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Comment by randomdata | Hacker News Reader

> In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner.

Has that really changed?

A manufacturing business in my area is currently hiring everyone who shows up to an interview. They pay they are offering isn't wonderful (at least if you concept of money has been warped by the IT industry), but you should expect to make around $40,000 per year to start. Perusing the real estate listings, I see a three bed, two bath detached home near to that business listed at $139,000.

Rule of thumb says you shouldn't spend more than three times your income on housing, but many suggest you can go as high as five times income. We're at 3.4 times income. It's not ideal, but it seems doable, especially if you want to live like it is the 1940s. The cost of cell phone each month can easily apply $50-100 more to your mortgage payment each month instead.

I will point out that our example job is one that you can walk into and start today. If you take a little more care and look around and risk a few rejections before finding work, there are plenty of jobs that pay considerably more. In those cases, one person buying a home should not be an issue whatsoever. A $45,000 income would provide the necessary amount for the three times income rule of thumb to buy this home in question.

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Households today spend more on cell phones and communication but also spend less on fine china, dress clothes and food. When you net out all the pluses and minuses households today spend much more on housing, healthcare, daycare, transportation (two cars, for two jobs) and education.

When you look closely the two bed, two bath detached home it’s likely in a school district that is underperforming and while the home may be slightly larger than those in the past it’s 30+ years old.

This is detailed elegantly in the Two Income Trap by Elizabeth Warren.

The thing that is crazy is that there is any debate in the subject. Real productivity growth has averaged 2% for the last 100 years in the US. Early in the last century they they were speculating that if productivity growth kept up at that rate their grandchildren would only need to work a couple of hours a week and what would they do with all their free time?

How did we get here?

Actually, I think the housing price expectations discrepancy is probably a function of where you live vs where the GP lives. Inflation-adjusted housing prices haven't actually risen all that much outside top-tier cities.

http://www.realestatedecoded.com/case-shiller/

Given that a relatively small percentage of people live in these places, I get the feeling the perception of a housing price crisis is larger than the reality. I don't mean to say that housing isn't unreasonably expensive in some places, but that the issue likely receives disproportionate attention because it most strongly affects those who tend to write and read about issues like a housing price crisis (i.e. journalists, software developers, economists, etc. who often live in these expensive cities). The people dictating and participating in these conversations are those who are living in expensive cities.

For the typical poor person, I suspect the costs of higher education and healthcare are usually a bigger obstacle than housing costs. Though this is probably not the case for a poor person in San Francisco.

Millions of people live in top tier cities and millions of people live in Nowhere, USA where housing is still ludicrously expensive in proportion to job prospects

This hits really close for me. I am a Seattle IT guy and looking at houses back near family in Michigan. Sure, houses are 2-4x more expensive here...but I will most certainly make 1/2 as much in the areas in Michigan that I would like to live...which is as far away from the Detroit metro as possible. And even if I can make that much I will be lucky to find a job. Here in Seattle people come to me to hire me!

Amen... but with Washington DC. Northern VA has literally the richest counties per capita in the US. Then I look at Eastern WA or Idaho and lose my shit. Montana, too, though the culture is terrible.

If only I could get a job there that didn't pay poor salaries...

Remote work will someday change this but boy is that change slow to occur!!

You know, I've always heard that and thought it seemed reasonable, but when I actually started looking through the data I noticed that the top tier cities often have significantly lower median incomes.

The top tier cities also have higher mean incomes. The top tier cities tend to attract the outliers. If you are Mark Zuckerberg, you probably live in a top tier city. But almost nobody is able to say they are earning like Mark Zuckerberg. And if you are earning like Mark Zuckerberg, the cost of housing is the least of your concerns.

It seems for the normal every day average person, they actually make less money in a top tier city.

gp actually answered that with "especially if you want to live like it is the 1940s".

There is a quiet denial about how luxurious modern living is. People just flat-out underestimate how much work it takes to keep the infrastructure of the modern world in place and humming - traditional infrastructure, IT grids, distribution of goods and services (particularly maintaining an enormous fleet of wheeled vehicles).

I know a lot of people who are poorer than I am but spend more, because they just don't clamp down on things like car usage, sending money to their children, pets and ordering a daily coffee. The only thing that will force them to live a simple lifestyle is literally having no money.

Sometimes people maneuver into a position where they have no choice, because they make bad long-term lifestyle choices early on, but so far the evidence is that human demand for stuff and services is infinite. People use their spare hours to gather and consume more.

> There is a quiet denial about how luxurious modern living is.

Absolutely! I genuinely marvel every time I go into a supermarket. I can buy a huge variety of delicious foods from all the corners of the globe. 200 years ago a king couldn't eat this well.

Also, I have literal robots doing my housework! A robot cleans the floor. A robot cleans the dishes. A robot cleans my clothes. It's nice to take a step back and appreciate all this.

>200 years ago a king couldn't eat this well

A kind 200 years ago couldn't eat this variety.

But they could eat very much better -- all free-range, well made, top quality cuts (not hastily made, lower tier BS, with all kinds of additives to increase self-life or make it appear more appealing in the shelves), made fresh on their own premises or bought from the best artisans.

And of course all prepared at their whim by their army of personal chefs, and served by an army of servers.

And they had all the time they liked to enjoy those things, with friends and family, not having to gulp them down between 60-hour work weeks...

> And of course all prepared at their whim by their army of personal chefs, and served by an army of servers.

Math says that majority of people were among army of personal chefs and servers not among those being served. So, you are arguing by outliers.

Parents were talking about kings, not about service people.

Reportedly Boris Yeltsin was so floored by a random American supermarket that it help spur him to end the Cold War: https://penetrate.blogspot.com/2013/04/how-randalls-grocery-...

If you find that interesting, in a similar vein, a walk through corn and soybean fields in Canada lead to the collapse of the Soviet Union.

https://nationalpost.com/news/canada/the-walk-that-changed-t...

>There is a quiet denial about how luxurious modern living is

There's also a big denial about how luxurious 1940s living was compared to 1840s or the palaeolithic ages...

...and that's just as well, because it's not really relevant. Living standards and necessities are determined socially, in comparison with what others of the same era have (and expect people to have), not with comparison to the past.

Someone that lives in nice large cave in Malibu with rocks for furniture and self-made pottery, and a stock of food he has hunted himself, would be considered well-off in the cavemen era, but homeless today.

Leaving aside how arguable it is, this definition of living standards is not relevant to this subthread, which is about the claim that prosperity has not been increasing for decades, followed by an unfavorable comparison to the 40s/50s. By such a useless definition, the claim is tautological: of course prosperity can't have increased of living standards are defined as being eternally static. Incidentally, it's a subthread you started and a claim you made, so it's a little bizarre to see the goalposts being moved so dramatically.

> Living standards and necessities are determined socially, in comparison with what others of the same era have (and expect people to have), not with comparison to the past.

By this definition aggregate living standards can never improve (nor decline) over time.

Ah yes. The poor are poor because of poor morals, instead of you, who is of good moral standing.

The poor are poor due to lack of money. This is caused by increasing costs of healthcare, education and houses, you know those basic things needed to live. And by a capitalistic class taking about 95% of all gains from productivity increases. Saying millions of people are poor because because of bad morals is disgusting and completely false.

Ugh, poor money management skills have nothing to do with morals. It's fine to say someone has poor money management skills just like it's fine to say someone has poor C++ coding skills.

Creating a budget and sticking to it requires behavioral changes that take time to sink in.

It's extremely unlikely that you make the perfect amount of money to cover your exact needs that result in you being broke. It's much more likely that people adapt to a system of spending all money that comes in on whatever 'priority item' pops into their mind because they lack the skill and/or discipline of budgeting. This is evident in higher income people as well that suffer from lifestyle creep.

Again, this has nothing to do with morals. It's just a statement about the appalling lack of financial education in the vast majority of the US population.

I think you and the original poster are in violent agreement Reread his post all of the way through.

I agree with your core thesis, but it could probably have been expressed better. In the USA there's a moral system that some people have that equates wealth to virtue. In my experience, it leads to conclusions that are generally dehumanizing and unempathetic of others, which is definitely not a long term sustainable foundation for a free society.

I thoroughly reject whatever it is you are suggesting. There is nothing immoral about wanting to enjoy a high standard of living.

If you maintain a 1920s lifestyle today, you probably could work just a few hours a week.

Thing is, nobody wants that kind of a lifestyle.

Thing is, it doesn't make sense to want that lifestyle. It's not an option anymore, the same way living in a cave is not an option.

It would place you in pariah status, for one -- and a lifestyle is not just to putting food in the table or a roof above your head, it also includes making you eligible for a partner, able to raise kids to do OK in society, and so on.

Pray tell, what is that lifestyle? What has changed?

People lived in homes both rented and owned, there were few big flats of apartments. They didn't have cars but used bikes and public transport.

They had comparable quality food if not better. Ate somewhat less meat. Slept better and longer. Worked similar or shorter hours. (with exceptions)

More worked physical jobs, but a sizable number ran office jobs.

They tended to be more locally sociable and active I suspect too.

Fewer went to get higher education.

> while the home may be slightly larger than those in the past it’s 30+ years old.

Pardon my naiveté, but is this a common bar? I didn't grow up poor and I'm _definitely_ not poor now, but I don't think I've ever lived in a house that was less than 30 years old. I didn't even realize that was desirable; my impression was that the stereotype of new construction is "classless, soulless cookie-cutter Levittown" (not saying that I agree with this notion, just that it was my understanding of how the property market treats housing).

Am I mistaken here? Or is this perhaps different between cities vs more rural areas, or suburbs? I've only ever lived in big cities.

Suburbs built in the 1970s have the same problems as houses built today - rapid, low-quality construction, cheap materials, etc. They're temporary buildings. (Levittown, in fact, was built in the 50s!) At the very least, a new house is further from it's expiry date than an older house. You'll probably find better construction where land costs more (downtown cities) or pre-1950s buildings, but these are quite rare.

EDIT: As a reminder of the endless progression of time, a 30-year-old house would have been built in 1988.

Meanwhile, in the fifties all the houses were new and all the school districts were better than average.

"all the school districts were better than average"

That might be a statistical impossibility:-)

Depends. Suppose you take those new-fangled school districts just built in the fifties. Are they better than the global average? Likely. Are they better than the average school district in America? Possibly. Are they better than the average school in your state? Maybe. Are they better than all those new school districts? Definitely not.

If we are to compare eras and discover what's different I would suggest we ought to compare broad numbers not anecdotes. Even your example is suspect.

The real median income at present in the US is 31k meaning half make less. 45k puts you at the 59th percentile better than almost 2/3 of people. Clearly not everyone who wants to is earning 45k.

A median earner with a spouse and 2 kids is liable to take home less than 1100 every 2 weeks after taxes but your 45k earner will have more like 1400. They will get 3 paychecks in 2 billing cycles but will have to live on 2 most cycles.

Median rent is almost 900 a month. Health insurance for a family is going to run 500 usd says that their food will be 150 a week 2 crappy cars maybe 400 a month. Utilities at least 200. Communications at least another 100.

We are already at 2700/2800 without including clothing or detergent to wash them.

The real question is where is the person supposed to save the money to move from the apartment to the house in the first place. At 45k you are too well off to qualify for a lot of benefits except in areas that are very expensive to live in, but still too poor to support a household.

Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation.

> The real median income at present in the US is 31k meaning half make less.

You will find that the full-time median income is much closer to $50,000 though.

> Clearly not everyone who wants to is earning 45k.

But, in fact, as this is a full-time job, you are actually below the median. When you add in high school students working part time, then you're right, but that's not particularly meaningful.

> Median rent is almost 900 a month.

Seems high for the area in question, but regardless, since you are buying a home, I'm not sure why you would also pay rent to someone else?

> 2 crappy cars maybe 400 a month.

Maybe the person paying for the house needs one car to get to work. Why do you need two cars?

> Communications at least another 100.

A landline phone where the house is located is $23.50/month. Another $35/month if you want internet service. That's a long way from $100 and already way more than someone in 1940 would have. If you really want the 1940s house-buying experience, you don't need internet service.

> Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation.

I don't know about the economic situation in Ohio, but the place in question has exceptionally low unemployment and substantial job growth. That's why businesses like the one I mentioned have to hire everyone who shows up. If they didn't, they wouldn't have any employees.

I don't think anyone expects that you should be able to throw at dart at a map and be able to afford a home anywhere it lands. Not even people in the 40s and 50s could do that. They had to be quite discerning about where they settled in order to do so. That much remains true today.

You will find that the full-time median income is much closer to $50,000 though.

That's household income, not per-capita. It is heavily skewed by two-income households.

I'm talking about full-time personal income. You are right that household income, which includes households that only have part-time income (and other sources of income, like pensions), comes in at around the same amount.

>Maybe the person paying for the house needs one car to get to work. Why do you need two cars?

Sure, assuming the family doesn't have kids, the other person will never need to leave the house for errands, etc. (Or, you know, they don't want to be cooped up in the house all day.)

During the 40s and 50s the use of a car, even in rural areas, was normally reserved for a special trip once a week to run errands and get out of the house, if you were able to afford a car at all. The average family at the time wouldn't dream of wasting money on a second car, let alone the first one, to 'frivolously' get out of the house on a daily basis for pleasure. That money was needed to pay for the house.

It is entirely understandable that expectations have changed. I certainly don't think twice about hopping in my car any day of the week, and own two of them at that. But if expectations have changed, why would we want to even try to to apply 40s and 50s housing logic to modern times?

Lets be real the second car is so the spouse can get a job too because otherwise the bank is taking the house.

The house was already affordable without the spouse needing a job, albeit with some possible unpleasantness like not being able to drive around for fun every day of the week. But if the spouse chooses to take a job, affording that house becomes really comfortable. Which only goes to show just how affordable housing really is.

Then there's another income to add to the equation

Your “median earner with a spouse and 2 kids” is quite different from the median household. The (gross) income in a median household is $59k.

The point was that one worker can't effectively pay for a household anymore.

But that's simply not true. It may be true in certain places. Two people probably can't realistically afford to buy in San Francisco, but it's big world out there. You don't have to live in San Francisco.

Not even in the 40s and 50s could you live anywhere you wanted, while owning a house on a sole income. Like today, the houses affordable to one income were only found in certain places and only those who were willing to move (or were lucky enough to have been born) where housing was affordable were able to own them.

From what I recall, the homeownership rate in the 1940s was only around 45%. Owning your home wasn't anywhere near as common as it is today. To say that people with one income could afford their home back then is simply cherry-picking those who could, ignoring everyone else.

Many earners are part-time earners nowadays. If you want to make that point, you may want to look at the median income for full-time jobs ($50k for men).

I think folks are spending quite a bit more on things they need which used to be much cheaper. Healthcare and higher education come to mind as expenses which have started to eat the average family's budget much more than in the past. The medicine is much better today than in the 50's of course.

We ought to include a full picture of required spending in relation to housing costs.

On the other hand, essential costs like food and clothing have dropped substantially over time. In the 40s and 50s food and clothing accounted for approximately 50% of one's disposable income. Now it is closer to 30%.

But your comment does raise an interesting question: If I were to hypothetically spend $100,000 for an optional status symbol like a Ferrari or higher education and can no longer afford to own a home due to that purchase, does that indicate a problem with the housing market?

People that can't afford housing don't buy Ferraris and they spend money on higher education because that is sold to the entire populace at large as the way to get ahead.

Further good jobs use it to distinguish between those who are worth looking at and those that aren't even where the education isn't truly required to do the job.

Also we really don't want to admit to ourselves that the biggest step up would be to go back in time and drop out of the right uterus.

Spending on food, clothing, and housing does not factor into "disposable income".

Where would you factor it in then? "Disposable income is total personal income minus personal current taxes"[1] Where else would the money come from?

[1] https://en.wikipedia.org/wiki/Disposable_and_discretionary_i...

Huh. I'd always considered the definition of disposable income as the income that I would literally consider to be disposable, e.g. the money left over after I've covered everything I need (including housing, clothing, food and taxes) that I could set on fire and not change my current condition.

Per the wikipedia article of disposable income, I could afford a Ferrari (on a payment plan), but I would generally say I don't have the disposable income to afford a Ferrari because I still have to pay rent and feed myself.

Obviously the article defines that as discretionary income, I've always considered them to be equivalent terms.

In common speech, your definition of "disposable income" is perfectly acceptable.

https://www.merriam-webster.com/dictionary/disposable%20inco...

https://dictionary.cambridge.org/dictionary/english/disposab...

Note that the Oxford Dictionary uses GP's definition, probably to distinguish themselves from Cambridge :)

https://en.oxforddictionaries.com/definition/disposable_inco...

It's probably a case of a word used incorrectly, but so often that ends up assuming a different meaning.

> after I've covered everything I need (including housing, clothing, food and taxes) that I could set on fire and not change my current condition.

Housing and taxes make sense because they're generally inflexible costs, but how does clothing fit into this? Unless you're sewing smocks out of burlap, the majority of most people's clothing expenses is fully discretionary in every sense of the word (even including work clothes, for those unfortunate enough to have their employer force them to dress a certain way). That isn't to say it's a waste of money, but it's discretionary in the same way that eating at nice restaurants or going to concerts is: something you spend not to survive, but to improve your quality of life in some way.

These are standard economic terminology, not definitions made up by the article writer or wikipedia.. They're can be found in probably every introductory economics textbook from the past half century.

>A manufacturing business

That alone cuts out nearly half the country. The skilled labor economy has been hollowed out and is nearly extinct in most places. You and I live in similar places and the dream remains alive here, but it is long dead in the corner of the country in which I was raised.

It is true that you may have to move to find places where a single income can buy a house, but that has always been true. The necessity of having to move to find better economic conditions has been true since the dawn of humankind. It's why we left Africa, and eventually covered the globe.

It is not like in the 40s and 50s you could live anywhere you wanted either. In fact, the 40s and 50s is right in the heart of the urbanization movement that happened precisely because capital concentrated, exactly like what is happening in many major cities today, and regular people could no longer afford to live where they grew up and had friends and family, and were left with little choice but to leave their existing life and head for the city to start a new one.

It wasn't particularly pleasant. Most people don't crave that kind of adventure. Most people would rather stay near to friends and family and the life they know, but sometimes you don't get that option. That remains true today.

The difference between then and now, is now the planet is full.

At some point there must be a paradigm shift in this line of thinking or very bad things will happen.

In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner.

> Has that really changed?

Yes. From http://www.mybudget360.com/the-magical-2-housing-ratio-betwe...:

> Back in 1950 the median home price cost a little above 2 times the annual median household income [2.2]

> in 1970 the ratio became more favorable to US households [1.7]

> After this point[..] prices remained fairly stable only because of the two income household, until 2000 [2.3]

> After this point, things went haywire. Even today after the [subprime mortgage crisis] the ratio is still out of sync with 50 years of data [3.3]

Keep in mind that this data is comparing housing prices to household income, not per-capita income.

> Rule of thumb says you shouldn't spend more than three times your income on housing

Is this a rural rule of thumb? Looking around me, I see people routinely paying 5-10 times their annual income to get a crappy city apartment and spending the majority of their income making mortgage payments. The alternatives, spending the majority of their income on rent or moving to an area where the majority of the income would vanish, do not seem better.

A conforming loan usually requires you to have a debt to income ratio of 43%. I'm definitely not in a rural area and you can buy a decent house in a slightly above average school system for $200K - if you live in the burbs.

Then you decide have your first child and every reasonable thing you said suddenly looks impossible.

I don't see why? The three times income rule already carries the assumption that you have children. When you get out to the five times income rule you are probably right that children are out of the question, but we're only sitting at 3.4 times income. With the potential to earn more with a little effort, bringing us closer to the ideal three times income.

Not even in the 1940s or 1950s could you buy a house with a week's pay. Housing has always been a substantial cost.

Or you get a major illness, or you ever want to retire...

Living in Sydney Australia spending three times my income or less would be impossible. Didn't think it would be possible within decent travel of any city hub.

I'm sure there are places where housing is unaffordable, but that was also true in the 40s and 50s. The people in that time couldn't just live anywhere they felt like. They did have to move to specific places to find that housing that was affordable, just as is true today.

It's interesting how we are so quick to ignore the uncomfortable details about what home ownership in the 40s and 50s entailed, only focusing on the fact that it was possible, then thinking we can apply that to our ideal living situation in 2018.

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