover their healthcare if its that high. bottomline people just way over spend now. how this is even an arguement on here that the middle class cant make it anymore is completely absurd to me ... NO we just spend piles more money as a combined country on stuff we think we're entitled to b/c we've "earned" it.
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If we had the same level of health care now as we did in 1950, I would most likely be dead. My nephew would be for sure.
I'd would definitely be dead. Almost certainly wouldn't have survived birth, but there is no way I would have survived after I broke my neck the first time.
Not to mention, I think a lot of us would be dead from various illnesses that we never even got due to modern vaccinations.
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Don't forget to budget for plenty of cigarettes, because everybody smoked in those days.
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If we had the same level of health care now as we did in 1950, I would most likely be dead. My nephew would be for sure.
I'd would definitely be dead. Almost certainly wouldn't have survived birth, but there is no way I would have survived after I broke my neck the first time.
Not to mention, I think a lot of us would be dead from various illnesses that we never even got due to modern vaccinations.
"iowajes has been bitten by a rattlesnake."
:)
Following this thread. I was just thinking about this yesterday. While I haven't tried to fill in any numbers, I'm fairly certain that or society has adapted to new/more items and become f*cking consumer whores. It's so hard to shake off this programming.
I'm not sure if anyone has linked this Atlantic article yet but:
How America spends moeny: 100 years in the life of the family budget http://www.theatlantic.com/business/archive/2012/04/how-america-spends-money-100-years-in-the-life-of-the-family-budget/255475/
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interesting census write up ... not only are our homes larger now they come with more crap in them and bigger garages ... so a direct comparison of sq. footage doesnt really tell the whole story
also we're farther from everythinng. does any of this sound familiar. Still dont know why its a struggle for many on here to understand that its likely not that much more expensive now vs then if you take out the rampant consumerism.
https://www.census.gov/housing/patterns/publications/HousingByYearBuilt.pdf
Conclusion
In conclusion, the 2009 American Housing Survey shows
that homes being built today are bigger than those built in
earlier decades. In addition, homes built today have
almost more of everything – different types of rooms such
as more bedrooms and bathrooms, more amenities such as
washers and dryers, garbage disposals and fireplaces, and
more safety features such as smoke and carbon monoxide
detectors and sprinkler systems. But homes built in the
2000s are less likely to have neighborhood amenities such
as proximity to public transportation and access to
community amenities such as daycare and shuttle buses,
though they are more likely to be near walking or jogging
trails and have access to a community center or clubhouse.
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on top of that the more expensive car arguement follows a similar path cars in 1950 werent expected to last over 100k miles so the price of a new car then compared to now doesnt make a lot of sense when you consider a car bought today should be expected to travel 200-300k miles minimum.
healthcare may be more expensive now but we save way more lives now and have figured out how to fight more disease ... healthcare maybe the absolute hardest comparison to nail down.
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The theme behind this thread (I think) speaks to why I bought a relatively small home (1,100 square feet). Before buying a house, I read a lot about how the average family in 1950 had five people but lived in 900-1,200 square foot homes. Today the average is four people but new homes are about 2,500 square feet.
We don't have kids yet, and pretty much everyone who sees our home says "it's a nice starter home." We usually just take it in stride, but we fully intend to live here for a long time.
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The theme behind this thread (I think) speaks to why I bought a relatively small home (1,100 square feet). Before buying a house, I read a lot about how the average family in 1950 had five people but lived in 900-1,200 square foot homes. Today the average is four people but new homes are about 2,500 square feet.
We don't have kids yet, and pretty much everyone who sees our home says "it's a nice starter home." We usually just take it in stride, but we fully intend to live here for a long time.
We bought our retirement home. At least, we joke that people start with the starter home, then trade up, then trade back down. We are skipping the middle part.
(2BR, 1BA, no garage, 1146 sf, 4 people).
But it wasn't cheap.
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In 1950 a quarter of homes in the United States didn't have flush toilets. 1950 was closer to the Spanish-American War than to the present day.
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yes there is many many more things we have now and luxuries which cost more. be interested to see it laid out by someone who isnt trying to prove that "it costs more to live now" - i'm pretty sure if you drive a car equivalent to a car manufactured in 1950 as far as safety and with far better fuel efficiency. and choose to live in a house equivalent to 1950 with all of the 1950 features that were standardly being built at the time, and have one cell phone plan, one tv with bunny ears and dont eat out all the time its not that different with healthcare being the odd ball here but as iowa jes said she'd be dead if not for the advancements in medicine since then. food is cheaper now. clothes are cheaper now. energy as a whole is cheaper and cleaner now. things are more efficient now. looking at a microcausem of "houses cost more now" and they do about 10 dollars more per squarefoot - but they come with way more toys inside and a larger garage as well. advanced education costs more but thats a product of EVERYONE THINKING THEY NEED A DEGREE regardless of their mental aptitude. demand has risen for college so price have adjusted to demand. 6x as many people have degrees now compared with 1950.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to. Part of it is just simple competition where there are just more people with degrees now and automation and other efficiencies have led to an unequal growth in opportunities in stride with growth in population. Part of it is the blue collar manufacturing jobs and even say call center jobs are being outsourced to other countries leaving a hollowing out between white collar and fast food/retail.
There's plenty of data backing up that average college tuition % increases has far outpaced wage increases. Housing as the Two Income Trap has shown is a result of people moving towards areas with better schools and driving up the prices. You may not find a comparable 1,000 sq foot home in an area where you would be comfortable with the schools. Childcare because of demand since we all moved to the burbs for the better schools and now need both parents to work. Need two cars now because of the two jobs and long commutes and more $ for gas, maintenance, insurance, etc.
I've read the Two Income Trap a couple of times now and always thought that Warren put too much emphasis on the housing in pursuit of education as the significant domino that caused all these problems. After typing out this post though it does seem like she hit it on the head.
An interesting exercise would be to see how many homes are available per population density that are affordable as a 1950's comparable % of average median family income today that are also in school districts that are by whatever measure at least average or better. Also need to compare the quality of a home and it's age. I'm sure I can find a home built in the 1950's today that is in decrepit condition that is technically affordable and perhaps in a decent district. It wouldn't be a fair comp to a newly built home in 1950 however.
I would guess that in the 50's there were less competition for these homes, school districts weren't as stratified into poor/avoid like the plague and higher quality do whatever you have to to move there.
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Man, I didn't live through it but I know enough of how my parents even lived in the 70s to understand how it was for the average middle-class:
- 2 bedroom house: 1 for parents, 1 for ALL the kids.
- Average electronic devices purchased per year: 0
- Cable/Internet/phone: Just phone. Everyone used rabbit ears for TV and nobody dared call long-distance. Many people still don't have TV and use the radio as sole entertainment.
- 1 car. ...Up until about 1979-80.
- Appliances and clothes cost three times as much but lasted 10+ times as long. (Bring back polyester!)
- BBQ? No BBQ. Hibachi if your parents were rich.
- Money is spend on cigarettes (30 cents a pack), booze, books, lawn care, and the occasional record. ...But there's not really that many records to choose from in the store unless you live in NYC or something.
- Not many kids' toys to spend on because there isn't major franchising yet. (No "Star Wars".) One of the first birthdays I can remember I got a small, plastic paint-by-numbers Mickey Mouse statue and a puzzle. ...And I was really happy with those TWO things. :)
- Unless you were lucky enough to be the first-born, the clothes on your back up until high school graduation were all hand-me-downs.
- Education. ...Yeah, the majority of middle-class people didn't go to college.
- No maid service. Hell, no.
- Save for retirement = yes. Most people did in fact put some decent coin away for retirement.
- Vacation? That's a once-a-year drive to a campground or rental cottage if you're lucky. Out of country: Only allowed twice in your life--maybe honeymoon, and once upon retirement.
I honestly think that if you lived know EXACTLY (or as close as possible) to the frugal way families did in the 1950s, you'd have a higher savings rate than MMM himself. Under $25K in today's dollars for sure.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to. Part of it is just simple competition where there are just more people with degrees now and automation and other efficiencies have led to an unequal growth in opportunities in stride with growth in population. Part of it is the blue collar manufacturing jobs and even say call center jobs are being outsourced to other countries leaving a hollowing out between white collar and fast food/retail.
There's plenty of data backing up that average college tuition % increases has far outpaced wage increases. Housing as the Two Income Trap has shown is a result of people moving towards areas with better schools and driving up the prices. You may not find a comparable 1,000 sq foot home in an area where you would be comfortable with the schools. Childcare because of demand since we all moved to the burbs for the better schools and now need both parents to work. Need two cars now because of the two jobs and long commutes and more $ for gas, maintenance, insurance, etc.
I've read the Two Income Trap a couple of times now and always thought that Warren put too much emphasis on the housing in pursuit of education as the significant domino that caused all these problems. After typing out this post though it does seem like she hit it on the head.
An interesting exercise would be to see how many homes are available per population density that are affordable as a 1950's comparable % of average median family income today that are also in school districts that are by whatever measure at least average or better. Also need to compare the quality of a home and it's age. I'm sure I can find a home built in the 1950's today that is in decrepit condition that is technically affordable and perhaps in a decent district. It wouldn't be a fair comp to a newly built home in 1950 however.
I would guess that in the 50's there were less competition for these homes, school districts weren't as stratified into poor/avoid like the plague and higher quality do whatever you have to to move there.
median income 50k in the us so middle class
http://www.mrmoneymustache.com/2013/07/25/50-jobs-over-50000-without-a-degree-part-1/
http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/
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Man, I didn't live through it but I know enough of how my parents even lived in the 70s to understand how it was for the average middle-class:
- 2 bedroom house: 1 for parents, 1 for ALL the kids.
- Average electronic devices purchased per year: 0
- Cable/Internet/phone: Just phone. Everyone used rabbit ears for TV and nobody dared call long-distance. Many people still don't have TV and use the radio as sole entertainment.
- 1 car. ...Up until about 1979-80.
- Appliances and clothes cost three times as much but lasted 10+ times as long. (Bring back polyester!)
- BBQ? No BBQ. Hibachi if your parents were rich.
- Money is spend on cigarettes (30 cents a pack), booze, books, lawn care, and the occasional record. ...But there's not really that many records to choose from in the store unless you live in NYC or something.
- Not many kids' toys to spend on because there isn't major franchising yet. (No "Star Wars".) One of the first birthdays I can remember I got a small, plastic paint-by-numbers Mickey Mouse statue and a puzzle. ...And I was really happy with those TWO things. :)
- Unless you were lucky enough to be the first-born, the clothes on your back up until high school graduation were all hand-me-downs.
- Education. ...Yeah, the majority of middle-class people didn't go to college.
- No maid service. Hell, no.
- Save for retirement = yes. Most people did in fact put some decent coin away for retirement.
- Vacation? That's a once-a-year drive to a campground or rental cottage if you're lucky. Out of country: Only allowed twice in your life--maybe honeymoon, and once upon retirement.
I honestly think that if you lived know EXACTLY (or as close as possible) to the frugal way families did in the 1950s, you'd have a higher savings rate than MMM himself. Under $25K in today's dollars for sure.
I was born in 1970 (well, duh, my username), and this was pretty much my upbringing (my oldest sister was born in the early 1950s). We took one vacation total I think. Maybe camped overnight once or twice too, in my lifetime.
My husband's family vacationed a lot more, every other year visiting relatives in Europe, at least until the kids were old enough that they were a full price ticket. Then it slowed down.
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you had to also pay people in the 50s for their knowledge of things or go to the library and try to obtain it yourself. this blog and what we've all learned and shared with each other in this community about how to save money isnt worth piles more than the slightly perceived(IMO) higher cost of living now. there is so much you can do and learn to save money now that just wasnt possible then.
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Just a comment on healthcare from my own little bubble world.
I can't go back to the 50s.... but in the 60s my dad was a young doctor. The docs in the community pretty much "just did what was right." Don't have insurance? One of them will fix you up.
Very often we got pies, fruit, veggies, chicken, swing sets, etc. as payment. Dad would do them a favor. A year later a stranger would show up and build the most awesome indestructible fort or swingset.
Dad also had mixed feelings about "new doctors". He thought the specialization was good... but that they often lost a breadth of generalized knowledge that was bad. He thought modern diagnostics (MRI, CAT, etc) were great things, but that newer doctors were missing skills in examination/diagnosis/history taking where you often could avoid expensive testing.
In general, this topic fascinates me. It's something I've thought a lot about over the years. Middle class folks in the 50s/60s thought they had things REALLY GREAT. And today a vast majority of (non-mustacian) people would be horrified to live without much of what we consider "necessities."
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to. Part of it is just simple competition where there are just more people with degrees now and automation and other efficiencies have led to an unequal growth in opportunities in stride with growth in population. Part of it is the blue collar manufacturing jobs and even say call center jobs are being outsourced to other countries leaving a hollowing out between white collar and fast food/retail.
Living in a reasonable house, not having children or health problems (easier said than done of course), and not going to (or paying for) college solve the first part pretty quickly. Having a job that doesn't require college education solves the second part. Being creative solves not hitting any of what I just said.
My GF and I live in a ~1000 square foot house built in the 60s (and well maintained, not "decrepit" like you imply all old houses are) in a town that grew 87% from 2000-2010. PITI is about 20% of our take-home pay.
We have no children, and no serious health problems (we've each had a very-warranted emergency room visit in the past 5 years, but those were each <$500/visit). I think our health insurance together is about $200/month and covers routine stuff.
I attended three semesters of college with no money out of pocket (scholarships with a bit of parental help). She attended half of one semester before she left, and is still paying off that (relatively small) student debt. Neither of us have a degree of any kind.
I work in IT, and she's a traveling self-employed photographer in a very very niche market.
We have a household income above the US median, and above median in our area. And our income will only go up with time (especially hers). We have what I consider a pretty damn luxurious life (3 bedroom house, two cars, dogs, travel, fancy home-cooked food), and a a respectable savings rate even by Mustachian standards. Well above the 1950s norm.
We could definitely get by on only one income if we wanted to. FIRE aspirations would be significantly worsened, but our standard of living would remain pretty great. Chronic expensive health problems are really probably the main thing that could sink a ship like ours if we were restricted to one income.
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in general, this topic fascinates me. It's something I've thought a lot about over the years. Middle class folks in the 50s/60s thought they had things REALLY GREAT. And today a vast majority of (non-mustacian) people would be horrified to live without much of what we consider "necessities."
That's why I am curious about this subject in general, too.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to. Part of it is just simple competition where there are just more people with degrees now and automation and other efficiencies have led to an unequal growth in opportunities in stride with growth in population. Part of it is the blue collar manufacturing jobs and even say call center jobs are being outsourced to other countries leaving a hollowing out between white collar and fast food/retail.
Living in a reasonable house, not having children or health problems (easier said than done of course), and not going to (or paying for) college solve the first part pretty quickly. Having a job that doesn't require college education solves the second part. Being creative solves not hitting any of what I just said.
My GF and I live in a ~1000 square foot house built in the 60s (and well maintained, not "decrepit" like you imply all old houses are) in a town that grew 87% from 2000-2010. PITI is about 20% of our take-home pay.
We have no children, and no serious health problems (we've each had a very-warranted emergency room visit in the past 5 years, but those were each <$500/visit). I think our health insurance together is about $200/month and covers routine stuff.
I attended three semesters of college with no money out of pocket (scholarships with a bit of parental help). She attended half of one semester before she left, and is still paying off that (relatively small) student debt. Neither of us have a degree of any kind.
I work in IT, and she's a traveling self-employed photographer in a very very niche market.
We have a household income above the US median, and above median in our area. And our income will only go up with time (especially hers). We have what I consider a pretty damn luxurious life (3 bedroom house, two cars, dogs, travel, fancy home-cooked food), and a a respectable savings rate even by Mustachian standards. Well above the 1950s norm.
We could definitely get by on only one income if we wanted to. FIRE aspirations would be significantly worsened, but our standard of living would remain pretty great. Chronic expensive health problems are really probably the main thing that could sink a ship like ours if we were restricted to one income.
Oh I definitely think it's possible. And I didn't mean to imply all old houses are falling apart. But as you noted as DINKs your situation isn't really the one we are trying to draw a comparison to. You don't have the childcare expense even though both of you work and you don't need to get drawn into the trap of chasing more costly housing because of school district.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to.
This is a myth. A career in a skilled labor occupation remains a viable path to a middle class lifestyle. But it's still hard work, so our parents drilled it into the heads of several generations in a row to seek out a degree in order to find a "better" job than they have. Sadly, not all degrees are of equal market value, and a simple degree is no longer enough to qualify you for the type of work that should reasonably require a quality post-secondary education. All this while the work that required skilled laborers still has to get done, and the robots aren't here yet. The market forces has resulted in a good skilled tradesman, with a decent work ethic & a marginally analytical mind, being more in demand than in the past, and certainly relative to the market demand for a generic degree. My brother & I are case examples. We are of similar mental acumen, but he chose the path of higher education, while I decided that I had better opportunities elsewhere and "dropped out" of my dual major (Physics & Engineering) after one year. He has 3 degrees at this time, doesn't work in any of those fields, and makes $30K a year as a single, middle aged man. I pursued technical education, on-the-job training & a skilled trade license, and have averaged $125K for the past decade. Yet, my brother wouldn't want my job; because it's too many hours, in uncomfortable working conditions & environments, and with shifting job requirements & long term income uncertainty. Too many adults are similar to my brother; fragile flowers unwilling to "work" if it actually involves working.
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We're definitely living in bigger houses today -- and it's not just the houses themselves. I grew up in a house that was built in the 40s. I had about 3' of closet space; today that's unheard of. Today everyone wants a mudroom, a den, upgraded electrical to handle all our electronics. We had to carry our coats and books to our bedrooms, no one had any private space, and our "electronics" were comprised of a 13" black and white TV with rabbit ears. One bathroom houses were typical then.
As for the outdoor space, remember that houses back then didn't have air conditioning. Here in the South that meant that porches were summer living spaces. And when people grew (and canned) their own vegetables and kept chickens, larger outdoor spaces were necessities.
When I was a young child, pretty much every family had a stay at home mom; that changed by the time I was a teen. But those moms didn't behave at all like today's moms: That is, they didn't drive mini-vans and shuttle the kids to soccer practice and music lessons. They spent all day making food (few convenience foods), cleaning the house, and sewing.
Growing up (I was born late 60s) I knew families who had NO cars of their own. The mill bus'd pick them up and take them to work every day ... and the church bus'd pick them up on Sundays.
Consider, too, that in those days not everyone had the same freedoms that we all have today. Minorities and women certainly didn't have the educational and job opportunities that are available to them (us) today.
I have to say, I like my life now. I love air conditioning, color TV, the internet and a whole lot of other things.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to.
This is a myth. A career in a skilled labor occupation remains a viable path to a middle class lifestyle. But it's still hard work, so our parents drilled it into the heads of several generations in a row to seek out a degree in order to find a "better" job than they have. Sadly, not all degrees are of equal market value, and a simple degree is no longer enough to qualify you for the type of work that should reasonably require a quality post-secondary education. All this while the work that required skilled laborers still has to get done, and the robots aren't here yet. The market forces has resulted in a good skilled tradesman, with a decent work ethic & a marginally analytical mind, being more in demand than in the past, and certainly relative to the market demand for a generic degree. My brother & I are case examples. We are of similar mental acumen, but he chose the path of higher education, while I decided that I had better opportunities elsewhere and "dropped out" of my dual major (Physics & Engineering) after one year. He has 3 degrees at this time, doesn't work in any of those fields, and makes $30K a year as a single, middle aged man. I pursued technical education, on-the-job training & a skilled trade license, and have averaged $125K for the past decade. Yet, my brother wouldn't want my job; because it's too many hours, in uncomfortable working conditions & environments, and with shifting job requirements & long term income uncertainty. Too many adults are similar to my brother; fragile flowers unwilling to "work" if it actually involves working.
See my post above with MMMs jobs for over 50k without a degree.
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Also I think there are a couple more generations ie my grandkids. Won't go to a college it will be learned online to the masses for.much much less money.
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in general, this topic fascinates me. It's something I've thought a lot about over the years. Middle class folks in the 50s/60s thought they had things REALLY GREAT. And today a vast majority of (non-mustacian) people would be horrified to live without much of what we consider "necessities."
That's why I am curious about this subject in general, too.
Me three, maybe it's like Louis C.K. says, "Everything's amazing and we're all miserable." Well, not Mustachians, we're seemingly pretty darn happy...
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Also I think there are a couple more generations ie my grandkids. Won't go to a college it will be learned online to the masses for.much much less money.
I agree with this. It might even start with my kids' generation.
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Growing up (I was born late 60s) I knew families who had NO cars of their own. The mill bus'd pick them up and take them to work every day ... and the church bus'd pick them up on Sundays.
I think we are headed back to some version of this, to some degree. Not for the same reasons, but as Internet based transportation systems (i.e. Uber, Lyft, Zipcar, Relay Rides, etc) make car-free living more convenient, many more people will choose a car-free lifestyle, for various personal reasons.
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I don't think it takes much in absolute dollars to have the same standard of living. Maybe 50K outside of HCOL metro areas? That number may be way too high, I really don't know.
But how would you actually replicate that lifestyle? If I go to the hospital, am I going to refuse the CT? Opt for the surgery with a huge incision instead of a couple small holes that quickly heal?
On housing, do developers even build 900 sq. ft. houses anymore? Due to building codes, I can't opt of new but costly features like integrated fire alarms. Then there's resale. I may be perfectly fine with a 2 bedroom home, but these days that's going to dilute your pool of buyers and the price they're willing to pay right?
It's hard to make apples to apples comparisons due to economic changes within different areas. San Francisco was, I'm sure, a much cheaper place to live in 1950. But it also wasn't the epicenter of an industry that routinely pays 23 year olds 6 figure salaries.
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On housing, do developers even build 900 sq. ft. houses anymore? Due to building codes, I can't opt of new but costly features like integrated fire alarms. Then there's resale. I may be perfectly fine with a 2 bedroom home, but these days that's going to dilute your pool of buyers and the price they're willing to pay right?
Yes, but they are called "Tiny houses" now. Integrated fire alarms aren't expensive, if your house doesn't have the interlock cables installed, you can buy a set that are connected to each other by wireless. The rule is that if one detects a fire, they all go off together; but if your house is tiny, one is likely enough to be heard in the entire house anyway.
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Aren't tiny houses the portable trailers basically? Not exactly the same SFH they had in the 50s right? They don't look like Levittown to me at least.
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Tiny houses are a joke for the most part. People use them like travel trailers. But they are
1. Heavier
2. Less aerodynamic
3. Cost way more
If you going to build a small house stationary for years (10+) on one lot they may make sense but. A travel trailer today is much more optimized than building a tiny house and towing it 10+ times a year across the country. On the plus side with such a huge fad right now you can probably blog about your travels and break even vs just buying even a class c RV for 26k and towing a compact car with you. Tiny houses are like going back to the 1950s of a travel trailer. Heavy and overpriced and not aerodynamic. It's a dumb fad I hate. But. I'm sure someone will have some brilliant reason why they are more worthwhile than an industry that has been optimizing this for decades.
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- 1 car. ...Up until about 1979-80.
And it was probably a subcompact econobox or a POS Dodge.
- BBQ? No BBQ. Hibachi if your parents were rich.
Ha! I remember my dad hunched over the Hibachi grilling hot dogs.
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- 1 car. ...Up until about 1979-80.
And it was probably a subcompact econobox or a POS Dodge.
The Family Truckster: Station wagon! Ginormous gas guzzling station wagon. Well at least in the early 1970s.
My dad had a pinto. Two parents & three kids to anywhere. Till 1985. Then he got a truck and momma got the pinto till it died.
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Aren't tiny houses the portable trailers basically? Not exactly the same SFH they had in the 50s right? They don't look like Levittown to me at least.
Varies. I've seen it done with a large shed with a porch, and a mattress in the "loft". 350 square feet. Depends upon just how extreme you are willing to get.
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Housing, childcare, healthcare, and education/student loans are what's driving the noticeable decrease in standard of living. In the 50's you didn't need a college degree to get that job that guaranteed a middle class income. Today we all know you almost have to. Part of it is just simple competition where there are just more people with degrees now and automation and other efficiencies have led to an unequal growth in opportunities in stride with growth in population. Part of it is the blue collar manufacturing jobs and even say call center jobs are being outsourced to other countries leaving a hollowing out between white collar and fast food/retail.
Living in a reasonable house, not having children or health problems (easier said than done of course), and not going to (or paying for) college solve the first part pretty quickly. Having a job that doesn't require college education solves the second part. Being creative solves not hitting any of what I just said.
My GF and I live in a ~1000 square foot house built in the 60s (and well maintained, not "decrepit" like you imply all old houses are) in a town that grew 87% from 2000-2010. PITI is about 20% of our take-home pay.
We have no children, and no serious health problems (we've each had a very-warranted emergency room visit in the past 5 years, but those were each <$500/visit). I think our health insurance together is about $200/month and covers routine stuff.
I attended three semesters of college with no money out of pocket (scholarships with a bit of parental help). She attended half of one semester before she left, and is still paying off that (relatively small) student debt. Neither of us have a degree of any kind.
I work in IT, and she's a traveling self-employed photographer in a very very niche market.
We have a household income above the US median, and above median in our area. And our income will only go up with time (especially hers). We have what I consider a pretty damn luxurious life (3 bedroom house, two cars, dogs, travel, fancy home-cooked food), and a a respectable savings rate even by Mustachian standards. Well above the 1950s norm.
We could definitely get by on only one income if we wanted to. FIRE aspirations would be significantly worsened, but our standard of living would remain pretty great. Chronic expensive health problems are really probably the main thing that could sink a ship like ours if we were restricted to one income.
Oh I definitely think it's possible. And I didn't mean to imply all old houses are falling apart. But as you noted as DINKs your situation isn't really the one we are trying to draw a comparison to. You don't have the childcare expense even though both of you work and you don't need to get drawn into the trap of chasing more costly housing because of school district.
while my 1950s house isn't really dumpy and falling apart it will no doubt be razed and a 4000sf mcmansion will replace it once I sell. That is what is being done here because that's what people want/expect/can't live without even if it is for a smaller family and in the same school district. So its more for ascetics and to impress and keep up with the Jones as well as live what is precueved to he a middle class life regardless if financials. Probably the biggest things that propelled the current middle and lower classes to want and expect so many things now is availability of credit and shiney pretty things on TV. Both things uncommon in the 1950s.
When I was looking for a house last spring, we almost landed on this 50s-build little blue 800 square foot 2/1 for ~$90k. Someone nabbed it before we could make an offer and knocked it down to put a 2700 square foot, 2 car garage house on it and it's now for sale for $475,000. I don't get it. And a house that big looks really stupid on such a small lot.- 1 car. ...Up until about 1979-80.
And it was probably a subcompact econobox or a POS Dodge.
The Family Truckster: Station wagon! Ginormous gas guzzling station wagon. Well at least in the early 1970s.
I've still got my early 90s equivalent! (http://i91.photobucket.com/albums/k317/mooseteeth/2014-07-25183746_zpsdce3b5a8.jpg)
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while my 1950s house isn't really dumpy and falling apart it will no doubt be razed and a 4000sf mcmansion will replace it once I sell. That is what is being done here because that's what people want/expect/can't live without even if it is for a smaller family and in the same school district. So its more for ascetics and to impress and keep up with the Jones as well as live what is precueved to he a middle class life regardless if financials. Probably the biggest things that propelled the current middle and lower classes to want and expect so many things now is availability of credit and shiney pretty things on TV. Both things uncommon in the 1950s.
Housing size is fascinating to me. I grew up in a house that was a... lot of square feet. Probably well over 2000 above ground square feet?
We're buying a house that is still relatively large, I think about 2000 total finished square feet including the basement. But what is crazy is how many houses are so much bigger than this place.
I don't think it takes much in absolute dollars to have the same standard of living. Maybe 50K outside of HCOL metro areas? That number may be way too high, I really don't know.
But how would you actually replicate that lifestyle? If I go to the hospital, am I going to refuse the CT? Opt for the surgery with a huge incision instead of a couple small holes that quickly heal?
On housing, do developers even build 900 sq. ft. houses anymore? Due to building codes, I can't opt of new but costly features like integrated fire alarms. Then there's resale. I may be perfectly fine with a 2 bedroom home, but these days that's going to dilute your pool of buyers and the price they're willing to pay right?
We clearly cannot live in 1950 now. But that does not mean we cannot look into the differences in expected lifestyle between then and now and look to see how much more expensive (or less) the same type of lifestyle of luxury is now vs then.
The main reason I am curious about all this is that I see a lot of lamenting how expensive everything is nowadays. How you can't make it. Etc. I expect however if you were to live the same level of luxury that people had around 1950, the income required to sustain that in 2016 would be much lower than the inflation adjusted equivalent was in 1950.
The problem I have with CPI is it doesn't really account for this and instead assumes the new levels of luxury are "normal" and so inflation basically incorporates level-of-luxury inflation by setting newer luxuries as the expectation.
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But how would you actually replicate that lifestyle? If I go to the hospital, am I going to refuse the CT? Opt for the surgery with a huge incision instead of a couple small holes that quickly heal?
It isn't "refuse the CT". It's "ask the doctor if the CT is really necessary." In many cases they do it to be "complete" or to provide a liability trail. In many cases they know the answer without the CT. The whole "get a barrage of tests regardless of cost" is a big part (but not all) of the US health care problem. If we spent the money like it was ours instead of like it was coming for free from our insurance companies... I think we'd be better off.
As to incision vs laproscopic scars... Some things do better with one vs the other. Laproscopic techniques are awesome, but my Dad complained they were too broadly applied. For an appendectomy he'd ask "would you rather have 3 two inch scars in your belly or one 3 inch scar below your bikini line?"
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But how would you actually replicate that lifestyle? If I go to the hospital, am I going to refuse the CT? Opt for the surgery with a huge incision instead of a couple small holes that quickly heal?
It isn't "refuse the CT". It's "ask the doctor if the CT is really necessary." In many cases they do it to be "complete" or to provide a liability trail. In many cases they know the answer without the CT. The whole "get a barrage of tests regardless of cost" is a big part (but not all) of the US health care problem. If we spent the money like it was ours instead of like it was coming for free from our insurance companies... I think we'd be better off.
As to incision vs laproscopic scars... Some things do better with one vs the other. Laproscopic techniques are awesome, but my Dad complained they were too broadly applied. For an appendectomy he'd ask "would you rather have 3 two inch scars in your belly or one 3 inch scar below your bikini line?"
That's a valid point, but I'm saying in general many medical advances done today do save lives and they cost money. Regarding the surgery example, maybe things were different previously, but my 3 scars are nowhere close to 2 inches. A few centimeters and only one is even remotely visible 3 years later.
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Replying to subscribe--this is certainly an interesting discussion. DW's grandparents raised 8 boys in a small house.
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in general, this topic fascinates me. It's something I've thought a lot about over the years. Middle class folks in the 50s/60s thought they had things REALLY GREAT. And today a vast majority of (non-mustacian) people would be horrified to live without much of what we consider "necessities."
That's why I am curious about this subject in general, too.
Horrified is right. People would feel as deprived as fuck. The problem is way too many youngsters watched all the seasons of "Mad Men" and think that life was all hunky-dory.
I actually collaborated (Liar! All you did was send him an e-mail!) with Living Stingy about this topic:
http://livingstingy.blogspot.ca/2016/03/1960s-work-ethic.html (http://livingstingy.blogspot.ca/2016/03/1960s-work-ethic.html)
On a sidenote: I bet this woman in the UK who lives every day like it's 1940 is rich as hell!
http://www.dailymail.co.uk/femail/article-3467851/1940s-obsessive-eats-rations-sleeps-air-raid-shelter-dreams-traditional-housewife.html (http://www.dailymail.co.uk/femail/article-3467851/1940s-obsessive-eats-rations-sleeps-air-raid-shelter-dreams-traditional-housewife.html)
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Ender - great topic.
As others have pointed out, there's so many things today that are different that it's hard to do an apples to apples comparison.
Also, inherent to the thread is the question "what's middle class"? IN a very basic sense you can define "middle class" as "around the median (ave)". But there are dragons here too - suppose real compensation doubles (which is has since 1950) - "middle class" is now able to afford so much more of everything then they could before. Since your question is "how much money would it take to reproduce the same standard of living as 1950" I believe we should consider what an average ("middle class") person would be able to afford in 1950.
A few other things I've encountered:
IN 1950 the laborforce participation of men 65+ was 47%. Today it's 21% This is largely due to the fact that the average retirement age is currently 62.
In 1950 about 1/4 of those 65+ were considered to be living in poverty. Today it's about 10%.
The average work week has dropped from 40 (1950) to 39 hours (2014)
In 1950 the average family spent 30% of its budget on food. Today it's about 13%
Medicare did not exist until 1965
traditional IRAs did not exist until 1974
401(k) plans did not exist until 1980
average real-adjusted SS benefits: $321 (1950) vs $1,277 (2010)
Pensions covered roughly 1/4 of workers (1960) vs 20% (2010)
Commercial air travel was basically non-existent in 1950. So was the interstate system.
Median life expectancy at birth for white males was 66.3 (1950) and 76.3 (2015)
Median life expectancy at age 60 for white males was 75.7 (1950) and 81.5 (2011).
Average new-construction home size 983sqft (1950) vs 2,521sqft (2015) - a 2.6x increase
Average family size: 3.54 (1950) vs 2.54 (2015)
Median household income (adjusted to 2015 dollars): ~$24,000 (1950) vs $51,900 (2015)
Lowest tax bracket was 17.4% (1950) vs 10% (2015) - note, i have no idea how deductions were done in 1950, and can't comment on average taxes paid.
So what can we say from this list of facts & figures pulled off the internet?
In 1950 a 'typical' family would most likely have 2 children and earn around $25,000 (in today's dollars). They would live in a 1,000sqft home and be taxed at 17.4% (but no idea about deductions). There was no medicare available. SS existed but payouts were low for someone retiring in 1950 for two reason; i) the program was still being phased in and ii) SS payouts are calculated both on wage growth and inflation, so todays payouts reflect that. There's about an even chance the breadwinner of this family would still be working after age 65, and he could expect to die 6 years sooner. They might have a car but travel more than a few hundred miles from their home would be very rare.
In contrast, a 'typical' family in 2015 would have 1 child and just over twice the income. Tax rates for median-families are lower and SS payments are higher. There's more of a social safety net in place (e.g. medicare). They probably own at least one car, if not two, and long-distance travel is affordable and available to them. Chances are they will retire before age 62, and be less likely to be in poverty when they do retire.
Note: I started referencing all the sources I used, but this got too long. Either believe me or not, but most of hte facts and figures come from my friend FRED and the Bureau of Labor Statistics.
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Awesome list, nereo. Perspective.
I've tried to explain "In 1950 the average family spent 30% of its budget on food. Today it's about 13%" to folks. People do whine and complain about the ridiculous cost of food. And it's dirt cheap now in comparison. Maybe it's how many days they go out to eat a week.
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All these gloom and doom threads about "everyone makes less" or "can't provide for family the way you used to be able to" makes me wonder:
- How much money would you actually need now to live with the same standard of living as 1950?
- What would the additional costs be, that didn't exist then (for example cell phones)?
- What are the additional luxuries/needs that people include as mandatory now that were not in that time (level of healthcare? home size? etc)?
Yes 1950 is arbitrary.
My biggest problem with using the CPI is that it doesn't keep standard of living constant. It adopts an approach which they call hedonic quality adjustment. Which attempts to account for situations like TVs got cheaper but better and the overwhelming majority of consumers still purchasing them.
It does not, however, effectively take the level of luxury in 1950 and keep it constant - it adjusts, based on what people are purchasing.
I think you have this backwards. Hedonic quality adjustments are for trying to increase the accuracy of quality of life measures . If you take the average wage in today's dollars in 1950, which implicitly implies using hedonic adjustments, and subtract it from today's, you will find a dollar value of the real increase in standard of living.
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i think nereo has summed it up pretty well. we have it way better. so we can stop complaining about how much more it costs now.
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I think there is a psychological factor that has not yet been mentioned.
Most people in the 1950s had some exposure to the Great Depression. They either lived through it or they lived with parents that lived through it.
My parents were very young during the depression, but that said: I believe it greatly affected their ways of thinking. They understood what it was to be devastatingly poor. Looking back, I think we were pretty well off. And there were some areas where it was apparent. (We had a big house, for example.) But having lived really poor, my parents were really frugal in many ways -- even after they had obviously "made it."
* rarely ever ate out. When we did, it was a big deal. And even then, it would be Luby's cafeteria.
* family vacations were one or less a year. We always drove. We never stayed in anything nicer than Holiday Inn.
* there were some rooms in that big ass house that sat unfurnished for years
* bought cars once and ran them into the ground. (I just sold Dad's 1990 Blazer.)
* to the day dad died, he mostly watched a 13 inch black and white TV with rabbit ears
* never bought into the social scene
* etc.
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I think you have this backwards. Hedonic quality adjustments are for trying to increase the accuracy of quality of life measures . If you take the average wage in today's dollars in 1950, which implicitly implies using hedonic adjustments, and subtract it from today's, you will find a dollar value of the real increase in standard of living.
This is why I want to avoid CPI entirely - I want to say, "what is the cost in 2016 of living at the standard of living in 1950."
Using CPI (or inflation, calculated from it) implicitly adjusts for quality/standard of living in a way which causes what I think are misleading results. If inflation adjusted wages in 1950 were $50k/year and now are $45k/year, what meaningful conclusions can you draw?
It does not automatically mean our standard of living now is worse for the same income. Making $45k/year in 2016 might actually be a considerably "better life" than $50k (or even higher) inflation-adjusted in 1950.
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This is why I want to avoid CPI entirely - I want to say, "what is the cost in 2016 of living at the standard of living in 1950."
I think the best way of answering your question then is to approximate (to the best of our abilities given the changes in our culture) what a 'typical' family in 1950 would have.
From my list they would be a 4 person family living in a 1,000sqft home (or slightly smaller) and own at most 1 car. They wouldn't take any vacations that involved air travel or going more than a few hundred miles from home. One parent (almost certainly the mother) would stay home and by necessity the father would work until his mid-late 60s. Adjusting for increases in life expectancy I think it's fair to say that he would have to work into his early 70s today.
Regarding the "other" things that are common today but didn't exist in the 1950s, like cell phones, laptops, digital cameras - that's a much harder distinction. One would have to look at what percentage of a family's income was discretionary spending in the 1950s... FRED shows that real disposable (https://research.stlouisfed.org/fred2/series/DSPIC96) (not discretionary) income has gone up from ~$2k in 1960 to $12.5k in 2015, a 5x increase. Statistics on discretionary income dating back before the 1990s seem hard to come by, though I expect they've followed similar trends. As noted food has become a smaller portion of our budget, and tax rates are lower.
I did find that shows we spend roughly the same % of our budget on "entertainment" in 2003 (about 5%) as we did in 1950 (about 4%) - given that real earnings are just over 2x today what they were in 1950 this is a considerable increase in absolute dollars spent on non-essentials. (http://www.bls.gov/opub/uscs/[/url)
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I think you have this backwards. Hedonic quality adjustments are for trying to increase the accuracy of quality of life measures . If you take the average wage in today's dollars in 1950, which implicitly implies using hedonic adjustments, and subtract it from today's, you will find a dollar value of the real increase in standard of living.
This is why I want to avoid CPI entirely - I want to say, "what is the cost in 2016 of living at the standard of living in 1950."
Using CPI (or inflation, calculated from it) implicitly adjusts for quality/standard of living in a way which causes what I think are misleading results. If inflation adjusted wages in 1950 were $50k/year and now are $45k/year, what meaningful conclusions can you draw?
It does not automatically mean our standard of living now is worse for the same income. Making $45k/year in 2016 might actually be a considerably "better life" than $50k (or even higher) inflation-adjusted in 1950.
I think if it were the case that we made 50k today and 45k in today's dollars in the 1950s you could safely draw the conclusion that we are worse off in terms of standard of living. I'm not going to look it up but I suspect the average 1950s wage is something like 12000/yr in today's dollars, or less.
Where most of the confusion happens, say with comparisons of household income between today and the 1980s, is that household composition is much different. Does it make sense to compare a 50/50 single person / married split to a 30/70 single/married household split? Not really, and those that do usually have a political bone to pick.
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I think if it were the case that we made 50k today and 45k in today's dollars in the 1950s you could safely draw the conclusion that we are worse off in terms of standard of living. I'm not going to look it up but I suspect the average 1950s wage is something like 12000/yr in today's dollars, or less
See, I don't feel this is true at all.
I think that over the last 65 years the expectations for what is "worse off" has changed dramatically. The reason I started this thread is because I think that if we were to as best possible reproduce the standard of living we had in 1950 (or 70, whatever) that it would be considerably easier to afford now than it was then.
People constantly talk about "stagnant wages" and other stuff like this but I don't think that properly accounts for actual quality of life. Expected quality of life? Sure. But actual? I don't think so, partially because of how CPI is used to calculate inflation.
Median inflation adjusted income in 1950 was $32,761.88 (using $3300 in 1950 (http://www.mybudget360.com/cost-of-living-2014-inflation-1950-vs-2014-data-housing-cars-college/)).
This pdf (http://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf) has some interesting charts. This one in particular is interesting, here:
(http://i.imgur.com/FeCbxZS.png)
Where most of the confusion happens, say with comparisons of household income between today and the 1980s, is that household composition is much different. Does it make sense to compare a 50/50 single person / married split to a 30/70 single/married household split? Not really, and those that do usually have a political bone to pick.
I'm not convinced this is very compelling. Again, I am purely curious about income required in 2016 to sustain normal a normal-ish lifestyle in 1950.
If anything, I would expect current family composition makes it easier to afford the same standard of living as was present in 1950, because more people are not having children and having them later when they do so.
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I think if it were the case that we made 50k today and 45k in today's dollars in the 1950s you could safely draw the conclusion that we are worse off in terms of standard of living. I'm not going to look it up but I suspect the average 1950s wage is something like 12000/yr in today's dollars, or less
See, I don't feel this is true at all.
I think that over the last 65 years the expectations for what is "worse off" has changed dramatically. The reason I started this thread is because I think that if we were to as best possible reproduce the standard of living we had in 1950 (or 70, whatever) that it would be considerably easier to afford now than it was then.
People constantly talk about "stagnant wages" and other stuff like this but I don't think that properly accounts for actual quality of life. Expected quality of life? Sure. But actual? I don't think so, partially because of how CPI is used to calculate inflation.
Median inflation adjusted income in 1950 was $32,761.88 (using $3300 in 1950 (http://www.mybudget360.com/cost-of-living-2014-inflation-1950-vs-2014-data-housing-cars-college/)).
This pdf (http://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf) has some interesting charts. This one in particular is interesting, here:
(http://i.imgur.com/FeCbxZS.png)
Where most of the confusion happens, say with comparisons of household income between today and the 1980s, is that household composition is much different. Does it make sense to compare a 50/50 single person / married split to a 30/70 single/married household split? Not really, and those that do usually have a political bone to pick.
I'm not convinced this is very compelling. Again, I am purely curious about income required in 2016 to sustain normal a normal-ish lifestyle in 1950.
If anything, I would expect current family composition makes it easier to afford the same standard of living as was present in 1950, because more people are not having children and having them later when they do so.
Everything you're saying seems to indicate that you like hedonic adjustments, you just don't think there's enough of it or you would do it differently :)