Most of these arguments are actually forgetting one important point:
There’s a lot more people now than there was before, almost a 100 million more people in the US. While it seems to be a reasonable assumption that since an average person is both a worker and a consumer then the economy would scale linearly with population, but we don’t really have all that much evidence that this goes for any population no matter how large.
Even if the standard of living and adjusted-for-inflation income has gone down and I don’t think that it has, Occam’s Razor directs us that it’s most likely because the additional population made every one of us just a little more useless on average.
I think it’s interesting that the thread title is about relative income - which to me means: how much of the wage of an average worker/employee is used to buy food, housing, clothes (all of average quality, not raised expectations for better cars and bigger houses!) - and how much is left over? Or, as historians often like to put it: how many hours does an average guy have to work to buy 1 loaf (kg) of bread, how many years’ income to buy a house?
But what’s mostly been cited are the absolute income figures - how much money people take home, without adjusting for taxes. I know in my country, the relative price for food has fallen drastically in the last 50 years, but the relative price for rent has skyrocketed - today, 1/2 to 1/3 of the average income pays rent, but only 10 to 20% pay food; in the 50s and 60s, rent was maybe 10 to 20%, but food was over 50%! So saying that eggs used to cost 5 Pfennig, but in the 90s they cost 35 Pfennig, which is an increase of 300% (?I’m not good at math), is missing the point of how much income people took home and had left over to buy eggs with.
Now, this article about libertarianism has some figures.
The OP already hinted at a few things - rising cost of health care (and still no sensible mandatory/general health insurance for everybody! - for me, that’s scandalous in a civilised country); rising cost for college (and 50 years ago, there were more jobs available without a degree) (and again, I think education should be free, part of the infrastructure of every sensible country; and yes, I’m vehemntly opposed to my state introducing tuition fees now at the universities) and similar changes mean that today, a family with two incomes barely scrapes by, whereas before, a family of a skilled worker/employee could live on one income comfortably.
Note, all this has nothing to do with the question of people having higher expectations, or complaining more. Unless you think that if the only new cars available have to meet stricter laws about safety (and pollution?), so the R&D (and electronics) makes them more expensive, buying more expensive cars means people have higher expectations, not that they simply have no other choice. (And buying a cheap used rust bucket costs more in gasoline and repairs.)
The usual consumer basket (used by statisticans) does change to reflect people different shopping habits, but that doesn’t mean that they assume the average person buys an Ipod each month. They put in a fraction each month for buying things like Ipods once a year, but 30 years ago, they had a fraction for buying a walkman, or LP player. Similar, while many people have a PC at home, that’s because it’s necessary to have the skills in todays world, and people don’t spend the 1000 $ a PC cost each month; they save up for one year, and then buy one, and keep it for 5 years or similar.
And not having health insurance, or subsidized housing, and many other small things do mean more burden on the individual family, so people are right to complain that things are getting worse (esp. considering where the money the govt. is cutting is going instead.)
I’m not sure I understand your argument here. You seem to be indicating that proportional income has nearly doubled (35k:71K), meaning we’re not any worse off…is that what you intend to mean?
Because the general thrust of the “decline in relative income” argument is that other costs have way more than doubled…thus offsetting the gain you indicate.
The other point that is lost is that single earner families is kind of a misnomer. The typical styy at home, care of the house and kids, wife/mother is working and is earning income, albeit indirectly. You don’t need to spend money on daycare or an in home caretaker for your kids. You probably don’t need the best dishwasher, no cleaning lady is needed to come every two weeks, etc. It is as much a lifestyle choice as anything. Both husband and wife want to work these days (not all the time of course, but it is certainly more true than in the 70s).
Better and worse off are subjective terms. All I know is, the OP quoted NPR as claiming that “dual-income families have less disposable income today than single-income families did in the 70s.” This claim is factually false (even after one corrects for price inflation).
Actually, I’m not sure you can say that yet. Your original post says that “disposable = gross - taxes, discretionary = gross - taxes - basic living expenses.” But this doesn’t seem to be a universally held definition. While I can find a few sites that agree with it, most of my googling seems to indicate that most people (even economists) find “disposable income” to be a synonym for “discretionary income.” That is: post rent/food/medical care/commuting.
And I’d be willing to bet that’s what NPR meant by it.
Given that, simply knowing that gross incomes for the two-earner today is about twice the gross incomes for the one-earner then isn’t nearly enough. Taxes may be about the same, but housing and medical expenses have risen at many, many times the rate of inflation since 1970. It wouldn’t suprise me if under a more typical definition of “disposable income,” that the claim is true. Heck, the single-earner income from 1970 wouldn’t pay my mortgage payment alone now, and I don’t have an extravagent house by any means.
One earner on average, as part of a two-earner household. You can’t compare the statistics directly. If you look at the link that poster provided, you’ll see that real wages for both single and double earning households have increased from 1975 to 2004.
I also find the NPR discussion to be a bit dubious. Thanks to Freddy the Pig for digging up the numbers.
There are two major things hitting today’s family’s disposable income, and that’s education and health care, as the OP eluded to earlier. If people can stay healthy and live in nice grade school districts, those two costs shouldn’t be too much of a problem. The only other costs I see that are skyrocketing is people’s willingness to pay for convenience.
How many cabs do people take in a given day? How many mocha chai lattes? How many people eat out every weekend? If people were more disciplined with their money and especially their credit cards, there wouldn’t be this feeling of a pinch in the public conscience. People have to be better managers of their choices.
I don’t think additional people are necessarily bad, their very much needed for a growing economy. More people means a bigger market, which means more opportunity to sell. More people also means more labor which makes wages more competitive.
Actually, what I’ve always found amazing is how the US economy has absorbed so many women workers without so much as a blip in the unemployment rate. I don’t have the figures in front of me, but when I was growing up in the 60s, almost no one I knew had a working mother. Now, I don’t know very many women (mother or not) who don’t work.
Just a note on terminology. Disposable income usually means income after taxes. Discretionary income usually meand income after taxes and fixed espenses. Is the OP sure they were talking about disposable and not discretionary income?
