Money and the middle and upper classes

[KB5252]

Much has been made over the past 5 or so years about the widening gap between the upper and middle class. It is very hard to find any unbiased data as far as I can tell and everyone has an agenda. IMO there is no one specific place you can point to and say there, this is why there is a widening gap (if such a thing even exists).

What I want to know from you guys is why this appears to be so, the middle class hasn't been saving at the same rates they did 20 or 30 years ago, what do you think the factors involved are?

 

[jvol1]

Wage growth is lagging CPI. Standard of living is declining by a bit more each year, which is why only one person needed to work to raise a family and buy a house and car back in the fifties but now both husband and wife need to work, etc. If we can ever balance our trade, you should see that trend reverse itself.

 

[overseasorange2]

Much has been made over the past 5 or so years about the widening gap between the upper and middle class. It is very hard to find any unbiased data as far as I can tell and everyone has an agenda. IMO there is no one specific place you can point to and say there, this is why there is a widening gap (if such a thing even exists).

What I want to know from you guys is why this appears to be so, the middle class hasn't been saving at the same rates they did 20 or 30 years ago, what do you think the factors involved are?

1) A different mindset, back in the 50 & 60's people did not use credit cards that much. They actually waited till they saved the cash. Now people are paying outlandish interest on credit cards. The younger generations tend to buy now pay later. They tend to want something now. In my father's time, people waited....maybe something to do with living through the depression and WW2. The same thing is happening with the younger generation in China. They want things that their parents never had(Jeans, cell phones, PC, etc.) and they don't want to wait for it..

2) The cost of living( insurance, property taxes, sales tax) and U.S. Taxes. Heck it takes me 6 months to make enough to pay the IRS, Health Insurance, car insurance, property taxes). Luckily I lived overseas for 12 years where I avoided much of these cost. Otherwise, I would be living check to check.

 

[IPorange]

Wage growth is lagging CPI. Standard of living is declining by a bit more each year, which is why only one person needed to work to raise a family and buy a house and car back in the fifties but now both husband and wife need to work, etc. If we can ever balance our trade, you should see that trend reverse itself.

How is standard of living declining each year?

 

[overseasorange2]

How is standard of living declining each year?

I think the expected standard of living has gone up. With both the wife and husband working, they can get into these huge houses(Especially in the recent past). However, if one loses their job, they are financially screwed.

 

[jvol1]

How is standard of living declining each year?

It's one of those relative things. I don't mean that the standard has gone down per se, just that it costs more to maintain the same one, ie to have the same amenities you have to have to earn relatively more now than back then because wages haven't kept pace with the cost of stuff.

Measuring cost of living is one of those hidden fuzzy areas of government statistics. I think one of BPVs earlier posts from the Wall Street Journal mentioned that part of the Clinton SS surplus was due a difference in the way cost of living indexes were calculated. This is discussed in more detail on shadowstats.com if it's a subject of interest.

 

[joevol320]

the main problems is the more companies and business are taxes, they pass the cost onto us. some people and most liberals do not understand, though the middle class may not get a direct tax increase, they have to pay more for every item they buy, including basic needs, food, utilities etc.. don't forget local taxes.

 

[overseasorange2]

the main problems is the more companies and business are taxes, they pass the cost onto us. some people and most liberals do not understand, though the middle class may not get a direct tax increase, they have to pay more for every item they buy, including basic needs, food, utilities etc.. don't forget local taxes.

The one thing that the idiots in Washington don't get is that by increasing the taxes for people that make over 250 thousand they are further hurting the potential job market. My understanding from NPR is that most people in this category are small business owners....not much incentive for increasing your payroll.

 

[KentheOrange]

It's one of those relative things. I don't mean that the standard has gone down per se, just that it costs more to maintain the same one, ie to have the same amenities you have to have to earn relatively more now than back then because wages haven't kept pace with the cost of stuff.

Measuring cost of living is one of those hidden fuzzy areas of government statistics. I think one of BPVs earlier posts from the Wall Street Journal mentioned that part of the Clinton SS surplus was due a difference in the way cost of living indexes were calculated. This is discussed in more detail on shadowstats.com if it's a subject of interest.

Not even close to being true. Back then an average house was 1,000 sq ft or less and families usually only had one car. You had one telephone and one TV. Eating out more than once a week was unheard of because Mothers stayed home and cooked, cleaned, made and repaired clothing, and knew where their kids were.

If people were willing to live with this same standard many two income families could become single income homes.

 

[IPorange]

I think the "standard of living" expectations have outpaced the ability of the average family to earn a living. Nobody had anything equivalent to the numerous appliances, computers, entertainment services (high speed internet, cable, satellite TV), multiple vehicles, annual vacations to places more than 500 miles away, etc. even 30 and 40 years ago.

The expectations of what "normal" is are through the freakin' roof.

 

[OrangeYankee]

I think the "standard of living" expectations have outpaced the ability of the average family to earn a living. Nobody had anything equivalent to the numerous appliances, computers, entertainment services (high speed internet, cable, satellite TV), multiple vehicles, annual vacations to places more than 500 miles away, etc. even 30 and 40 years ago.

The expectations of what "normal" is are through the freakin' roof.

Bingo I was going to say... I mean even just as recent as twenty years ago people only had one bathroom and 3 bedrooms and a family car and maybe a clunker for ol' dad to drive. You also had a land line, One TV with cable, and more if you had extra.

Now you are roughing it if you don't have 3 bathrooms, 4 bedrooms in a 2500 sq ft house, internet, cell phones in each member of the family's pockets, cable/sat running to each room in the house, at least 2 cars and ... eh you get my point.

In today's world the upkeep of life has skyrocketed and keeps growing with all the subscriptions you can have now.