Did you know that your grandparents were making just as much money as you in the 70’s? It may not seem like it but apparently it is true. A new study reveals that wage growth for the average U.S. citizen has been stagnant since 1970. We work more hours and for less money than our parents and grandparents did. How is this so when previous generations never made $30,000 or $40,000 dollars per year?
The United States economy may have grown during the 70’s, 80’s, 90’s, and 2000’s but the salaries of the middle class have not. The reason for this is inflation. Factor in inflation and wages have not grown in 40 years. The price of goods and services has been outpacing wage growth. Homes, automobiles, electronics, and food all represent a larger percentage of personal income today. A dollar today does not buy as much as it did in the 60’s.
Take a look at these statistics:
1970’s
- The average salary was $7,564.
- A quart of milk was 33 cents.
- A loaf of bread was 25 cents.
- A dozen eggs were 60 cents.
- A pound of ground beef was 80 cents.
2009
- The median wage was $32,390*.
- A quart of milk was $1.49.
- A loaf of bread was $2.00.
- A dozen eggs were $1.99.
- A pound of ground beef was $3.99.
Costs can vary for items depending upon your location and the food product. For example, premium breads can run $4 to $5 dollars. Eggs can get as high as $3.99 and leaner cuts of beef can run $5 to $6 per pound.
The point of this illustration is to demonstrate that wages have not risen at all when you look at their buying power. Individuals are making more money today than a generation ago but they are actually getting less for their dollars. As you can see, middle class Americans have struggled just to keep pace with inflation. The wealth that was gained over the past 40 years has trickled upward and not down to the average worker.
*The U.S. median wage was $32,390 per year, according to the most recent data from the Occupational Employment Statistics
Photo by: bigburpsx3
A graphic illustration of why investing in fixed income for the long haul is a bad idea.
The history of banking and governments is a history of fraud!
There’s also this thread that you might find interesting; perhaps we do make more today in terms of what our money buys, though we could surely buy more if not for the effects of inflation: http://mises.org/Community/forums/t/15824.aspx
I just checked it out Kevin. I think because the author takes prices back to the Great Depression that wages look higher.
The numbers are much worse when you factor in all the higher taxes (income, SSA, Medicare and sales) we now pay.
I agree Carl.
The way the economy is going with all the accumulated debt and deficit, it looks like it will only get worse!
True Mich! We have got to stop running up deficits.
Now I actually have a ready answer for those older than me when they start knocking my generation as being more self-involved and less ambitious!
LOL Matt/
This article is complete and total nonsense. My standard of living and that of most people I know is 10x that of 40 years ago. I am old enough that I remember paying a nickle for a Coke. I also remember not having a single TV (now I have like 7), a car with no features other than seats, no PC’s, no Internet, etc. etc. My house is far nicer and bigger than the one I owned 40 years ago. If you are not better off today than people 40 years ago, you are screwing up. Sorry.
I don’t think that more technological advances means that the average worker is better off.
Our grandparents didn’t have to stash away money in 401Ks and IRAs either. We really are worse off!
So true Kay! Pensions are much better for individuals than defined contribution plans.