by Jack
When we hear reports about the economy is almost without a pulse and that a record number of our adult children are living with their parents…it’s depressing. Okay, let me go on the record for the umpteenth time to say, the Obama Administration has poorly managed our economy and the recovery from the Great Recession. But, is there more to it, something pre-Obama, something about our own failures that set us up to be less than we could be today?
Let’s take a walk back in time to look at the 1950’s. Maybe that will give us a little perspective, so we may more fairly judge the government we have and where we’re at as a society?
During period 1950-1959, the average annual salary was $2,992, life expectancy for a man was just 65.6 years and women, 71.1. A loaf of bread cost .14 cents. The average home in California sold between $4500-$7000, and a really nice home sold for around $10k. A Pepsi cost .10 cents in 1953, a movie theater ticket was about .50 cents in 1955.
I had a stay at home Mom in the 50’s. My Dad worked 6 days a week in a service station he owned. An average work week for him…60 hours. Our cloned, tract-style house, was built during the big housing boom of 1946-48 when the G.I.s were coming back from WWII and almost everyone wanted to buy a home and start a family.
Our house was the standard of the day, two bedrooms and one bath. Heating was by a brick fireplace in the living room and a gas floor furnace located in the hallway between the two bedrooms and bathroom, we bought a window mounted swamp cooler to get us through the sweltering summer. Oh, and we had a single car garage that we actually used to park the car in! We felt pretty comfortable and did not want for much.
In 1954 my Dad bought a like-new 1950 Buick. It was the newest and best car we had ever owned up to that point. My Dad was extremely proud of that Buick and eventually it would be the car I learned to drive in, but the point being it was 4 years old when we bought it. My Dad would saying buying new is for suckers, (no offense to those who buy new cars) he just felt very satisfied living slightly behind the old automotive curve and getting a little more for his money in the process. Typical of people who grew up in the depression era.
We lived modestly, but I was never aware of any financial problems. We had everything I could want or even imagine wanting. When television became popular we had an early black and white TV. When color came out, well, it took a few years but eventually we had a color TV too.
Once a year in was given new clothes. Make that, new to me. They actually came from my cousins who had outgrown them. I didn’t mind because it was a great opportunity to wear really good stuff. For example, I had to wear Foremost jeans if my Mom bought them, but if they were from my cousins, I got Levi’s! Levi’s were a big deal to kids my age. Looking back I suppose that was my first experience with material things that had the power to defined you. All the cool kids I admired wore Levi’s.
My cousins weren’t necessarily better off than my family, but they did live closer to my Uncle Bill who was, and he owned a clothing store…thus they got the good stuff, and I got it next, albeit as hand-me-downs.
In the summer of 1956 I wanted to a pair [real] roller-skates, black leather boots with wood wheels, for our local roller rink. Such things defined skaters and raised your coolness factor.
But, the skates cost $30, so we (Dad and Mom) came up with a plan. My Mom got me up 5 a.m. and drove me to the orchards outside Yuba City. Along the road there were large signs that said, “Pickers Wanted” or just “Pickers.” I chose a plum orchard because they were paying .25 a lug box. I was assigned 6 trees and a ladder… and that was my first job. I was not quite 9 years old. Can’t do that today, can you?
It was hard work, but it only took me 3 days to earn the money for the skates and it made those skates something really valuable to me. A good lesson was learned.
Picking fruit became a regular summer job for a few years. Almost everybody I knew picked fruit at some point, because it was a good way to add money to the family budget. We did not feel like an underclass, it was just a good deal. Going in to the late 50’s I noticed more and more families coming from South of the border to cash in too. They were suddenly here for the summer then gone, back to Mexico. Prior to this time our crop pickers were a mix of derelicts/transients, poor people, kids like me, some stay at home Mom’s and the multi-state, grapes of wrath types that were our migrant workers. Only a few were Mexicans. I never saw a black family picking, but I’m sure there must have been.
Now fast forward to 2013.
You won’t find kids working anywhere today, but somehow they have lots of great stuff, mountin bikes, racing bikes, expensive skate boards, fancy cell phones to trendy new I-Pad tablets. Seems like there are massive flat screen tv’s in most homes. And speaking of homes…today’s homes are well over twice the size of homes built in the late 40’s and 50’s like I grew up in. Most families have a new car or one that is less than 3 years old and a good second car, but both parents work. The average income in 2006 was $50,233 (US Census) thats way up from the 50’s and inflation adjusted dollars. But, it takes more than two average incomes to buy a modern home in CA. Back in the early 50’s, slighly less than one income would do it.
The median home price in California prior to the Great Recession was $546,000! Today that median price has backed off to $350, 706, but it’s still not very affordable to the average person. A family household earning $75k before taxes rarely qualifies to buy a $350,000 home. (CA Assoc. of Realtors) No wonder adult kids are staying home with their parents longer! We’ve priced homes out of reach!
In 1956 the average movie ticket was .50 cents – today it’s $10??? Ouch! In 1956 gasoline sold for .23 cents a gallon, sometimes cheaper. Today it’s around $3.72 a gallon. However, if you look at inflation adjusted costs, that .23 cent gasoline should ONLY be selling for $1.97. (I wish) A .50 cent show ticket should be $4.29 today, not $7.50-$10. Theater popcorn was 29 cents back in 1956. Inflation adjusted it should be $2.49, but it costs $7.50 for a large popcorn today. A .14 cent loaf of bread in 1956 should be $1.20 today and so it goes! it’s important to know that many basics have outpaced inflation, so the inflation C.P.I. is not perfect science.
And here’s something very, very, surprising…. minimum wage in 1956 was $1 and adjusted for inflation it equals $8.58 per hour today. However, the current federal minimum wage is $7.75 an hour, and in Ca it is $8 per hour. Hmmmm? That’s not what I expected to find. So at first glance it looks like the poor are in this one area are really worse off today. Ah, then I remember this low wage also comes with government subsidies and tax credits. Today’s welfare recipient with two kids gets paid an average of $17,500 a year, in terms of what they can buy. While working at minimum wage is $16,650. Hmmmm… Why work for minimum wage then?
But what about you and me who don’t get subsidies – we pay taxes to government to give subsidies to others. What kind of things are higher for us than inflation adjusted costs? A lot, too many for this short article, but I noticed that show popcorn is now over 400% higher than inflation adjusted cost. Theater popcorn is 1200% higher than the cost of home-made popcorn, but they tell us that’s to keep ticket prices down…okay, but ticket prices have also outrun inflation by a huge margin. Another…hmmmm.
Let me wrap it up like this. On one hand we have come to expect to more more fun stuff, more costly toys and we demand bigger and bigger homes, presumably to keep all our stuff in. Unfortunately, in the process of living large, we’ve heavily leveraged ourselves.
Living month to month with a ton of bills does not a stable economy make or a stable home life for that matter. Financial woes bust up as many marriages as adultery. But, the upside is, technology has made many very helpful gadgets… very inexpensive! The downside is, those gains are offset because the costs of many basics have gone way up like energy. Gasoline is sky-high (mostly because of government) and looking back at my theater example, well, the cost of entertainment is really high! A family of four will spend about $60 to see a movie, buy a few soft drinks and some candy.
Living in the modern world is a mixed bag isn’t it? Much is good, but it comes with a whole lotta bad! Overall our high cost of just living as we think we need to live has us in debt up to our eyeballs. So much for our insatiable appetite to have more fun stuff and a huge home with a 3.5 car garage to put all our surplus stuff in. That was stuff we had to have yet we rarely use. And forget parking cars in that big garage, cause its full of our stuff! Uh, does any of this sound remotely familiar?
We are clearly better off today in terms of owning things than we were in the 1950’s. But, the nagging question is, was it worth what we had to give up to get it? Could we actually be doing better, and by that, I mean being happier by living simpler and demanding less? It’s all relative to what you are acclimated too. We’ve wasted an awful lot on stuff and placed a huge financial burden on ourselves in the process. The dot com bubble, the energy bubble and housing bubble…we could have easily avoided these things if we were not so darn gluttonous and just a little bit more sensible and frugal.
We had a 1948 Woody station wagon until my parents saved to buy a 1957 Chevy wagon. My first new car was a 1972, 350 Pontiac Ventura hatch-back. Loved that car.
Never saw TV until 1956 when we returned from Japan and Germany and my dad was stationed at Ft. Lewis, Washington. They never bought a color TV. My first one was one my husband and I saved to buy in 1969.
Family fun was board games. After homework was done my brother, parents and I would play Monopoly, Sorry, Scrabble, and a dozen different card games like WAR! while drinking Kool-Aide and eating popcorn popped in a pan on the stove.
My worst memory is having to wear saddle oxfords instead of the in-style penny loafers, because they would last FOREVER!
Yup, it was a great childhood and I’m sad to see my grandkids communicating with each other and their friends with their new cell phones and on-line games instead of being able to play anywhere in their neighborhood.
Is the new really better, and at what cost no matter how much money went into buying it?
Great article Jack.
Americans born in the late forties and early fifties have certainly seen an explosion of stuff. Television was a neat invention but it introduced a greater opportunity for citizens to see how the rich and famous live and enticed us to want more stuff from the latest indigestion product to the brand new cars. Programs like The Millionaire and The Beverly Hillbillies gave way to Lifestyles of the Rich and Famous in the eighties and before we knew it too many of us were trying to live large on credit. All of that consumerism has added to our ills both financial and social but high demand usually leads to lower prices…so why are we paying so much more for basic stuff?
Energy prices, as you pointed out, play a large part in making everything more expensive. Every workplace is temperature controlled at high energy prices. Every factory pays for high energy to first make and then deliver goods to market. Consumers are paying higher energy costs to drive and heat and cool our homes than we need to be. The high price can be traced to government and political factors. Some of it is avoidable but we lack the political will to allow the market to work.
The big elephant in the room is the high cost of the ever growing federal, state, and local bureaucracies.
The American people work and pay a very high price indeed for overseers and paper pushers who ride in the cart and add nothing to grow the wealth of the nation. They are paid well to participate as spenders in the circular exchange system. As a nine year old picking fruit you contributed more directly to the economy!
The federal government in particular was never supposed to become so involved in our lives, nor was it supposed to become so complex and expensive. The concept of federal aid to the states blossomed since the early fifties:
And according to that same article:
The “work”, and I use the term loosely, to deliver and monitor all of these grants and programs is nonproductive busywork that the people must work to support.
Is it any wonder that the public sector, many of whom vote to elect big government politicians, make approximately 16% more in salary and benefits that their public sector counterparts?
State and local bureaucracies add more weight to the load the wealth producing private sector must bear. This is all unsustainable but it is also immoral and totally against the principles on which our nation was founded.
The people are responsible for their own debt and their propensity to want free stuff from government. We have become dumb enough to think that government has its own money. The federal reserve has been more than willing to further the grand illusion. But the bubbles were largely a function of government regulation and intrusion. If not for the wrenches they continue to throw into the works our nation would be in much better shape and our people would too.
“Sensible and frugal” would be good, not only in how we spend our own dollars but in how we allow our government to spend and distribute our dollars.
Sure wish we could have the opportunity to see what would happen if we could rid ourselves of the big bureaucratic burden.
Welfare is a program that, if it were working, would see fewer families in need as they are uplifted and returned to full productivity and self reliance. Instead it has grown through the years to become a full blown dependency factory! CATO again:
And then along came LBJ:
I thought this was a very fair and balanced article.
Jack: “Today’s welfare recipient with two kids gets paid an average of $17,500 a year, in terms of what they can buy. While working at minimum wage is $16,650. Hmmmm… Why work for minimum wage then?”
The thing is that this isn’t necessarily an either/or choice. The majority of children whose families receive welfare have working parents. So a parent working for the minimum wage is definitely eligible for welfare, and would most likely choose to do both since either option by itself is not enough to pay the bills or keep food on the table.
Still, you are right that it’s silly that a person can make more from welfare than from a minimum wage job…however, the lesson to take from that is not that welfare is too generous, but that the minimum wage is too low. I am glad you were surprised to learn that the minimum wage today is lower than it was in 1956–I think if more people knew this one simple fact, they would be a lot more outraged than they already are.
While certainly the rise in materialism since the 50s cannot be ignored, I am not sure how exactly we can craft policy to reduce Americans’ love of luxury. What we can do is raise the minimum wage to match inflation.
Once more, as Minimum wages go up,so do cost of goods, ALL goods and services. It is a cycle that cant be remedied by welfare assistance.
The Food Stamp Program, administered by the U.S. Department of Agriculture, is proud to be distributing this year the greatest amount of free Meals and Food Stamps ever, to 46 million people.
Meanwhile, the National Park Service, administered by the U.S. Department of the Interior, asks us “Please Do Not Feed the Animals.” Their stated reason for the policy is because “The animals will grow dependent on handouts and will not learn to take care of themselves.”
Thus ends today’s lesson in irony!
Read more common sense at the blog, The Grumpy Economist:
It is truly ignorant to go for the bigger number without understanding A) The negative affect on jobs and the cost of goods, and B) The fact that raising the minimum wage does not address the problem of the growing numbers of needy working poor.
If a solution to an income problem causes higher unemployment for the unskilled worker and higher prices for goods they must buy what real good have we accomplished by raising the minimum wage?
Another very good article asks and answers a related question:
The policies we have in place now will make things much worse when inflation really kicks in. The changes we need are in Washington. Changing the minimum wage will not create more jobs it will add to the dismal jobs picture we already have.
It does create a nice distraction for Obama, the author and leader of the worst recovery in history!
The following are now our top three employers. All are for part-time jobs. Where are the manufacturing jobs? Our country is doomed if our country’s future is based on the consumption of Big Macs.
1. Wall-Mart
2. McDonalds
3. Taco Bell
Harold: “Once more, as Minimum wages go up,so do cost of goods, ALL goods and services.”
The problem is that the minimum wage has not kept up with the cost of goods and services. In fact, the real value of the minimum wage has declined since 1968. What min. wage advocates are asking for today is for the scales to be balanced. We cannot have a healthy economy while the minimum wage goes down in relation to the cost of living.
“It is a cycle that cant be remedied by welfare assistance.”
Right now welfare assistance is being used to remedy the problem of low wages. 80% of Wal-Mart workers are on some type of government assistance. I ask this every time, and I never get an answer: why are Republicans not outraged that the largest employer in the country is asking the government to pay their employees for them? That is a massive hidden subsidy for Wal-Mart. It is not just welfare to the poor, it is corporate welfare.
Wal-Mart could easily raise wages to a healthier level and still make billions of dollars in profits. They wouldn’t be “forced” to raise the cost of anything if they were willing to trim their profits by a relatively small amount. The company could pay its workers enough to where they don’t have to go on welfare. Isn’t that what you want?
“The Food Stamp Program, administered by the U.S. Department of Agriculture, is proud to be distributing this year the greatest amount of free Meals and Food Stamps ever, to 46 million people.”
See above. How do you not see that this is related to the decline in wages?
“Meanwhile, the National Park Service, administered by the U.S. Department of the Interior, asks us “Please Do Not Feed the Animals.” Their stated reason for the policy is because “The animals will grow dependent on handouts and will not learn to take care of themselves.”
Thus ends today’s lesson in irony!”
Yeah, now you’re just being an asshole. It’s sad that comparing people on welfare to dependent animals is now so common in conservative circles. How did that work out for you last November?
“If a solution to an income problem causes higher unemployment for the unskilled worker”
It doesn’t.
http://aneconomicsense.com/2013/03/06/the-impact-of-increasing-the-minimum-wage-on-unemployment-no-evidence-of-it/
http://www.econbrowser.com/archives/2013/02/minimum_wage_an.html
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/
http://www.policymic.com/articles/41325/minimum-wage-bill-obama-s-9-proposal-won-t-increase-unemployment
http://www.newyorker.com/online/blogs/comment/2013/02/the-case-for-a-higher-minimum-wage.html
http://www.epi.org/publication/briefingpapers_bp150/