Monday, October 14, 2013

Your parents may have had it better than you!

Last year, according to US Census the average household income was $51,017. About the same as it was in 1988. 

The nations GDP per person has increased 40% during the same time period. 

During this time period the standard of living has fallen dramatically. Healthcare spending per person (adjusted for inflation) has roughly doubled to about $8,500 since 1988. This alone has taken a large bite out of our take home pay as companies switched the burden of payments to families in the 90s and 2000s.

Today the cost of housing is 56% higher. We pay 155% higher out of pocket cost for families to pay healthcare costs. All these contribute to a stressed middle class with less discretionary income.

In contrast to people in other developed nations, who have devoted more time to leisure as they have gotten richer, Americans still work about as much as they did a quarter-century ago. Despite this, the net worth of the typical American family in the middle of the income distribution fell to $66,000 in 2010 — 6 percent less than in 1989 after inflation.

These figures tell the story of America’s new normal. In the new normal the share of the nation’s income channeled to corporate profits is higher than at any time since the 1920s, while workers’ share languishes at its lowest since 1965.

In 2010, the Department of Commerce published a study about what it would take for different types of families to achieve the ideals of middle class — which it defined as a house, a car or two in the garage, a vacation now and then, decent health care and enough savings to retire and contribute to the children’s college education.

It concluded that the middle class has become a much more exclusive club. Even two-earner families making almost $81,000 in 2008 would have a much tougher time acquiring the attributes of the middle class than in 1990.

Which is why we need to redefine what we perceive as middle class to reflect the reality of today's economic reality. Then we need to organize and work to an articulated vision which will define our expectations to our representatives.