That article doesn’t make sense, todays kids suffer alot. Go to a junior high school and look at all the bullying, cliques and self loathing that exists there, kids are not overprotected at all. In victorian ages there was a theory that holding your baby would cause him/her to be spoiled, this is just a modern offshoot of that theory (which is all it is). The fact that kids live in an environment of superficiality, self hate and lack of direction probably plays as much if not more of a role than overprotection.
As to the original question, it is probably in part economics
According to The Frugal Gazette III in the intro the author says that in 1948 social security and federal taxes took 2% out of people’s paychecks, that number is now about 25%. She also says the tax rate for people w/o dependents is the same though so that may nullify that whole point.
There is also the cost of college. Some people enter the world with 15000-20000 in loans, which is $150-200 a month to pay off.
There is also real estate which is higher for comparable places. Medical care is also higher and less likely to be paid for by employers.
So assume someone in 1948 vs someone in 2005 had a job. Assume the person in 2005 made more in real dollars ($3000 vs $2400 a month, all assumptions). The $3000 a month person will also pay $200 in student loans, $150 for healthcare (and probably some extra wage reductions to pay for their healthcare via the corporation), an extra $250 month for comparable rent.
They also pay more in taxes
http://www.atr.org/talkingpoints/110101taxfacts.html
Government Takes A Bigger Bite. Tax Bite In The Eight-Hour Work Day Grows. The typical worker now toils nearly three hours out of an eight-hour workday just to pay taxes. In 1996, the tax bite in the typical 8-hour workday was 2 hours and 47 minutes. By comparison, in 1945, the tax bite in an 8-hour day was 1 hour and 59 minutes. (Tax Foundation).
So that is a tax increase of 40%, from about 25% to 35%. So the person who makes $3000 will pay another $300 in taxes.
So $300 in taxes, $200 in student loans, $250 extra in rent, $150+ in healthcare (not including deductions from wages to pay for higher premiums which may add nother $50-100) and it adds up to $900-1000 less in real dollars.
There is also (this is a guess) the 401(k) factor, in the 50’s maybe it was assumed the corporation would give you a pension, now you need to invest independently and put away 10% of your income. But even if hte corporation invested a pension they’d take it out of your wages so it would be the same.
On the other hand alot of things are cheaper and more durable now. Appliances, cars, home electronics, etc.
So I don’t know. But its worth pondering that its not just splurging on Tommy Jeans that causes todays 20 somethings to be poor.