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Comment by skohan | Hacker News Reader

> everyone is lifted up and made richer over time

Really? In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector. It was also possible to work your way through college and exit with a degree and no debt, in a job market which made that worth it.

Yes global poverty has decreased, but the material standard of living has decreased for most people in the working class in the developed world, while wealth has skyrocketed for a select lucky few.

It's more complex than saying "everyone is made richer" - it seems what has happened is that a few people have been made much richer, and everyone else is somehow equalizing somewhere closer to the bottom.

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>the material standard of living has decreased for most people in the working class in the developed world

Who told you that? Both inflation adjusted median personal and household income have increased by double digit percentages over the past 50 years. In the case of household incomes that still happened even with the shrinking average household size (i.e. number of people in a household).

[1]https://fred.stlouisfed.org/series/MEPAINUSA672N#0

[2]https://fred.stlouisfed.org/series/MEHOINUSA672N/

You're not focusing on the other side of his statement, where costs for housing, healthcare and education have also skyrocketed, along with the development of the two income trap.

What he said isn't controversial for most academics studying this.

https://en.wikipedia.org/wiki/The_Two-Income_Trap

https://medium.com/@6pranavk/insight-of-the-day-cost-disease...

And neither of you are focusing on the "extra" stuff you don't "need" - high speed phones, large TVs, cars with air bags, etc.

Want to compare to 1970? Then live with those restrictions and you'll probably have enough money to pay for insurance, college, etc.

This is simply not true. Education, healthcare, and housing costs have far outpaced inflation.

People didn't buy nearly as much of those three things in 1970.

What do you mean? The home ownership is on the decline, especially among younger people, and "one unit of education" (i.e. a bachelors') hasn't changed. Yes more people are going to university on average, but the price of higher ed is not regulated by scarcity.

The numbers don't add up. This is essentially the math which blames avocado toast for why millennials aren't buying homes. If the price of university has doubled relative to median wages in the past 50 years, you're going to have to buy an awful lot of smartphones every year to account for that difference.

The numbers add up when you add in healthcare, which has captured an increasing portion of workers compensation.

This is complete nonsense.

Large TVs in 2020 cost just as much as small TVs did in the 70s (if not less), adding air bags to a car costs mere hundreds of dollars, and is ammortized over 20 years, and cancelling your phone plan is not going to let you support a family of four on a single blue-collar income. Shit, cancelling your phone plan won't even compensate for the annual growth in your health insurance premiums - which is something that compounds every year.

"Air bags is amortized over 20 years" Cars don't last 20 years, generally... 5-10. And airbags are one of hundreds of "improvements".

TVs are an example of the plethora of technology that most homes have. From microwaves to air conditioners to cell phones...

"Canceling one thing isn't going to support your family" Which is why I didn't mention one thing... I mentioned a handful of things. A host of "modern conveniences" that add up.

Education, health insurance and other things cost more? Those are also things that the government has stepped in to make more affordable as well... which is a massive topic in of itself.

My main point stands... quality of life and cost of life has risen with hundreds of costs that add up (a mere 100 for an air bag... a mere couple bucks a month for data on your phone... a mere 5 for text messages... a mere 100 for a microwave... etc.etc.etc.etc).

Remove all the "extra" stuff that's standard today compared to 50 years ago and even with outliers (IE Health Insurance), you'll still be much closer to being able to afford the same quality of life as "way back then".

The average home size in the 1970s was 1,500 square feet. It’s around 2,700 square feet today. And the percentage with air-conditioning, two car garages, pools, dish washers, etc have increased significantly as well.

Go price out a 1500 sqft house built in the 1930s-1970s today and you'll see that it's still significantly more expensive than it's inflation adjusted price back then, especially in the larger cities where there are jobs. And that 1970s house today is less valuable than it was back in the 1970s too, but that is harder to evaluate in aggregate. Jobs also used to be more distributed, so the need to move was less back then.

AC & Dishwashers are also only a few thousand dollars of value, mostly on the AC side. The rest are relatively luxury items.

If 1,500 SF homes cost more now than they did in the 70s, how is the average person affording 2,700 SF homes today?

And low end AC & Dishwashers can be had for only a few thousand dollars NOW. Back in the 70s the cheapest ones were still expensive enough to require an upper middle class income.

> how is the average person affording 2,700 SF homes today?

They're not. Home ownership is currently at about the same level it was in the 90's, declining from a boom in the 2000's driven by sub-prime lending, but if you look at generational differences, everyone younger than baby boomers is basically owning homes at much lower rates.

https://journal.firsttuesday.us/bad-news-for-tomorrows-homeo...

2014 was six years ago after a sharp recession. Current home ownership is near all time highs.

https://www.census.gov/housing/hvs/files/currenthvspress.pdf

So why is the average home size nearly double the size in the 70s?

There is more to quality of life than income. Despite rising incomes, younger peopple lagging far behind in terms of wealth accumulation[1]

This may have something to do with the fact that the cost of housing has risen drastically as compared to median income over the past few decades[2]

While the cost of education has also more than doubled for men, and increased by 20% for women relative to median income (despite a 73% increase in median income for women) since the 70's[3]

Yes income is increasing, but the costs for the markers of a middle-class existence are increasing much faster.

[1]https://www.marketwatch.com/story/this-depressing-chart-show...

[2]https://www.longtermtrends.net/home-price-median-annual-inco...

[3]https://college-education.procon.org/median-incomes-v-averag...

Compare the output of an inflation calculator vs the price of health insurance, collage, or the average new home in 1960’s USA vs now. Different prices don’t move in lockstep with inflation.

So, inflation as calculated on a basket of goods divorced from living expenses gives inaccurate comparisons. Yes wholesale food prices for example got really cheap, but overall food is still a significant fraction of people’s budgets.

I always figured that was because WW2 destroyed Europe, Russia and Japan, forcing the entire world to buy from us for 30 years. I don't think it's anything that can be replicated.

And China, and large parts of Africa. The Philippines. Probably a lot more than I can remember.

Your point stands tho.

Basically everywhere that wasn't the US and Canada (excluding Pearl Harbor).

Even Pearl Harbor caused minor damage, all things considered. I think many of the facilities were repaired and rebuilt within 1 year while many of the ships were actually recovered. The carriers weren't even there during the attack.

For the US it was a huge shock, for a country like Poland it was Tuesday.

Because I was curious, Friday might have been a better analogy.

https://en.wikipedia.org/wiki/September_1939#September_1,_19...

I think he was referring to the highly famous quite (/s) from Street Fighter the movie delivered by Raúl Juliá

Hey, a little respect for the quote! It's even up on TV Tropes: https://tvtropes.org/pmwiki/pmwiki.php/Main/ButForMeItWasTue...

I'll be honest and say I didn't even know the origin of the quote :-))

History definitely played a factor in the US's ascendance, but the current state of the US economy isn't just something which happened by accident. We could have implemented an economic policy designed to optimize the benefit to the middle-class, and to protect strategic interests (like the capacity to produce PPE for example) but that's not what we did.

It was also true at the time in Western European countries though, especially in the 1970s-1980s.

> In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector.

Modern expectations mean that this isn't what people think it is. You also owned one car per family in the '70s; new houses often have to build two parking spaces. Housing prices were held down because public housing was still being built; today it's unmaintained and often torn down. Old houses were built on small lots; suburbs today require a quarter-acre. Colleges received way more public funding as a proportion of their income than they do today, and enrollment was lower.

Housing has gone from subsidized to restricted and college has gone from subsidized to free-market while demand keeps rising. It's not surprising that the price increased. (And the protectionism lobby is now also the anti-housing lobby!)

You're arguing income inequality has worsened in spite of free trade, which is fine, but I think the original comment's point was that free trade carries some benefits, which is a separate argument altogether (that is, they are not asserting free trade is a panacea). It could be the case that some other cause has led to increased income inequality, which then would not affect the free-trade-has-benefits argument.

Here is a Brookings report that explores whether global trade has directly contributed to worsening income inequality: https://www.brookings.edu/articles/worsening-american-income...

> Really? In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector. It was also possible to work your way through college and exit with a degree and no debt, in a job market which made that worth it.m

This is more of a feature of the transition from a Bretton Woods/Treasury/politics-based monetary policy to neoliberal/central bank/finance-based one no? At 10% inflation, the creditors just ate most of your mortgage debt regardless of whether you worked in manufacturing or not.

Probably it was a combination of factors, but I imagine the transition to a service-based economy and the outsourcing of entire sectors of jobs relying on large pools of organized labor didn't help the situation

Since the 1970s, physical house size has increased from around 1600 sq.ft to around 2600 sq.ft. At the same time, house occupants has dropped from about 3 to about 2.5 [0]. In addition to that, the building requirements and safety features have increased costs significantly per square foot.

Average house price in 1975 was around 42k [1]. That is a little over 200k in 2020 dollars [2]. Doing some math with 200k/1600 vs 380k/2600 gives $125/sq.ft and $146/sq.ft or roughly a 14% increase in relative cost. In 1975, median income was around 12k [3] while median income in 2018 was around 63k [4]. (EDIT: I'd note that I'm being generous as home prices dropped significantly this year and I went with the higher numbers)

SHOCK!!!!

An average house in 1975 is 16.5x the yearly income while an average house in 2020 is only 6x yearly income despite being 40% bigger and 15% less occupied while being safer to live in as well.

I'll give you college debt, but for all the wrong reasons. The government artificially incentivizes bad loans. They insist that kids CAN'T get that 380k house loan (even though the house is collateral), but also insist that kids CAN get that same 380k for a piece of (often useless) paper without any collateral backing. Get rid of the stupid laws and you'll watch that problem go away all by itself. Get rid of the pressure to have a degree to sweep floors and you'll watch college prices fall even faster.

[0] https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...

[1] https://fred.stlouisfed.org/series/ASPUS

[2] https://www.usinflationcalculator.com/

[3] https://www2.census.gov/prod2/popscan/p60-104.pdf]

[4] https://www.census.gov/library/stories/2019/09/us-median-hou...

The government not only incentivizes bad loans, they also exempt college debt from the bankruptcy process. And these are loans people are supposed to agree to when they are 17-18 years old. It's an insane system if you ask me.

As a side-note, lately I've been curious about what's actually been driving the cost of higher education. I know it's often cited as "administrative costs", but what does that actually mean? Where does the money actually go?

> As a side-note, lately I've been curious about what's actually been driving the cost of higher education. I know it's often cited as "administrative costs", but what does that actually mean? Where does the money actually go?

If you're asking about tuition? A few places.

Marketing, sports stadiums, student services (Counselling, mental health, etc), bureaucratic waste (Middle managers overseeing operations people), overbuilt facilities that serve no pedagogical value (Stained glass windows and large, pretty university grounds don't maintain themselves).

But that's just the half of it. In addition to tuition, most universities force you to pay for room and board, by living on-campus. Those fees go into paying for overpriced, poor-quality catered food, and overpriced dorm rooms.

GF paid 18K on student loans last year, but only 2500 deductible on her taxes.

I had 28k in margin interest last year, 100% deductible.

US is greatly skewed to the rich

I think both what you said and parents are true.

The problem isn't with the "Single Income" part.

It is with the "cost" of hosting and medical care.

The world in general has a huge incentive in driving up asset prices. And Housing is one of the biggest asset.( Correct me if it is not the biggest ) And rent is the biggest expenses in living cost.

What needs to be done is fixing housing prices / supply.

I agree - I think housing functioning as an asset and also as a functional human need are conflicting interests. Like if food were also subject to speculation, this would cause a lot of suffering.

There was also less competition in the job market because women only worked a subset of lower paying jobs if they worked at all.

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