The economic winners and losers since 1973

Median income for males, in 2008 dollars, from US Census data.

Age	1947	1973	2008
25-34	20,650	43,696	33,415
35-44	23,989	52,108	44,189
45-54	22,606	50,553	45,540
55-64	19,765	41,375	41,757
65+	8,061	17,785	25,503

Why those three years? 1947 is the year the data begins, 1973 is the year of peak earnings, and 2008 is the last year for which data is available.

We see that from 1947 to 1973, everyone’s income increased.

From 1973 to 2008, the 65+ age group saw a continued increase in income, and the 55-64 age group had their income hold steady. The biggest losers were the 25-34 age group which saw a 24% decline in real income.

The reason why the number of young men who live at home keeps going up each year (a continuing topic at the NY Times) is because the percent of parents whose income is far greater than their sons’ keeps increasing each year. I wonder what the 2009 data will look like?

Comments

[James]

Those numbers are meaningless. The CPI is a retarded measure of inflation. I can buy a lot more with $33,000 today than I could even in 1990. One word: INTERNET.

[HS: We can buy stuff today which didn't exist in 1973, but the cost of education, housing, healthcare, all have gone up. The price of automobiles has held steady.]

[Genius]

The data are completely useless without showing women's earnings too.

[HS: Women's median income has been increasing until recently, but that's because of increased labor force participation, so it doesn't say what you think it says.]

[T-Sizzle]

I note that for most age groups, the numbers have gone down since 73. Way down for the 25-34 group. Like you pointed out, that's going to make some young people live at home longer, especially as the cost of housing went way up in that time.

OTOH, they can play with X-boxes now, so that's nice...

[Jason Malloy]

The number of adult men living with their parents has dropped fairly dramatically since the 1970s.

http://inductivist.blogspot.com/2008/08/losers-living-at-home-its-been-my.html

[re]

http://econpapers.repec.org/paper/izaizadps/dp3970.htm

[Happy Realist]

Some economists have noticed this trend:

"Abstract: High- and low-wage occupations are expanding rapidly relative to middle-wage occupations in both the U.S. and the E.U. We study the reallocation of workers from middle-skill occupations towards the tails of the occupational skill distribution by analyzing changes in age structure within and across occupations. Because occupations typically expand by hiring young workers and contract by curtailing such hiring, we posit that growing occupations will get younger while shrinking occupations will 'get old.'"

http://econpapers.repec.org/paper/izaizadps/dp3970.htm

-
cheers

[T-Sizzle]

Interesting link, gracias.

[James]

[HS: We can buy stuff today which didn't exist in 1973, but the cost of education, housing, healthcare, all have gone up. The price of automobiles has held steady.]

Interestingly, all those things that have really gone up in price have heavy government interference. Some say that government subsidies just inflate prices.

For this reason you can also argue whether the "net" prices have really gone up. After all, financial aid has increased, interest rates are lower, and government healthcare outlays have increased. I am pretty sure it is easier to buy a house now than it was in the 1970s when you needed 20% down. The sticker price on my house is 50% higher than the one I grew up in, but our closing costs were tiny compared to my parent's, and we got the $7,000 tax credit!

Automobile prices have held steady while quality has jumped enormously. New cars don't rust, always start, get better mileage, are much safer, etc. The new corrola is better than the old camry, for example.

Meanwhile I just got a gallon of milk from Wal-Mart for $2.38!!!

[HS: I agree that bad government policies have contributed to healthcare, education, and most especially housing, increasing in cost.]

[Stopped Clock]

I assume the increase in income for the >65 group is also due primarily to increased labor force participation.

[ron b]

i agree that the missing link is the addition of women in the workforce.

otherwise interesting information.

for example - why would houses be 10x more expensive since if incomes are unchanged since 1973?

even with women in the workforce, assuming income parity, houses should only be 2x as expensive.

[Marc KS]

Back in 1973 a high school education was sufficient to get a decent job with which you could have a decent income.

The jobs where a HS education is sufficient are going away - 25-34 year olds with decent jobs have only been working for 2-4 years nowadays (because they have to spend 2-5 years after highschool in postgrad) compared to having worked for 6 years in 1973.

On average the longer you work the higher your wage is (since experience is a valued asset). Also todays 25-34 yr olds have not made much money by that point/probably have student debt compared to 1973 25-34 year olds who by value of having worked longer and not having student loans would (on average) much higher savings/investments (additional income)

Mostly guesswork on my part however

[Twain]

There could be fewer people living at home now than compared to 40 or 50 years ago, but the people who still do are doing it because of income for the most part. If I made 25-30 g's in the mid 90's I would have moved out,but I wasn't making that much. Why pay rent to someone when you can live at home for free when your income is low? Then you can save money which I did. Having said that I wish that I would have gotten a roommate in my 20's and moved out, but I didn't know anyone. Looking back , I would do things differenly, but your life is what it is.I have a lot of money saved and now have my own condo.I know 2 brothers who live at home at 35 or so and don't even have any money saved and have no gf to speak of. If you have a stable income or career and feel good about your future, it's easier to move out and find a woman if you want to get married.

I was talking to someone who was a fulltime teacher in the early 60's and was renting a room from a family because his family didn't live where he worked or he probably would have lived with them. Then this person got married in his mid to late 20's and moved in with his wives family.

There was a conservative book writer on CSpan who was saying we should go back to the homestead where extended families lived together. It's not a bad idea if you can get along. What if you want to have girls over but your mother doesn't approve? I didn't have that dilemma in my 20's unforntunately. But, one person living on there own in an apartment is a waste of money.

[HS: "What if you want to have girls over but your mother doesn't approve?" Back in the old days, people didn't have girls over. They got married, and then it was acceptable to have sex with your wife under your parents' roof.]

[Twain]

I agree that it might not be a bad idea to go back to less promiscuous times, but I was just saying that many younger people today wouldn't go for that. It seems people in their 20's today don't have much guilt or societal pressure to wait for marriage. Some places wouldn't even rent to nonmarried couples in the past. Nobody criticizes athletes for having many partners, so there just isn't a stigma involved with it today. In fact, they are praised, even by the guys who don't have gf's.Jessica Simpson's father is a minister I think and she was seeing Tony Romo. Is there any doubt they were having sex even though they were not married? Many people date 5 or 6 years and then get married, if at all. They wouldn't wait that long to get married if they weren't having sex. The guy would tell the woman that he wants to get married because he wants sex. Now the guy can get it without marriage, so why marry. The alpha will play one woman off of another when the woman is trying to get him to marry her, but why should he settle down. The alpha is taking up several women while he is having fun. We need a society where one guy can't have a ton of woman and if he does he will be criticized, not looked up to.

I was talking to a guy from Spain who was in his 20's and had many gf exchange students from the US in the 1960's, but he never had sex with them.Today he probably would be able to. He had a gf that he brought over to his parents' apartment just to visit with him and his brother and his father came home and yelled at them for doing it. He said what will the neighbors think. About ten years later is younger brother had a gf and his father let the gf live with them and share a room together for 7 years!! They never married.This shows how mores can change quickly.

[meter]

"for example - why would houses be 10x more expensive since if incomes are unchanged since 1973?"

If you're old enough, remember what a typical 1973 house looked like and was furnished with and compare with a typical 2009 house. Square footage and amenities look any different to you?

[Haumea]

So has the overall standard of living risen or fallen? Considering how much centralized heating/air conditioning, internet access and cellphones (not to mention secondary goodies like HDTV and TiVo) have added to quality of life, it is difficult to argue the latter.

[RandyB]

The price of housing is another factor in the "failure to launch." Back when a guy could move out on his own with a waiter's salary, that was the first thing they did. The baby boom generation has been voting themselves money as long as there's been a population bulge, including using zoning to keep more housing from being built in their neighborhoods to keep their own values up. Remember in the campaign McCain said we needed a program to keep housing prices from dropping? Why should high housing costs be a national priority except to benefit the dominant voters?