ipomoeaandthestarstealers:joligreenredqueen:It’s Harder to Get Started Today:jhameia:imissedtumblr:
I told him that, although I agreed with him that young people should save more, there is also a strong case that it is much more difficult today for a young person to establish themselves financially as he did when he was a young adult.
He looked at me strangely. “What do you mean?” he asked.
So, I laid it out for him, piece by piece. Afterward, it occurred to me that the entire discussion might make for a good post here, particularly with some specific research to back it up.
Real wages Let’s start with income. In 1970, the average wage earner took home $312 per week (in 1982 dollars). In 2004, the average wage earner brought home $277 per week (in 1982 dollars) – and it’s still falling. That means that, once you factor out inflation, the average wage earner in 1970 brought home about 18% more than the average wage earner today.
Home prices Even if you adjust for inflation – and even if you take into account the crash of the housing bubble from 2007 to today – the median price for a home in the United States has gone up more than 50% since 1970. Remember, that number accounts for inflation, so what that number actually means is that the cost of a home requires 50% more of a person’s paycheck than it did in 1970.
Education prices The cost index of an average undergraduate education since 1970 drastically outpaces the growth of the Consumer Price Index. In short, disregarding inflation, the cost of an undergraduate degree today is roughly 30% higher than it was in 1970.
Other essentials In order to compete in today’s workforce, a young person often must have items – paid for out of their own pocket – that weren’t needed in 1970, including a cell phone, a computer, and home internet access. Often, when searching for work, it becomes very difficult for a young person to compete without these extra expenses.
So, to summarize, in order to have housing and an education comparable to what a young person had in 1970, they must spend 50% more on housing, spend 30% more on education, and do it all while earning about 18% less money. That doesn’t even include the extra expenses needed to compete.
I look at my own parents for an example. My parents purchased the house I grew up in for $20,000 – and that included seven acres of land. At the time, that was approximately what my father earned in a year. Today, if I were to purchase a similarly-sized house with seven acres of land, I would be spending well over $100,000 – significantly more than an annual salary.
My parents were also able to find good work without the cost of a college education. Today, the jobs they both had would be completely unavailable to someone if they did not have a college education, putting significantly more expense on the back of a young person today.
I’ve read many times that Generation X is the first group of Americans who have it worse than their parents. The numbers above illustrate that truism perfectly. What’s particularly galling about the rising cost of living (for middle classed U.S. citizens and legal residents) is that a BA is now a requirement for relatively low-paying, entry-level jobs that absolutely do not require special skills. Either institute subsidized higher education that makes it possible for as many people as possible to go to college or make employers stop requiring college degrees for jobs that don’t need them.
