Robert Frank chart by way of Ezra Klein
Ezra Klein today runs a year-in-charts post that's purely the excellent. It includes the Toil Index, by the excellent economist Robert Frank. Basically, it shows why it's so hard for working people to live decently these days. Working families are running faster and faster just to afford the same things their parents enjoyed, namely decent homes and decent schools for the kids.
This is the same territory Elizabeth Warren began mapping in the early 2000s, with The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke. The thesis from Ms. Warren was that families need to have two parents cranking away all the time in order to stay in the middle class. If something happens to one parent, she wrote, like a layoff or an injury, then it all falls apart.
Here's betting you can relate.
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Not to mention, the single people who can't even start a family because they can't even afford to go out, and meet their opposite sex.........no disposable income.
So according to the statistics, about 50% just get knocked up anyway and being "single moms" start collecting WIC, food stamps, section 8 housing, have the kids taken care of by Head Start, a gloified baby sitting service, welfare as long as it lasts and 5 grand a yr from the IRS (Earned Income Credit). Of course the boyfriend is liveing with them all the while. Getting married is for suckers.
And then there is you ret. You are such a bigoted misogynist cretin you have a hang a hundred dollar bill around your neck to get girls to talk to you.
You might get better play at some Fox News affiliated blog. I suggest you try.
DonQ, isn't it a little bit misogynist to think that women would converse w/ a "cretin" simply b/c he had money (what the $100 around his neck would elude too)?
Not to mention you need to have 14 Degree's to even make a reasonable income....Pfffft. I have three and am going back again for my fourth...ugh.
Where did you get the number for 2005? The original chart from your link to the Toil Index only goes to 2000.
The chart comes from Cornell economist Robert Frank, and the link goes to an earlier article of his about the Toil Index. The index is his creation -- great name, right? -- and he must have updated it after that article.
Thank you Laura.
Hah, again, not to mention that my co-habitating long-term boyfriend and I can't even afford to get married to even begin to think about starting a family... not like we'd want to in this economy. Forget even trying to factor in spending any time with that said family altogether.
Yes, we may be employed, but it still feels like indentured servitude at times.
@NewOrleans-You can get married in any public courthouse. Save the money you would have spent on a huge wedding on life after the wedding.
I agree with Brad. Spend your money on experiences that will make you most happy. Wedding day was worst of my life (parents!).... and it was a small, low cost wedding at family church. 2 years later I lost my wedding rings, too. Husband has never worn his ring (30 years) because of shop work-- could have saved that money!. I replaced lost rings with a band set with some red & white stones (ruby is my birthstone). Weddings are another part of our consumer culture.... don't buy one just because you "should". buy one because it will be fun and make you happy
Well that explains why my partner and I can't find a place to live that's 1/4 of our income which was the standard I was taught to go by when I was learning in how to budget. Of course, that was when I was in school in the 60's. Now our rent is nearly 50% of our income and we are living in a 1 bedroom apartment and, between us, we have 3 masters degrees.
May I ask if you're living in a city now, and maybe moved from a suburb or smaller town? The 1/4 thing doesn't work well in New York City, but then again you don't have to have a car here.
I am living in a ex-urb of Minneapolis, MN and my rent this year is now better than 1/2 of my Social Security benefit, for a one bedroom apartment with bad plumbing and dangerous bathtub. The "Section 8" program is closed for at least 5 years due to the fact that there are thousands on the list. The Senior Housing which is on a different program are most limited unless you choose to move into Minneapolis.
If I go for a 6 month lease my rent goes up another $50.00 per month, if I go for a month to month arrangement the rent goes up $90.00 and if I try to get out of the apartment before the end of the lease I lose my deposit and am required to pay a minimum of 2 months rent.
I'm terrified of what will happen when next September comes around and see where the rent is going then. It took me 5 months to find this place. Scary!!!
The problem is you have to go to cities in order to get a job. There aren't nearly as many places to work that are rural or that have cheaper costs of living. It's a weird exchange I've noticed, although I don't know if that's the way it has always been or if that's something new.
I can tell you as someone in their early 20's who lives on their own I never heard someone talk about rent being 1/4th of your income. When you go to rent a place they require that you make 3x the rent in income unless it's Section 8 Housing or some other form of lower income rental properties. If you live in a place like Portland, OR (where I do) you pay roughly 700$/mo to rent a place, but only make about 1200-1400$/mo depending on how much overtime you can get (this is assuming you work for minimum wage-approximately 12$/hr (I make around 10-12$/hr depending on how many calls I take as telecommunications specialist for the hearing impaired)). So your rent is essentially half of what you make. The way you get over this is by having someone vouch for you or paying a huge deposit upfront. To get the apartment I am living in now they required that I pay first and last month's rent up front, plus an additional deposit of I think $1,000 before they'd rent it to me. I had to pawn a bunch of my stuff in order to get the money.
You have more options on a fixed income if you are no longer working.
Usually less expensive 100 miles or so outside any large city. Rural farming areas tend to be more affordable because average income is lower. Might be closer to home and more affordable.
Places like Oklahoma, Arkansas, New Mexico, and Texas tend to have lower rent. Kind of far from home. One plus for petroleum producing states is that most subsidizes nursing home care (click here for Oklahoma).
Most of the people I know that retired in California moved to Arizona to reduce living expenses.
The 25% income rule originated with mortgage lenders.
This is not new. It has been like this for at least 30 years.
Oklahoma is okay if you've got money, I guess. We have low property taxes because we don't like funding public schools. We make up for it in being among the top 5 with rates of incarceration. It is a rotten place to be born and grow up in.
Third world country basically.
True Don,
My brother moved to OKC in about 1980, and most of my relatives still live there.
Somewhat disturbing to realize that moving to a Republican state is like moving to Mexico, except that you don't have to practice your Spanish.
You missed out...about ten years ago we still had legal cockfighting. Couldn't buy a Hustler or Penthouse in any book or convenience store, but you could go to a cockfight.
Sadly, the south or the Bible belt has the highest divorce rate, the highest level of infant mortality, the lowest level of education, highest level of pornography, etc. If you don't believe in taxes, you get a 3rd rate place to live. The north east on the other hand has the lowest level of infant mortality (for the states), the lowest level of divorce, the highest level of education, the longest lifespan, etc. They act like responsible adults and support what civilized places need.
What I can't figure out about the south is why they embrace religious fundamentalism so keenly, and yet their religious practices seem to be having the least impact of any part of the country. There's a lot of bible thumping going on, but not a whole lot of putting it into practice in their lives. If you're going to be making a lot of noise about how great your religious beliefs are, then why not try actually applying them in your life and see if things don't get a little better? Or else just drop the facade and give up the BS if it's not working.
It's not just "working families" - single people (mothers, not married, divorced, widowed, granma) period, can barely afford to LIVE!!
And this is why I feel like that hamster, running on that wheel - going no where fast - the sad part is that I DO realize that even as the pundits lie to me!!
Ah but we are all most successful at doing more with less! Imagine what we will be able to achieve once we hammer out a more level playing field!
My parents didn't buy us iPads, cellphones, computers, televisions, iPods, internet service, or subscribe to more than one telephone service. We bought fresh or frozen veggies, cheap meat cuts, wore hand-me-downs. The only person who got new clothes was the oldest child (out of 6), except at Christmas time, when a plain blue sweater was one of our gifts.
We lived well, and my dad was home every day from work at 5:30 to read the paper and eat dinner that my stay-at-home mom prepared.
There was money for catholic school and public college (no loans, no grants, no scholarships) for every one of us. My dad was a lifer, a Naval officer. Frugality pays.
I was just waiting for the spoiled American argument. Sorry Margaret, but most people are already doing those things to save money and still struggling. Struggling to make ends meet, trying to keep a roof over our heads, food on the plate, and clothes on our backs , and nothing more to hope or dream for. Read the graph, people are working longer hours for less and less pay. I don't know about you, but I am pissed....pissed that my parents ,adjusted for inflation, made more money in the 70's and are better educated than this generation, and totally sold future generations out by voting for Reagan and trickle down economics.
Testify!
Margaret,
Most of the mom and pop restaurants in my area shut down because everyone started doing what you mention several years ago.
Others may not share your viewpoint.
US Navy officers make decent pay, even after retirement.
There are multiple scholarship programs for military dependents.
Government workers and their families tend to be privileged.
The middle class was doing alright until we switched to fiat money in the 70's. LISTEN TO RON PAUL!!!
I entered the workforce in 80 and truly feel the boiled frog effects of this graph today. Recently sold a vehicle and restructured mortgage debt to hang on...House needs to vote NOW!
Hell, my husband and I both had two jobs back in the 70's & 80's. So it's no different today. Our full time jobs were 35 hours a week, and we each had a part time job evenings and weekends. We were married 14 years before we had a car, and that was a hand-me-down. First new car was after 24 years of marriage. So stop belly-aching; we worked just as hard for less money than you're making. It's no different than it ever was. I'm sure your parents struggled just like we did. Just do the best you can with what you have.
You are WRONG. The facts don't back you up.
You know, you sound like the wonderful people on the ads that say "If I can do it, so can you!" We are "equal" as human beings, but also we are also "unique" as human beings. There are things I can do, that you can't or won't and I am sure there are things that you can do that I can't or won't.
First, you and your husband were both working your full time and part-time jobs when money was money and wages and benefits were still fair. It took both of you to do that???? In case you haven't noticed the charts, the wages for the middle class have remained flat over the last 30 years, but costs of living have not remained flat. In addition, benefits have been cut to the bones for todays working class (you know, those other benefits you and your husband enjoyed with your full time jobs). While you were working full time at 35 hours, people who are working today are working many more than 40 hours to just hold in place.
If things are "the same as always" then I would greatly appreciate your explaining to me how my mother could live in a senior apartmart, afford the rent, pay for groceries, see her doctors, get her prescriptions all on her Social Security benefits, and take trips to Sweden and Israel. Of course, her rent was $130.00, her Medicare paid her total medical care, her prescriptions were at a decent rate (not over $300.00 a month).
I got my first car at 28 years old, bought my house at 30, lived and worked hard to get by with my family (barely). Now I have a Social Security benefit that pays for my rent but it takes better than 1/2 of my benefit. I have a Medicare and Rx plan that costs me $150.00 out of my Social Security before I even see it, and then I have to pay a deductible and co-pays for doctors, hospitals and prescriptions. The cost of food has gone up exponentially, the clothes I buy are from the thrift store. I have never had an I-Pod, I-Phone, or X-Box. I have had to give up a car, because simply I couldn't afford the car, the maintenance, the license, or the gas. At 74 I am still working a part-time to be able to get from one month to the next. My television is from when I was still employed full time. My computer is a gift from my son.
I appreciate your advice. Now tell me just how I live more within my means. Give up my apartment? Give up my medications? Stop buying food? Quit buying soap (at $15.00 a package)? Stop buying toilet paper (at $13.00 a package)? Go to the Dollar Tree to purchase little bitty packages of necessities? Well I already do that one - and it isn't quite enough.
May I suggest that you don't have my life and I really don't think you are qualified to make a judgement on me or anyone else. Instead, thank God that you aren't where so many of us are.
Just a suggestion.
Hopefully it won't have to get a whole lot worse before it gets better. But make no mistake, a change is coming. But it will require folding along that generation gap and retirees finding common cause with college students. Dorli Rainey comes to mind. Talk about bad-ass!
The irony, of course, is that this sentence right here explains it. 40 hrs/wk is considered "full time" (I do not know if it was considered as much in the 70's or 80's as I was not alive then). Someone working 35/hrs a week would be considered a part time employee and would not qualify for benefits w/ most companies (some companies will qualify you for benefits if you work 32 hrs+/wk, but the odds of you actually working less than 40 and still qualifying for benefits are minimal and such hours are usually reserved for disabled persons or students). So what you are actually saying is that you worked 2 part time jobs in order to make ends meat. So yeah of course you'd expect everyone to shut up about having 2 jobs because you never had 1 full time job. For the rest of America they are working full time jobs of more than 40 hours a week plus a second part time job and sometimes a 3rd. Even though 40 hours a week is considered "full time" the median worker actually works 50 hours per week. Which means when you add this to the second job we've now increased our workload by a minimum of 15 hrs/wk. I call this ironic because the poster made this statement assuming it would testify to the "shut up and do it yourself cause that's what I did" sentiment while simultaneously agreeing with the very thing the poster thinks he/she is disavowing.
As I have stated numerous times before- I never knew it was possible for people to contradict themselves w/in the same thought process on a consistent basis until I started blogging.
The funny part is that ignorant voters are doing it to themselves by listening to fake news (Fox news come to mind).
I can't speak for other states, but California actually voted to wreck our own economy.
Hispanics began to realize what was happening to their children at about #8, so immigration from Mexico to California reversed.
That collapsed the California economy, and the rest of the country followed our trend setting lead down the rat hole.
I had heard it said that Californians are so weird because of all the Dustbowl Okies who settled there during the Great Depression.
In a whole host of ways it looks like California started turning INTO Oklahoma!
Hi Don,
Yes. I'm pretty sure that's part of what happened.
One puzzling thing is that most of the "okies" that settled in California actually did not come from Oklahoma. Most of the "okies" I met while growing up were the children of immigrants born in New York that left when the stock market crashed. Italian. German. Irish. ...
The crash of '29 came about 3 years before the dust bowl started, so most of the "okies" were actually people from the east coast that followed I-40 or Route 66 through Oklahoma. Stopped for a month or so in Arkansas, Oklahoma or Texas, and kept going west.
The "okies" that I know went to Oregon, Washington, and Idaho because California was "full" in 1933 when the dust bowl started (part of my family). Both of my grandfathers came to California to work for the WPA but were unable to migrate west due to a hostile attitude toward immigrants from "foreign states".
Funny that history books used in school follow the story line of books like the Grapes of Wrath that miss out on this little detail.
Very good to know! Still, does California look alot like Oklahoma now. That is, a third world country in its own right.
Hi Don,
It depends on the city.
Lancaster, Fresno, Sacramento, Bakersfield, Ventura, Chico, San Diego, Santa Barbara, and Redding definitely have communities similar to Oklahoma. These cities definitely have segregation and other race related issues.
The Greater Los Angeles area and Greater San Francisco area do not have the same feel as Oklahoma. Each one has a China Town, a Little Tijuana, a Little Italy, and so on. There is segregation, but it is not normally racial. People that live in segregated areas choose to do so. Racism is only an issue in the poorest neighborhoods with the highest crime.
One sad fact is that there are several incredibly wealthy racist families in California. The descendants of William Randolph Hearst is one family. There are others. Those clowns have messed up every election for over half a century. I understand that relatives of Adolph Hitler even live here. Pump incredibly amounts of money into ridiculously stupid things during each election.
I shudder to think.
You are absolutely correct Crackhead Awards (wonder where that handle comes from...). It all started with Proposition 13. I watch the state slowly decline after that and the worse it got the more stupid people behaved. Ronald Reagan as the states governor did not help.
And people wonder why my college-grad son (physics) still has to live with family instead of on his own.
I have known since the 80's that the standard of living has been declining. We work longer hours for less pay just trying to keep up. Companies can't understand why employees are not loyal and people change jobs more frequently than our parents. And that isn't enough for the Republicans. They want to abolish a lot of labor laws. But even that isn't enough, they want to abolish SS, Medicare, welfare and a lot of domestic programs for the middle class and poor. The Republicans are crying class warfare, but they fired the first shots. Were they expecting thank you cards?
Companies have been far less loyal since Reagan. The greatest generation mostly worked union jobs because of the post WW2 manufacturing boom and they retired with pensions. Under Reagan, unions got busted, jobs went overseas and the old middle class American dream died with a stake in its heart.
My father who was a Teamster was doing givebacks for the last 10 years before he retired in 1995.
Companies are outsourcing only because manufacturing and assembly are cheeper outside the US.
Government should take an active lead role in this situation by funding research that will improve the US competitive manufacturing edge.
Work is migrating out of the US because government R&D for manufacturing effectively ceased in the US during the 1980s while simultaneously growing in places like Japan and Germany shortly after computers became common.
The result was robot factories that have threatened to shut down the US automotive industry more than once. A real hot topic in Japan during the 1980s.
Unions in the US even fought to prevent automation until Japan and Germany kicked our automotive a$$.
Much of the factory automation equipment used throughout the world isn't even made in the US.
If only we could outsource our rent.
I can personally attest to the fact that the economy is producing jobs: I have three of them.
I'm glad you point out that Elizabeth Warren's research has been showing precisely this. Anybody who is interested in finding out more should watch this video from March 2007: Elizabeth Warren "The Coming Collapse of the Middle Class". Available on Youtube.com watch?v=akVL7QY0S8A
Very thorough, fact-based description of the problem BEFORE the economic collapse.
i was laid off from work yesterday, my husband was laid off 3 weeks ago. i won't have any work until april and my husband has no idea if or when he'll get another job. we are in our 50's and have worked hard all our lives. the jobs that my husband has had in the last 6 yrs. were all 60 hrs. a week ( which he did). i can barely find a 40 hr. a week job. we just want to work and be able to pay our bills.
Belatedly, I'm sorry to hear the news. What you're going through sounds very, very hard. And you sound very strong.
I don't doubt that the trend is accurate, but... bear in mind that this is both for "median" workers and "median" housing. Anyone who follows housing trends knows that the median house has been growing in size for quite some time, which drives up its cost irrespective of any change in income. And while I'm not one of those "market purists" who believes markets will spring up to supply any demand, the fact is that very few families today are willing to live in cramped quarters (we were a family of six in a two-bedroom house until I was 8), so the market simply doesn't supply housing that's more affordable.
As I say, I'm sure the rise in housing costs are outstripping wage gains. But a more accurate picture, instead of comparing "median" anythings, would be to compare how many hours of labor per month are required to pay for the same square footage as in 1950.
This graph is misleading in my opinion. The graph charts the rising cost of renting a home which is determined by the average cost of the house. In a large part this graph merely charts the housing bubble. But most homes are owned by the occupants and thus not affected by changing rent cost not to mention those people who chose to rent houses often are only temporary house renters and eventually become home owners themselves. Or often people who rent homes share the house with other renters and since the average house is double the size of a house in 1950 you could have twice as many rooms to rent out in the house.
.....Umm how much you pay in mortgage is affected by the cost of rent and vise versa.
Silly, Del, we don't care about what's behind the numbers. We just want to make a point.
Mouzer, while one often looks at comparable properties to set a price, this is not the cause of the price. The price is determined by demand, quality/size, location, etc. From my observation, Del is correct. I could not find where the graph's author took into account the home size increase over the years, the quality of home increase over the years, and other factors that greatly impacted these numbers. I'm not saying there isn't some truth in the graph, just that there are many other factors at play.
I don't know what evil essence drove the "McMansion" craze, but, it was not a desire for quality nor architectural greatness. They seem to have been thrown together with ticky-tacky, but, they are big, I'll give them that.
Del-3643512,
Rent is determined by consumer demand and not the cost of the dwelling.
Rent was about $1,500/mo for 2 bedroom place in 2008. Dropped to $1,200/mo currently. Mortgages dropped from about $1,700/mo to $600/mo during the same period.
I rented out the place my wife and I currently live in from about 1983 until 2008 because the mortgage was upside down in 1983 (could not be sold). Operated at a loss until about 1990.
Can't sell it until after I live in it for at least 5 years because the original purchase prices was depreciated while it was being rented our.
I agree. While there is always a correlation between rental prices and mortgages (or home costs), one is not the cause of the other.
I knew that calculating your rent as a quarter of you income was long gone, but I thought I was an unusual case to see the rent as much more than half
Oh, my! Look at those wonderful 60's. A hundred-dollar's rent, $.25 gas, $.30 for premium cigarettes, free love, and the Beatles.
With the foreclosure rates so high, by definition, demand for rentals will increase. Rent will continue to go up across the board as fewer and fewer people own homes. Families are moving in together and sharing the labor of child rearing, food preparation, etc. to be able to get by.
Our labor force is trained to do jobs that our grandparents had, not what our economy will need in the future. Wages are flat. Efficiency in production and outsourcing have lost American jobs, but education and job training have not changed with the new economy. An english major doesn't have a lot of places to go without more education. If you can produce something - especially food, clothing, shelter, energy - you will probably be ok. If not, you need to start thinking outside the box. Start a business, learn to run a computer program (or several), learn how to create a website, make something with your hands, provide something that most people need. We have no choice but to change with the new economy. It would be really great if people started coming up with ideas on how we are going to accomplish this. The government isn't going to help us. We can only help each other. Getting rich off someone else's labor or knowledge is a thing of the past. If we can come up with a sustainable system, where everyone wins, we are on the right track.