Thursday, August 6, 2015

The Middle Class, The 1980s, And $100,000

There seems to be a certain meme running through some circles to try to convince folks that the middle class is not in bad shape. It runs as follows:
If you're still not convinced, consider this simple thought experiment from Washington Post reporter Matt O'Brien: "Adjusted for inflation, would you rather make $50,000 in today's world or $100,000 in 1980's?" Is that added dough enough for you to give up your flat-screen television, smartphone, and internet access? If it isn't, or if the answer isn't obvious, that would suggest living standards aren't stagnant or anything close to it.
The list left off ATMs, something I consider a necessity. No one in his or her right mind would trade superhero movies or television in the 1980s with contemporary offerings. Video games are certainly better now than they were in 1985. An average car today has all of the amenities of a luxurycar in the 1980s

I do admit to a certain nostalgia for a time when MTV actually played music videos, but YouTube has that covered. Looking through catalogs and making telephone orders was not an onerous undertaking, but Amazon is consumer's dream.

Going with the items mentioned in the quotation, smart phones are awesome. They are a computer and entertainment center that one can carry in a pocket. In 1985 the Sony Walkman or recently released Discman were portable. The IBM PC wasn't, and I couldn't have used one to post this on the Interwebs.

And yet, the comparisons produce a feeling of being distracted by, if not bread and circuses,  trinkets and treats Some things are more important than technological toys. To take one essential, the cost of new house in 1985 was $89,330. In 2013, the average new house cost $289,500. Hypothetically, $100,000 would have paid for the 1980s house. Fifty thousand dollars leaves one far short in 2015.

Although this thought experiment requires one to look backward, looking forward was cheaper in 1985.  The average college tuition for a public university was $1,318; the average tuition for private universities was $6,121. Harvard's tuition was $10,590. This fall average in-state tuition at a public university will be $9,960. Harvard's tuition and fees are $45,278.  The answer to above question might provoke less ambivalence if it were posed, "Would you give up your smart phone to pay for your child's college education?"

One can rightly assert that Americans obsess over first world problems and take for granted things that would have been luxuries thirty or forty years ago. That fact doesn't mean the American middle class is not getting squeezed when it comes to affording essentials.

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