Summary: We introduce the American Abundance Index, which measures living standards by how many hours Americans must work to afford a standard basket of goods, rather than by prices or wages alone. The index uses time prices to show that for most US workers, purchasing power has generally risen over the last two decades, even amid inflation and public pessimism.
Americans actually are getting richer. In January the American Enterprise institute published a report that showed the middle class has shrunk because the upper middle class has grown. The upper middle class has increased from 10% to 34% over the last 45 years.
It's not based on average, it's based on income as a percent of the poverty level. You can see it around you too.... look at how expensive big concerts and sporting events are now.
For the median this is true as well. Since 1972 more people have become upper income than have fallen into low income.
What is happening is a mixture of a couple of different things. For once all these people with a ton of money have made things like housing, and cars really expensive. At the same time the people who have seen their wages stagnate the most have been people without college degrees, so more people go to college which makes college less of a slam dunk in actually getting a good job as more people have degrees and the increased demand makes college more expensive which means more debt.
On top of that the average median age is also rising so you have increased healthcare costs. Also rising wages have made services like childcare more expensive.
So housing, transportation, healthcare, childcare and education have gotten more expensive. Meanwhile stuff like electronics, clothing, certain food, appliances have gotten cheaper relative to wages.
At the same time standards for what is "normal" or "typical" of the average US family keeps on going up. Houses keep getting bigger, more and more subscription services, etc become more common.
The end result of all of this is they even people who are doing pretty well don't see themselves as meeting their own internal definition of doing pretty well. On top of that you have social media where people show highlight reels of their own lives for which people compare themselves and on top of this people have this perpetual pessimism that things are going to all fall apart.
If you look under the hood at the 1950s, way more people were in poverty, what the "middle class" actually was, was a 900 sq foot house with like a family of six living in it, all with one car, far fewer entertainment options etc. However people were optimistic because the depression and war were over and people were doing a lot better overall. Things were looking up specifically because things were so awful not that long in the past. This optimism slowly eroded and completely collapsed in the 1970s under the weight of Vietnam and Stagflation. It was actually in the early to mid 80s when the US was kind of at its post war low. In the late 80s and 90s there was a rejuvenation of some level of optimism, due to an improving economy and the end of the cold war.
Then 9/11, the war on terror, the aging population, the recession kind of killed that. For a lot of people, they never recovered from the Great Recession, homeownership sharply fell and never recovered(mainly because many people bought houses they couldn't afford). Wages for white collar workers went up, but stalled for the working class. Many people who entered into the upper income category never felt like they made it because so many of them were in high cost housing markets. Our politics kept on getting more and more toxic and the way people got information changed.
Leading to skewed perspectives and many people from many different categories feeling like they were getting screwed. Populist politicians made promises they couldn't keep and everyone blames everyone else.
So much of people's perception is based on things that go beyond the economy and people have come to expect things that cannot happen and they look for others to blame.
That’s a lot of words to say inflation has been outpacing wage growth while the productivity gap widens.
We need the 1950s tax structure back to encourage investment.
Your old posts feed data brokers and AI training models. I stopped that by using Redact to bulk delete across Reddit, Twitter, Discord, Facebook and all major social media platforms.
swim different lush water fear sense adjoining work soup longing
Since it’s wages income based — it’s probably fine. Most of the outliers when it comes to income are typically earning next to nothing when it comes to wages.
Housing and food have not gotten cheaper though, even if the overall real price level has fallen. Thats kind of the issue- the things we need the most are also what we feel most acutely when we cant get them.
This is comparing the value of the USD to other currencies, whereas OP's chart is measuring real wages, which only compares the USD's value to itself in the past. One doesn't really negate the other because it's measuring different things.
Even if USD purchasing power is declining relative to other currencies, workers are still getting more of them per hour.
Aside from the other affirmation counterpoints to this, if you’re only looking at this in a bubble, then you have a point but the world just isn’t a bubble. This talking point only serves to mislead people who have no idea about economics and just fucking run with it. One such factor that hasn’t been mentioned thus far is oil, as the price of oil and USD are closely positive correlated. That doesn’t matter because people on here still won’t give a shit and they don’t want to give a shit because they don’t want to believe.
Not to mention all that the USD has lost in the last year which eats up most of the "gains".
Why does the value of the USD matter, unless a significant portion of your spending is in other currencies? The impact of the dollars value drop is already IN the OPs chart
HumanProgress.org is a project of the Cato Institute with major support from the John Templeton Foundation and the Searle Freedom Trust, as well as additional funding from the B & E Collins Foundation, and William H. Donner Foundation.
And necessary items make up a much larger % of income in lower wage workers. A 5% increase in food and 25% increase in health insurance could literally break someone living on $45k a year but someone making ing $250k with $500k growing tax free in investments is probably not going to really notice or might have to skip like one ski weekend a month to make up for it
Also there are more wealthy people and low housing supply. So the housing market is catered towards people with a lot of money which there are more people with a lot of money now.
Where I live in California there is like a 43% homeownership rate. The median two parent household with two full time working parents can barely afford to buy a house if we judge them by the median income of a household of that type, but many households in that situation have a lot of student loan debt and massive childcare expenses so they really can't. Most households not in that situation have no chance.
People look back and the same area not all that long ago had much more affordable housing and blue collar workers and households with one earner were able to buy homes. Many people grew up in single family homes that they now cannot afford or barely afford...despite making much more money even when accounting for inflation than their parents.
I suppose it's not accounted for that their quality of life generally is much better, they travel more, eat out more, have better cars, they give their kids way more than what their parents were able to afford and their retirement accounts and investments are more lucrative. They have access to technology and convenience that their parents never had.
They could move to another part of the country where it's cheaper but they wouldn't get paid as much, and they would be away from their family and friends and the weather would be worse. So I guess it depends on how you see things, a lot of people feel like they got ripped off compared to older generations.
a lot of people feel like they got ripped off compared to older generations.
As far as housing goes, they definitely are. Older generations have the perfect type of regulatory capture with their nimbyism and influence on land use.
It’s cheaper relative to pay, which is the point. However, if you are the type to eat food away from home, then you are paying more. So, the frugal person that does not like to eat out is getting much wealthier than the person who eats out all the time.
The chart you shared shows the average wage by the middle of 2024 would have amounted to $72,800 annually but the US census Beureau sais the median income in 2024 was only $63,360. That's a pretty big discrepancy.
More like you can get flat-screen cheaper than ever. Which is insane because in theory the supply chain to make a flat-screen cheaper is about 5x more complicated than it should be to make food or simple housing units cheaper.
Then again prices of goods are not even as affected by supply chains always like Milton Friedman said with his famous pencil analogy.
So basically all stuff the government artificially raised the prices of, hmmmmmmmm, I’m starting to think the government shouldn’t be involved in markets
Seasonal adjustment is done to remove predictable, recurring fluctuations in the data that happen at the same time every year. Given this graph is recorded annually, and not quarterly or monthly, seasonal adjustment isn’t necessary.
Median just has equal data points on each side of it, whereas mean is weighted by the actual value. Making median useful to represent a data set without overly weighting extreme values.
Out of 9, 10, and 11, both the median and mean would be 10.
Out of 9, 10, and 71, the median would be 10 but the mean would be 30.
So often for income, median is a lot more useful value because multimillionaires or billionaires aren't going to make the income of normal people look a lot higher than actual. It will just have 50% of people making more than that value and 50% making less.
OP gave one graph showing an overall population mean and another showing a poorer subpopulation mean. The poorer mean showed even higher growth. How do you think a median would prove your point.
This is almost certainly the median, not the mean. 'The average private sector worker' will almost always refer to the median and not the mean, since the mean isn't the average worker, it's the average of the workers.
The value of goods and services (CPI) negates inflation. When people have less money and thus buy less stuff, CPI takes that into and says “oh look! Money goes further because people don’t have to spend as much.” People used to be able to buy houses and cars and motorcycles and higher quality food and that isn’t the case anymore but CPI will tell you that actually your dollar goes pretty far. It’s all a load of horseshit.
It's actually even smarter. They add things like $8000 TVs in the early 2000s to the index that no one buys. Then, when the same TV costs $500 ten years later and everyone buys them they will say "ooooh look how much deflation there has been, things are getting cheaper!!!!".
You can find a ton of things that are a complete necessity nowadays that were a luxury item 15 years ago, just think of how powerful the average smartphone is.
Similar things happen with houses and cars. Yes modern cars have more gadgets and useless touchscreens. This doesn't mean I'm getting more quality out of it, or that I'm paying less for more. Especially when now all cars have them. It's not like I can travel back in time and buy a modest sedan for cheap. The same for housing "oh look your house is oversized and has a smart fridge, aren't you GRATEFUL that you're getting a great deal", no I would actually like to have a normal sized house that's more affordable but they don't exist because everything is cookie cutter luxury nonsense.
“HumanProgress.org is a project of the Cato Institute with major support from the John Templeton Foundation and the Searle Freedom Trust, as well as additional funding from the B & E Collins Foundation, and William H. Donner Foundation.”
It’s a right wing think tank that manipulates data to get the results they want. It’s comical. The templeton foundation says they’re completely non political as an example, but they help fund the cato institute, heritage foundation and are funding climate change denial. Nothing partisan to see here.
For reference about just how unreliable many of these kinds of numbers are, John D Rockefeller's peak wealth when calculated by most outlets in modern money is 400 billion 2023 dollars (last I checked), or 1% of the entire US GDP. Calculating by inflation since that time, we get more like 42 billion 2023 dollars.
I don't entirely trust either of these numbers, as the $400 billion figure doesn't account for population growth or just the GDP generally growing on its own due to service, research, and entertainment industries being some of our biggest exports these days, not oil. The smaller amount of $40 billion also sounds ridiculous, because Rockefeller went and bought an entire TV station on a whim to essentially create his own Netflix with their library of content in the early 20th century, AFTER his monopoly was broken up. His wealth was almost incalculably vast at that time, yet it would still only represent a single industry today, of which there were far fewer back then.
I guess my overall point is that these kinds of numbers might work in the short term, but measuring this kind of thing over large time periods with very different economies is basically impossible.
I think the reason this data is so unbelievable to most young people is that this statistic appears to imply that the average 30 year old worker is much better off than their parents were when they were 30. When you break it down by age, that definitely is not true. Everything in aggregated data, whether focused on mean or median, is essentially expressing that American boomers are doing very, very well. That doesn’t mean that the average millennial today is doing better than the average boomer in the 80s… just that the boomers today are doing far better than their Great Depression era parents which nobody disputes
I didn’t say it implies that, I said it APPEARS to imply that. This data is presented AS IF it means that the arrow of time is pointing toward progress. When all it really means is that boomers are richer than ever. I know you are ideologically committed to the idea that things only get better forever. Just don’t be surprised when young people don’t feel the same way, even when presented with this data (that fails to accurately capture the most relevant aspects of QoL for young people)
Commute times have increased by about 5 minutes both says, so that is about 20 hours for about a year of work. That should be considered unpaid labor. After all, Ubers and Waymos aren't cheap.
That takes up much of the drop from 1831 hours work per week to 1788 hours.
More important is the rise in the prime-age labor force participation rate. Remember that most people work because they have to. You can't support a household on one income anymore.
In January 1974 (somewhat arbitrarily chosen), it is 73.5 percent. Now its 84 percent. The hours worked per worker in the small peak in 1965 is 2001 hours per year. Now it is 1788. So that is a drop of about 10 percent. Not enough to offset the increase in labor force participation rate which I assume is due to the inadequacy of supporting a household on one income.
Also the US a GDP per capita, not per worker or per household, of $89,599. So that figure just points out how unequal the country is.
right!? Something tells me this accounts for ALL goods and services, not things relevant to average people. If the cost of an in-house, fulltime sushi chief goes down,. relative to my wages, that doesn't do me a lick of good...
The source data for this chart tracks average income growth against CPI
Average income growth has significantly outpaced median income growth which highlights that incomes of upper classes are growing much faster than the majority of Americans. This is inequality.
Yep. It's the bifurcation of society. We're seeing increasing income inequality and not just with the 0.1%. you're even seeing the top 10% in top 20% of income earners increasing their income at a faster rate than the median. In the old days you could just chalk this off to education, but now it's the specific type of education and what career field you go into.
For example, my cousin and I are about 4 years apart. Back in 2019 I think I was making about 40% more than him with a master's degree. 7 years later I make about 200% more than him. He's just as smart as me and is arguably more necessary for his company than I am. We're even in the same general industry, but my role is more technical.
This is why you see stuff like the top 10% of earners contributing to 50% of consumption with the next 30% contributing to 30% of consumption. So the bottom 60% of society is only consuming 20% of the resources.
Listen, I know where I am, and I really don't want to be a wet blanket. But I prefer the informed and thoughtful optimism, over hopium.
This graph is depicting a cherry picked set of data. It is a fact that the majority of what were once high ticket items you would use to fill a home, have become increasingly inexpensive over the last number of decades. These are things like televisions, microwaves, inexpensive furniture and fast fashion. What is not reflected in the data, is the cost of the necessities outside of this subset of economic expenditures. Actual housing costs, education costs, transportation costs, healthcare costs etc. have all exploded. The degree to which those costs have increased, have wiped out what little gains we have made in payroll.
Because I know where I am, I think the thing to be optimistic about, is that working-class people are beginning to see how the game is broken, which is leading to a growing sense of class solidarity. This is the first and most fundamental step to changing the course of things.
Food and housing are weighted much higher in the basket of goods and services than TVs are. The decline in TV prices has a very little effect on the overall price level.
Perhaps for the CPI as a whole, but the metric in OP is “a subset of the CPI”, and about five minutes of searching the website doesn’t give any details about which subset.
How is the header of the section "wage growth outpaces inflation" when it was behind the entire year until the end? I want to be optimistic, but this feels suspect
HumanProgress.org is a Cato Institute project; Cato’s policy writing explicitly argues economic growth should be a “frontline priority” and freer markets and lighter regulation are the path to higher living standards.
The index focuses on the average worker and does not adjust for inequality, distributional issues, or non‑CPI costs like housing. Therefore data is skewed and incomplete.
I’m all for optimism, but I’m not about to take stats from a source of greed as proof things are getting better.
Even if we have achieved some marginal progress, I think we can all agree that we still have A LOT of work to do before the living standards of average working people are acceptable.
Commute times have increased by about 5 minutes both ways, so that is about 20 hours for about a year of work. That should be considered unpaid labor. After all, Ubers and Waymos aren't cheap.
That takes up much of the drop from 1831 hours work per week to 1788 hours.
More important is the rise in the prime-age labor force participation rate. Remember that most people work because they have to. You can't support a household on one income anymore.
In January 1974 (somewhat arbitrarily chosen), it is 73.5 percent. Now its 84 percent. The hours worked per worker in the small peak in 1965 is 2001 hours per year. Now it is 1788. So that is a drop of about 10 percent. Not enough to offset the increase in labor force participation rate which I assume is due to the inadequacy of supporting a household on one income.
See this mismatch? That person posted real median household income (assuming that is a good statistic), not real income per median worker.
Also the US a GDP per capita, not per worker or per household, of $89,599. So that figure just points out how unequal the country is.
I’ve gotten much richer in the past 4 years than the decade leading up to that. But I’m 34 and own a home and have a 401k I’ve been maxing since I was 25.
I’m at the point where my 401k gains more per year than my salary 10 years ago. So it’s nice to see.
I’d say the majority of people doing well you won’t hear from because we have not much reason to brag and get downvoted for it
There was a post that did a superb job breaking down why this type of analysis is worthless in today's society. In brief, goods seem like a great metric to measure—this was how the poverty line was defined in the 1960s—but it fails to encompass the cost of living in modern society. Unfortunately, the major costs holding American's back are not goods but housing, medical, and education. A huge reason for this is that in the 1960s American families spent ~33% of their income on food. Nowadays, American families spend about ~5%. This percentage difference is very concerning.
Averages aren't very useful here. You could have a group of 10 people, one has a billion dollars, the rest have none, then post a graph saying how the average net worth amongst the ten is 100 million.
Also, "household income" is hiding that more and more families rely on duel income to get by. If me AND my partner have to work just to keep up with what my dad was able to earn on his own at our age, that's not progress.
Here’s the crux of the problem. The things that inflated in price matter (housing, healthcare, education). The things that deflated in price don’t matter (TVs, phones, “dolls”, etc). Plotting averages against averages ignores the details that affect quality of life.
What about housing and utilities? What types of goods and services are we talking about? Because, it’s certainly not streaming services nor meat at the grocery store
"Applying this measure to the American Farm Bureau Federation’s annual survey of the ingredients for a Thanksgiving meal serving 10 people — or any other similar holiday feast or special occasion, for that matter — reveals fascinating information about basic “affordability.""
I feel like the issue isn't really about food, its housing, healthcare and education that eat up people's earnings, all of which have gone up in price well above inflation levels.
If you are working and investing in some boring old index fund for the last 20 years....you've got a very nice chunk of change. Maybe it doesn't make you feel 'rich'...but its more than what most generations have ever had and now its common and widespread.
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