The year I was born ('55), the average US income was $4137.

Hannah Bell

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Thu Jun-19-08 06:57 PM
Original message

The year I was born ('55), the average US income was $4137.

Edited on Thu Jun-19-08 06:58 PM by Hannah Bell

Inflation-adjusted, = $31,576 today.


                                    2007
                   1955        Inflation-adjusted     2007
real
New
House            $10,950             $83,577          
$264,000

New Car            1,910              14,578            
28,000

Gas (gal)            .23                1.76              
4.00

Bread (loaf)         .18                1.37               
3-4?

Milk (gal)           .92                7.02               
3-4?

Stamp                .03                 .23                
.42

Harvard tuition     $800               $6106             
$32,000

Minimum wage         .75                $5.72             
$5.15



I couldn't find a good number for individual average income in
2007, but census numbers for 2006 = median 30K, mean 40K.

http://pubdb3.census.gov/macro/032007/perinc/new10_001.htm


Let's take 40K: in 1955 that was $5387.

2006 av wage as % of av 1955 house price:  49%
2006 av wage as % of av 2007 house price:  15%

2006 % of 1955 car:  282%
2006 % of 2007 car:  142%

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Hannah Bell

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Thu Jun-19-08 06:59 PM
Response to Original message

1. well, i bollixed it. the number under the first column is the 2007 real number, for comparison.

Edited on Thu Jun-19-08 07:01 PM by Hannah Bell

House = 264,000
Car = 28K
etc.

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DesertFlower

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Thu Jun-19-08 06:59 PM
Response to Original message

2. in 1960 if you made $5200 a year, it

was considered a good income.

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Hannah Bell

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Thu Jun-19-08 07:05 PM
Response to Reply #2

7. not so good. in '63, new schoolteacher = ~4500 in my neck of the woods.

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DesertFlower

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Thu Jun-19-08 07:09 PM
Response to Reply #7

10. teachers are underpaid.

i lived in new york. around 1967, they raised teachers salaries up to around $9500 a year. many stay at home moms went back to school to get their teaching license.

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Hannah Bell

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Thu Jun-19-08 07:11 PM
Response to Reply #10

12. which is what i'm saying. in 1960, 5200 wasn't a "good" income, it was

an "average," ordinary middle class income.

Which bought more than it does today.

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DesertFlower

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Thu Jun-19-08 07:15 PM
Response to Reply #12

14. i was thinking in terms of my brothers-in-law.

they worked for the City of New York Department of Highways laying asphalt. they made $5200 a year. they both owned homes, each had 2 kids and their wives did not have to work. i had just married my first husband and we wished that he had a job like that.

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Art_from_Ark

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Fri Jun-20-08 02:35 AM
Response to Reply #12

44. In 1960, $5200 was almost enough to buy my 2BR house

with a quarter-acre lot in small-town Arkansas. But new (elementary school) teachers' salaries at the time were a little less than $300/month.

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Hannah Bell

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Fri Jun-20-08 02:46 AM
Response to Reply #44

48. isn't that $2700/9 mo, though? that's half the house price.

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Art_from_Ark

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Fri Jun-20-08 03:04 AM
Response to Reply #48

51. I believe they averaged out teacher's salaries

so that they would receive a paycheck every month.

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DesertFlower

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Thu Jun-19-08 07:10 PM
Response to Reply #7

11. wow. $86.00 a week.

in 1960, i made $70.00 a week as a receptionist -- no education needed.

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Hannah Bell

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Thu Jun-19-08 07:17 PM
Response to Reply #11

15. which, again, proves my point. $5200 wasn't a "good" income in

1960. It was an ordinary working class income.

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Art_from_Ark

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Fri Jun-20-08 02:37 AM
Response to Reply #15

45. It depends where you were

$5200 in 1960 was pretty good money in much of Arkansas

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Hannah Bell

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Fri Jun-20-08 02:52 AM
Response to Reply #45

50. you said teachers there made $300/mo (= 2700/yr). I'd guess

those would be considered lower-end middle wages, yes?

But you said your house cost 5200. that's only double 9 mo of teacher's pay.

teachers here start around 35K. Non-ghetto houses start around 100K.

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Art_from_Ark

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Fri Jun-20-08 03:13 AM
Response to Reply #50

53. My house was close to $5200

Probably more like $6500 back then. Teachers' salaries were usually pro-rated, so that they would get a paycheck every month. Probably closer to $3200/year for elementary teachers. In any event, my house could have been bought for the equivalent of 2 years of a teacher's salary in 1960, and $5200 would have been enough to pay all but about $1300 of the mortgage. So $5200 was considered to be good money back then.

By the way, my old house, which has gone through several owners since we moved out 3 decades ago, could probably be bought for about $35-40,000 today, due to wear-and-tear and the fact that it is no longer conviently located near anything.

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Rage for Order

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Thu Jun-19-08 07:00 PM
Response to Original message

3. You can buy a house for $83k and a car for $15k

Of course, it won't be a 3,000 sq ft McMansion or a high performance luxury car, but there is no shortage of homes and new cars in those price ranges. I bought my first house in 1999 for $62,000. It was 1,050 sq ft, and built in 1960.

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Hannah Bell

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Thu Jun-19-08 07:02 PM
Response to Reply #3

5. Talking "average" here. In 1955, you could buy a house for 264K, too.

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Rage for Order

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Thu Jun-19-08 08:48 PM
Response to Reply #5

20. Yes, but there is plenty of affordable housing

If you move inland, away from the East and West Coasts. Middle America is not nearly as expensive as either coast.

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Hannah Bell

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Thu Jun-19-08 08:57 PM
Response to Reply #20

21. the point isn't whether there's "plenty of affordable housing"

the point is whether average wages bought more 52 years ago.

clearly, it seems to me, they did.

what IS an 83K house today, compared to its equivalent in 1955, & how many are there?

In my area (small town, high unemployment of 8%) there are a fair number - but 99% in the "not-so-nice" parts of town.

in 1955, they were in the "average" neighborhoods.

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Rage for Order

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Thu Jun-19-08 09:12 PM
Response to Reply #21

26. I understand your point

Certainly there are some things that are more expensive and some that are less so. However, the "not-so-nice" parts of town can be made "average" parts of town if people get to know their neighbors, talk to them on a regular basis, look out for each other, and feel a sense of ownership within their neighborhood. It won't change overnight, but people need to believe they have a vested interest in looking out for their entire neighborhood, not just their own house. Feeling like you belong to a community, rather than just living somewhere, will turn a neighborhood around faster than almost anything else.

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Hannah Bell

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Thu Jun-19-08 09:55 PM
Response to Reply #26

28. You're talking fixes at the individual level. The statistics show a

Edited on Thu Jun-19-08 09:59 PM by Hannah Bell

decline which is occurring across the board & which individualistic solutions can't remedy.

The bottom 75% of the income distribution has lost substantial ground v. the top 25%. That's society-wide, & in real terms it means harder to buy houses & cars, harder to send kids to college, & a reduced standard of living.

All the things you mention may be helpful for some individuals in some situations, but they don't do anything to mitigate the trend.

And there are important adjunct effects that enter the mix. For example, when inequality rises, trust declines & violent crime rises. That's society-wide. You can say, "Oh, get cosy with your neighbors," but trust isn't a matter of sheer will: it's extended according to our social experiences. If our social experience is violence, dog-eat-dog, severe inequality, we won't be as trusting, even if we WISH it otherwise. Thus it becomes harder to make common cause with others.

There are always "exceptions". But the point is, quality of life is declining at the "average," in terms of what it costs to have an "average" life.

and a house, car & college education are the defining goods of the "american dream". In my list, which "some things" have declined in price v. wages? None except milk. Not even bread. i hear some electronics have, but to me, those things are of little importance v. house, car, college, bread.

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DesertFlower

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Thu Jun-19-08 07:03 PM
Response to Reply #3

6. i bought my first house in 1989.

Edited on Thu Jun-19-08 07:04 PM by sweets

it cost $165,000, but it was a new semi-custom 2400 sq. ft. 4 bedroom, den, 3 bath on a half acre of land with swimming pool and spa and a ton of upgrades in a really nice neighborhood. i could have gotten a very nice smaller one (1900 sq. ft.) on a smaller lot for $100,000.

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DesertFlower

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Thu Jun-19-08 07:06 PM
Response to Reply #3

8. i heard the toyota scion

is $15,000 -- gets great gas mileage and is roomy inside.

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David__77

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Thu Jun-19-08 07:13 PM
Response to Reply #3

13. Hardly, but it's true that if you put the housing on a per square-foot basis, it's closer in price.

Houses are indeed bigger now than decades ago, and are in fact better made too: more energy efficient, safer environmentally, and healthier and safer to their occupants (new paints, tiles, insulation, tempered glass, etc.). I'd take a new house any day over an unrenovated old one.

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Hannah Bell

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Thu Jun-19-08 07:27 PM
Response to Reply #13

16. according to this, average house size up 140% since 1950.

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=418653

but average price has nearly tripled since 1955, according to my data.

I'd rather have a new 1955 house than a 2006 crackerbox, myself. Better materials & workmanship, on average, imo.

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slampoet

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Thu Jun-19-08 08:46 PM
Response to Reply #3

19. Please find an 83k house for me in Rhode Island.

You have the whole state.

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Rage for Order

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Thu Jun-19-08 09:06 PM
Response to Reply #19

24. The coastal areas are more expensive

In 2006, the median household income in RI was $52,421. According to the OPs figures, a new home in 1955 cost about 2.65 x median household income. Based on the 2006 median household income for RI, this would be about $139,000. There may not be many $83,000 homes in RI, but surely there are some $139,000 homes?

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provis99

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Thu Jun-19-08 07:00 PM
Response to Original message

4. You're turning me against capitalism

Using average income figures, we were actually richer in 1955 than today. Check median figures, rather than average income, since the income distribution has become far worse since 1955. Now two income earners in a household only support a quality of life that is lower than one income earner did in 1955.

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Hannah Bell

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Thu Jun-19-08 07:07 PM
Response to Reply #4

9. Median individual income in 2006 according to the census (which

Edited on Thu Jun-19-08 07:09 PM by Hannah Bell

pretty much misses very high earners) = 30K.

Making us much more worse.

What kills me is that even in 1955 (before the earnings gains of the 60, which flattened the income distribution somewhat), minimum wage was higher than now.

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Rage for Order

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Thu Jun-19-08 10:31 PM
Response to Reply #9

31. Are you mixing individual and family earnings?

Edited on Thu Jun-19-08 10:47 PM by Rage for Order

The http://www2.census.gov/prod2/popscan/p60-023.pdf">individual income of men in 1955 was estimated at $3,400, or about $25,576 in 2006 dollars. The median http://www2.census.gov/prod2/popscan/p60-024.pdf">household income in 1955 was about $4,400, or about $33,098 in 2006 dollars.

The median http://en.wikipedia.org/wiki/Median_household_income#International_statistics">household income in 2006 was $48,000, and median http://en.wikipedia.org/wiki/Household_income_in_the_United_States">individual income was $32,140 in 2006.

Handy inflation calculator http://data.bls.gov/cgi-bin/cpicalc.pl">here.

On edit: The http://en.wikipedia.org/wiki/Median_home_price#Median_home_price">median home price in the 4th quarter of 2005, the height of the housing bubble, was $213,900. In 2000, it was http://www.census.gov/const/uspriceann.pdf">$169,000.

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Hannah Bell

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Fri Jun-20-08 01:18 AM
Response to Reply #31

34. That (the '55 census summary) is a bit confusing. It says "average (median)", but "average"

Edited on Fri Jun-20-08 01:26 AM by Hannah Bell

generally means "arithmetic average" or "mean".
"Median" = middle value in a series.

average income is higher than median anywhere the top earns more than the bottom, which is everywhere.

so I don't see any serious discrepancy between your male median & my average.

Here's where the average home price came from (didn't notice it was 2004).

http://usgovinfo.about.com/od/consumerawareness/a/avghomeprice04.htm

again, "average" as in "mean," not "median".

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Hannah Bell

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Fri Jun-20-08 01:43 AM
Response to Reply #31

37. 2006 census data from the source:

http://pubdb3.census.gov/macro/032007/perinc/new10_001.htm

all races, both sexes, 15 & up

average (mean) = 40,328
median = 30,428

But the census misses the high end salaries. By design. BLS & IRS are better.

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Trillo

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Thu Jun-19-08 08:40 PM
Response to Original message

17. Just for kicks and giggles, added Shadowstats Pixel-ratio Estimate

Here's ShadowStats.com inflation calculator.
http://www.shadowstats.com/inflation_calculator?amount1=10950&y1=1955&m1=1&y2=2007&m2=1&calc=Find+Out

I'm not a subscriber, so I can't get the numerical figures he uses.

Method: I looked at the graphic for his shadows stats Alternate CPI which appears as as a proportional graphic. It is 80 pixels high, whereas the BLS CPI is 31 pixels high when $10950.00 in Jan 1955 becomes $83013.30 in Jan 2007. Since 80/31 = 2.580645161, I then took your calculation's CPI figure (which was close to his figure in one case), which I renamed BLS-CPI, and multiplied that by the pixel-height multiplier and added a final column labeled Shadow-CPI.

                            BLS-CPI         2007  Shadow-CPI
                    1955       2007         2007 pixel ratio

New House     $10,950.00  $83,577.00 $264,000.00 $215,682.58
New Car        $1,910.00  $14,578.00  $28,000.00  $37,620.65
Gas (gal)          $0.23       $1.76       $4.00       $4.54
Bread (loaf)       $0.18       $1.37       $3-$4       $3.54
Milk (gal)         $0.92       $7.02       $3-$4      $18.12
Stamp              $0.03       $0.23       $0.42       $0.59
Harvard tuition  $800.00   $6,106.00  $32,000.00  $15,757.42
Minimum wage       $0.75       $5.72       $5.15      $14.76

Paints a slightly different picture, no?

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Hannah Bell

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Thu Jun-19-08 08:59 PM
Response to Reply #17

22. what's off on the calculations? why does your house cost less & your

car cost more?

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Trillo

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Thu Jun-19-08 09:09 PM
Response to Reply #22

25. To Answer your first question,

I was introduced to John Williams first through this PDF:
http://www.weedenco.com/welling/Downloads/2006/0804welling022106.pdf

You're welcome to read through that for the precise answer, but basically, the assertion is that the CPI has been deliberately understated over a number of years through a number of administrations. Manipulations such as mathematically weighting downward moves more highly than upward moves.

To your second question, I'm not certain I understand what you're asking. The final column that I added was multiplied by the pixel ratio (because I'm not a subscriber and cannot get his precise numerical value), and in each case, is greater than the figure which is in the second numerical column. Therefore, both the car and the house are higher.

Can you rephrase your second question for clarity?

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Hannah Bell

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Thu Jun-19-08 09:43 PM
Response to Reply #25

27. i know what shadowstats is, i just don't get why my cpi adjustment

for the house comes in at 264K, but your SS = 215K, WHILE

cpi for car = 28K, SS = 37K.

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Trillo

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Thu Jun-19-08 10:17 PM
Response to Reply #27

29. In the OP 264K is the real 2007 price, as I read your chart.

But you just wrote " i just don't get why my cpi adjustment for the house comes in at 264K"

Just dealing with the house figures: Is your OP figure of 264K not the real 2007 price data, but is instead a cpi 2007 prediction based upon your title year of 1955? If so, what is $83,577 and where did it come from?

I was presuming your cpi figures were approximately accurate based upon the one sample I checked.

The shadows stats link for the house:
http://www.shadowstats.com/inflation_calculator?amount1=10950&y1=1955&m1=1&y2=2007&m2=1&calc=Find+Out

base year Jan 1955 --> $10950.00
BLS CPI   Jan 2007 --> $83013.30

It appears that your figure of 83,577 is approximately the same as Shadow Stats of 83,013.

The shadows stats link for the car:
http://www.shadowstats.com/inflation_calculator?amount1=1910+&y1=1955&m1=1&y2=2007&m2=1&calc=Find+Out

base year Jan 1955 --> $1910.00
BLS CPI   Jan 2007 --> $14479.95

Once again, your figure of 14,578 is approximately the same as Shadow Stats of 14479.95.

Therefore, since I picked the months of Jan, and you did not say what months were used, I would guess the error could be related to the months chosen.

Like I said, I was doing this for "kicks and giggles", it was not my intent to spend inordinate amounts of time double checking everything. The column I used was what I believed were your 2007 CPI figures, which I relabeled BLS-CPI (which was probably a poor choice, as it is not accurate, yet I did disclose that fact), instead of Shadow Stats numbers for "BLS-CPI". Understand?

This method, while less accurate, saved some or quite a bit of time, I just used a spreadsheet to multiply your numbers by the pixel ratio, rather than looking up each of his BLS-CPI numbers, then rescribing them in the table. Sorry if that made it more confusing for you.

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Hannah Bell

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Thu Jun-19-08 10:29 PM
Response to Reply #29

30. now it's me who mispoke. the 264K house is real data.

what i don't get is why your SS car rises so much in comparison with cpi, in contrast with the house.

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Trillo

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Thu Jun-19-08 11:06 PM
Response to Reply #30

32. They both rise by the same multiplier.

Some repetition, hopefully to clear this up.

The shadows stats link for the house:
http://www.shadowstats.com/inflation_calculator?amount1=10950&y1=1955&m1=1&y2=2007&m2=1&calc=Find+Out


base year Jan 1955 --> $10950.00
BLS CPI   Jan 2007 --> $83013.30

Since your figure of 83,577 is approximately the same as Shadow Stats of 83,013, and I thought I could save time, I used


Your 2007 CPI   -----> $83577.00 
multiplied by (80/31) which gives
Shadow-CPI      -----> $215682.58

The shadows stats link for the car:
http://www.shadowstats.com/inflation_calculator?amount1=1910+&y1=1955&m1=1&y2=2007&m2=1&calc=Find+Out

base year Jan 1955 --> $1910.00
BLS CPI   Jan 2007 --> $14479.95

Since your figure of 14,578 is approximately the same as Shadow Stats of 14479.95, and I thought I could save time, I used


Your 2007 CPI   -----> $14,578.00 
multiplied by (80/31) which gives
Shadow-CPI      -----> $37620.64

Since both times your figures were multiplied by the same pixel ratio of 80/31, I don't understand your statement that the "car rises so much in comparison with cpi, in contrast with the house".

They both rise by the same multiplier.

Would you like to rephrase your question again?

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Hannah Bell

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Fri Jun-20-08 01:21 AM
Response to Reply #32

35. got it.

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DemoTex

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Thu Jun-19-08 08:44 PM
Response to Original message

18. In 1965 I made more bagging groceries at Krogers than ..

Than my dad did with a fresh PhD in entomology (from Auburn) with a new asst. professor position at the University of Georgia in 1955.

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Hannah Bell

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Thu Jun-19-08 09:00 PM
Response to Reply #18

23. real or adjusted dollars?

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Trillo

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Fri Jun-20-08 12:14 AM
Response to Original message

33. Minimum wage should be much higher, closer to a Living wage.

"2006 av wage as % of av 1955 house price: 49%"
instead of 49%, wouldn't 40K be 365%

Besides the typo, I think this observation of yours is illogical, or at least I don't understand the reasoning for it. Why would you want to compare 2006 wages to 1955 house prices and to 2007 house prices?

Would it not be more meaningful to compare 1955 wages to 1955 house prices, and 2007 wages to 2007 house prices? Let's do that, wages starting at 1955 of $5387, using the same pixel ratio method I used above to estimate William's Shadow-CPI:


                  BLS-CPI     Shadow-CPI
         1955        2007           2007
    $5,387.00  $40,839.51    $105,392.28

then:

     
1955 wages as % of 1955 house prices:            49.20%  
2007 BLS-CPI wages as % of 2007 house prices     15.47%  
2007 Shadow-CPI wages as % of 2007 house prices  39.92%

Studying the issue this way, it seems that Shadow Stats are keeping the percentage of wages:house closer in their respective years than the BLS-CPI wage projection. This would seem consistent with William's assertion that government has been steadily understating inflation to the tune of about 2.58 times from 1955 to 2007 (this study's year range).

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Hannah Bell

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Fri Jun-20-08 01:24 AM
Response to Reply #33

36. I didn't use 40K, I used the 1955 value of 40K, which was 5000-something.

Edited on Fri Jun-20-08 01:44 AM by Hannah Bell

whatever 49% of the 1955 house price is. It's in the post.

edit $5387

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Trillo

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Sat Jun-21-08 01:40 PM
Response to Reply #36

54. It seems Bill Gross says much the same as John Williams,

"The correct measure of inflation matters in a number of areas, not the least of which are social security payments and wage bargaining adjustments. There is no doubt that an artificially low number favors government and corporations as opposed to ordinary citizens. But the number is also critical in any estimation of bond yields, stock prices, and commercial real estate cap rates. If core inflation were really 3% instead of 2%, then nominal bond yields might logically be 1% higher than they are today, because bond investors would require more compensation."
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm

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taught_me_patience

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Fri Jun-20-08 01:45 AM
Response to Original message

38. There are more multiple income households now

than in 1955. This skews the average house price a lot. Housing is still expensive, though. In general, I'd say that the standard of living is much better now, than in 1955.

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Hannah Bell

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Fri Jun-20-08 01:58 AM
Response to Reply #38

41. That's why i used wage data for individuals, not households or families.

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Selatius

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Fri Jun-20-08 01:50 AM
Response to Original message

39. Minimum wage in 1955 (nominal value): .75 cents. In today's dollars...

The BLS-CPI says it's approximately 6.08.

The Shadow Stats-CPI shows it should be approximately 6.08 x (80 pixels/28 pixels) = 17.37

17 dollar minimum wage. That's closer to the definition of a living wage.

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Hannah Bell

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Fri Jun-20-08 02:08 AM
Response to Reply #39

42. minimum in '55 = .75. average hourly manufacturing wage = 1.79.

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1237&context=key_workplace

How does that come out on S-stats?

On this inflation calculator, it's 5.72 & 13.66 for 2007.

http://www.westegg.com/inflation/infl.cgi

the last year of the epi data (2004), it's 5.15 & 23.63

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Selatius

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Fri Jun-20-08 02:26 AM
Response to Reply #42

43. 1.79/hr in 1955 ---> 14.52 for BLS. For SS, it would be 41.49. I rounded up a penny.

That seems incredible, but the effects of undercounting inflation are compounding in nature as opposed to simply additive. I guess it was true that a single man could support his wife and two kids on a factory income in those days.

14.52 x (80 pixels /28 pixels) = 41.485714285714285714285714285714

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Hannah Bell

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Fri Jun-20-08 02:38 AM
Response to Reply #43

46. I know it was true. I lived in a neighborhood where everyone's

dad worked on the shop floor at boeing & all the moms stayed home.

Nice houses, nice neighborhood, good schools.

"average"

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Selatius

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Fri Jun-20-08 02:47 AM
Response to Reply #46

49. Those days are long gone. I'll be long dead before such a day comes again.

The wealthy and their bankers will not give back those concessions without an epic level of struggle, but I'll be long gone when that comes. Damn them anyway.

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Hannah Bell

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Fri Jun-20-08 02:44 AM
Response to Reply #43

47. I think SS must be a bit off for pre-80s data, though.

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Selatius

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Fri Jun-20-08 03:12 AM
Response to Reply #47

52. Could be. Can't really tell. I go by the boxes, since I don't have a subscription to see the number.

However, I did notice one thing.

After 1983, the ratio between the pixel height of the BLS box and the SS box does begin changing from 80-28 to 80-29 to 80-30 and so on. I do remember that under Reagan massive revisions to the CPI were done. Carter was the last administration to calculate the CPI the old way. Clinton made even more revisions to the CPI, which had the effect of lowering inflation reports even more, and Bush II has introduced a new, experimental CPI calculation that has carved out roughly another third of a percent from inflation reporting. There wouldn't be a point in reporting the new experimental measure if there weren't plans to introduce that at some later point.

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leftofthedial

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Fri Jun-20-08 01:51 AM
Response to Original message

40. with one income earner per household.

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