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Fortunately, the economy wasn't broken in the 1960s, so he was able to get a white-collar job, buy a house, and have kids,[...] That doesn't work so well anymore. [...] We are well on our way to building a society in which you can't have a middle-class lifestyle as, say, an insurance underwriter or medical records clerk...

This statement just reflects a lack of understanding of what "middle class" meant in 1960. The standard of living of the American poor today is quite high, in many regards higher than the standard of living of the middle class in 1960.

http://www.heritage.org/research/reports/2004/01/understandi...

Fun fact: in 1960, a coffee maker cost $29.95 and the average household income was just under $5000. In 2010, the coffee maker costs $12.95 and the average salary is about $50,000.

http://www.dadsvintageads.com/viewitem.php/dadsvintageads/pd...




According to the BLS, the $29.95 that coffee maker cost in 1960 would be $221 in 2010 dollars.

I know your $5,000 vs. $50,000 figures are very rough, but $5,000 in 1960 would be $36,855 in 2010 dollars (and after taxes is not trivial, e.g. the personal exemptions that sheltered average families from the full and very high tax rates in the '50s were largely nullified by inflation over the next couple of decades before Reagan started a variety of corrections).

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He's saying that the quality of life improvement provided by a coffee maker in 1960 consumed 0.6% of the typical 1960 middle class salary vs. 0.03% of a typical 2010 middle class salary. A 20x reduction in cost for the same quality of life improvement for the middle class, in this example.

What additional insight do your numbers provide?

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I think it's easier to understand how much cheaper the coffee maker is today, both in terms of absolute price and what people can afford, if you translate it into today's dollars. "It would cost $221" is a lot more visceral than 0.6% of a putative generic annual salary.

One thing I added was "doing the math"; yummyfajitas didn't go that far (which is no reflection on his posting) ... plus I think it's useful to point out just how significant inflation has been over the years.

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The value of the percentage metric is that it allows you to compare a certain benefit in terms of the work it took to obtain it at different times. Given 2000 hours/year of work, it would have taken 12 hours of work to buy a coffee maker in 1960 vs. 0.6 hours of work in 2010.

To me, this makes the comparison exceedingly easy to understand.

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Yes, that metric is also good, although not as visceral as the one I used. It's also timeless whereas someone reading my comment 20, 50, whatever years from now wouldn't be helped as much.

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The big expenses - the stuff that you actually need and where most of most people's money goes - are housing, health care, and food. I doubt that's gotten cheaper. Probably the other way around.

Nobody really needs a coffee maker, but last time I checked a crappy house in many areas is still several times the average annual income.

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Food has gotten dramatically cheaper [1]. As far as housing, owner equivalent rent, not purchase price, is the relevant quantity. People certainly spend more on housing, but they also get more. Houses are bigger now, and have more amenities; for example, in 1960, about 80% of houses had flush toilets, today close to 100% do. I really doubt that health care available in 1960 is that much more expensive, though you can certainly spend a lot on medical treatments that didn't exist back then.

Elizabeth Warren's book, "The Two Income Trap" compares a median family of 1970 to one of 2000. She discovered that even though the modern family gets far more consumer goods than the older family (bigger houses, more cars, etc), they spent roughly the same or less on most major expense categories except tax (which went up considerably).

[1] http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data...

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Most "stuff" like : clothing, food, appliances, cars (i.e. most "stuff") got cheaper, but healthcare and housing went through the roof and more than offset the things that got cheaper.

The unfortunate thing is that healthcare and shelter are necessities ("needs") and not nice-to-have things ("wants").

Even more unfortunate is that health care in US is usually tied to the place of employment. Losing one's job could mean loosing health care and losing the place to live. When before it could have been not being able to afford good food, clothes, TVs, a car.

Consequently the 2 largest reasons for bankruptcies are : health care bills and mortgage payments, usually as a result of losing a job. (Of course, jobs are often "lost suddenly" no long after a "cancer" diagnosis).

An employer can excert quite a bit of control over an employee if they know the employee has a mortgage to pay, and all of his familiy is on that employer's insurance. An employee couldn't be "squeezed" as much if they didn't have a large mortgage and could walk out and his family could retain the insurance. This has been postulated is also the reason why per employee productivity has been going up since the 70s -- people simply have been putting in more hours and doing more work because they are afraid of losing their jobs.

(I don't have any data to back this up at the moment, downvote if you like).

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If health care circa 2010 (including things like MRIs and Viagra) is a "need", then every single person in 1960 did not have their needs met.

Also, if you have evidence that health care bills cause many bankruptcies, I'd be curious to see it. All I'm aware of is Elizabeth Warren's utterly flawed studies, unfortunately widely and uncritically cited in the media (she considers Michael Vick's bankruptcy to be caused by medical bills).

"(Of course, jobs are often "lost suddenly" no long after a "cancer" diagnosis)."

Losing your job != losing your insurance - look up COBRA. If you have no savings it might, but having no savings is a choice.

"This has been postulated is also the reason why per employee productivity has been going up since the 70s -- people simply have been putting in more hours and doing more work because they are afraid of losing their jobs."

On average, people do not put in more hours.

http://www.bls.gov/opub/mlr/2000/07/art3full.pdf

I don't have any data to back this up at the moment

Google is your friend.

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I'm not sure that chart shows that food has become dramatically cheaper. It measures food expenditures of families and individuals, but there were more and bigger families and fewer individuals in past times, so of course you're going to spend more on food when you're a 1950s family with 4 kids and one breadwinner than when you're a modern double-income couple with 0, 1, or 2 children.

I don't think you got Elizabeth Warren quite right. From http://motherjones.com/politics/2004/11/two-income-trap

"So we looked at the data for two-income families today earning an average income. What we found was that, while those families certainly make more money than a one-income family did a generation ago, by the time they pay for the basics -- an average home, a health insurance policy, a second car to get Mom to work, child care, and taxes -- that family actually has less money left over at the end of the month to show for it."

As for houses, you have to pay an arm and a leg to not live in a neighborhood that has crime problems that didn't exist in 1960.

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An average home is considerably bigger now than in 1970. Health insurance pays for more medicine than in 1970 and probably has a lower deductible as well. Two cars > one car. So that indicates we have considerably more stuff than we did in the past.

In any case, Warren shows incomes increased about 75%. Housing increased similarly, health insurance and other such goods increased less than 75%, and tax was the biggest increase at 140%.

(In the book, she presented the tax numbers in a strange way, completely differently from all her other numbers which confused nearly every reporter who wrote about the book.)

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Your presentation is kind of one-sided. Warren concluded that modern families are worse off for a reason, as outlined in the Mother Jones article.

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I cited Warren's data, which backs up my point: that everything besides tax has gotten cheaper between 1970 and 2000. She has an opinion which I didn't cite. So what?

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More than just an opinion. For example, your Panglossian summary failed to mention that bankruptcies are through the roof. Elizabeth Warren is not stupid. She didn't come up with that opinion for no reason.

I doubt anyone else is reading this anymore so I'm not going to go into detail. I just wanted to correct what you said so others wouldn't be misled. You can have the last word.

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"in 1960, a coffee maker cost $29.95"

Oh sheesh, do you think that that's what had to buy to make coffee rather than a percolator or a french press?

This can work both ways.

Fun fact: In 1960 a percolator cost $2.95, but in 2010 an espresso machine costs as much as $10,000.

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