Or maybe it was just a fairytale to pacify the workforce and keep them on the job—soon an entire family will have to work to earn a living
I once believed that through education and hard work, each generation of Americans could rise to a higher living standard than the previous generation. Now I think that is just an illusion that has provided a robust workforce for our elite corporate masters — the American Dream is no more.
Compare the Silent Generation to the Millennials. A household of the Silent Generation could provide for a family on one income, they could buy a house, and they could afford an automobile — all on one income.
Today Millennials must work two jobs to scrape by, and they often can’t afford to buy a house and regularly take on side hustles or gig work to make ends meet — they’re struggling. The average household income in 1960 was $5,600 for a one-worker household. The average household income in 2020 was $65,521, but the Millenials worked far more hours to earn $65 thousand, and that money did not stretch nearly as far. For the Millenial to reach the average household income, both partners worked full time and often had a second job or operated a side hustle or gig work to supplement their regular income. While average household income was eleven times greater by 2020, it took the equivalent of two and a half workers’ incomes to earn it compared to a single income of the Silent Generation. So in terms of hours worked, a household of Millenial workers brought home a bit over five times a single worker's earnings in 1960.
The average home price in 1960 was $11,900, or just about double the average household income. By 2020 the average home price had risen to $330,000, about five times average household income.
The average price of an automobile in 1960 was only $2,752, or about one-quarter of the average household income. By 2020 the average cost of a vehicle rose to $37,876, almost half the average household income.
Similarly, the cost of college tuition and fees rose from $1,490 annually in 1960 to $9,970 by 2020 — much more for private schools.
Generational gains in income should be chalked up to longer hours worked rather than being attributed to higher education and better jobs.
Households borrowed to make up the shortfall.
But even a massive increase in hours worked was not enough to maintain the increase in the standard of living we’ve come to expect. As home prices inflated, many people borrowed against the rising equity in their homes to prop up their standard of living. By 2008 households had taken so much equity out of their home mortgages that when the bubble burst and prices deflated by 12.4 percent, it left many homeowners underwater holding mortgages with balances more than the property was worth.
In sixty years, we have gone from a one-income household able to support a family, buy a house and afford a vehicle to a two-income family supplemented by side-hustles and gig work struggling to afford a vehicle and a home.
That’s not progress by any stretch of the imagination. And forget about factoring for inflation. The figures above compare what you can buy with today’s income to what you could buy with a household income in 1960. By 2020 the average home cost will be five times today’s household income. In 1960 an average home cost two times household income. In 2020 a typical vehicle cost half of the average annual household income. In 1960 a car only cost one-quarter of annual household income.
We are not moving forward. We are moving backward. Unless Millennials revert to child labor and move their children into the workforce, no more work hours remain to work harder or longer. The length of each day is set at twenty-four hours, and you have to sleep sometime.
Although household income earners are working longer and harder than ever before, their share of total gross national income is shrinking. According to the Rand Study on Income Inequality, if income distribution had held steady at the pace following WWII, today's median income earner would be earning twice as much as they are presently getting paid. Take any middle-class wage and double it. That’s the share that the typical worker is rightfully entitled to earn today. Instead, a much more significant percentage of the national income flows directly to the top income levels.
Since 1970 the upper third of income earners have seen their share of the national income rise from twenty-nine percent to forty-eight percent, while the middle one-third fell from sixty-two percent of the national income to forty-three percent. That’s a shift of $50 trillion out of middle-class pockets into the upper reaches of society over the last fifty years — grand theft. If income distribution had remained steady, the middle class would have twice as much money in their weekly pay packet as they have today.
Capitalism in the US worked for most Americans from WWII until the 1960s. Then greed grossly reconfigured the system — the middle class languished while the rich got richer.
We have reached the end of the fairytale, and there is no relief in sight. It’s now impossible for one generation to surpass the last or even manage parity. You can work as hard and as long as you want, but half the pie is already gone by the time you get to the table. Our government is hopeless. Our representatives are focused on reelection—their primary goal is pleasing their respective parties and donors. They save their empty platitudes for the voters. The plight of the middle class is not even on their radar.