When considering consumables, we've had pretty reasonable inflation and people are making more than their parents. But if you were to calculate inflation based on prices for things that don't benefit from advances in our production abilities (commodities, equities, housing, education, health care, etc), we'd be making nowhere near as much as previous generations when adjusted for inflation using that calculation.
Affording a car, TV, computer and food to feed ourselves isn't that difficult for many people. It's the life-altering purchases that are slipping farther and farther from the reach of the middle class.
I think one of the big things left off is housing prices. But I'm pretty sure rent, healthcare, and education are part of it:
[1] https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
Edit: Shiller was wrong (I asked him about this point after a lecture about his work on historical housing prices).
See all the weights here: https://www.bls.gov/cpi/tables/relative-importance/2017.pdf
Housing prices go into much bigger bubbles than rent. If interest rates go up or down, it doesn't very much affect the average person's ability to pay rent. But it has a huge impact on how much the average person can borrow.
My understanding for the reason that housing prices aren't included in CPI is because nobody buys houses in cash. So including mortgage payments in theory makes sense -- but it' tricky -- because everyone's mortgage originated at different times and under different circumstances.
But they should include the sale value of houses in CPI, otherwise its pointless. Just because the vast majority of people buy houses with a mortgage doesn't mean the sale price isn't a real price
For example, in Toronto house prices have seemed to go crazy. Industry reports agree. However housing inflation in Toronto measured by Statistics Canada does not show that.
Has anyone else noticed this or have an explanation? It's very strange.
https://www.reddit.com/r/AskEconomics/comments/9haj6h/does_t...
which is arguably the more accurate way of measuring consumer prices.
You could really replace "Economist" with anything in this statement.
http://www.dof.ca.gov/Forecasting/Economics/Indicators/Infla...
I don't think anyone is all that interested in a bunch of dry statistics. No conspiracy is needed.
https://www.bloomberg.com/opinion/articles/2018-10-24/what-s...
Another way to put it is that housing costs used to calculate inflation will lag market prices, because the cost is often locked in for a while. When prices go up, people often don't immediately start paying the new price.
At a certain point, enough individual incedences of a problem becomes far more than isolated incidents and graduates to a problem for society.
If the price of bread (and only the price of bread) went up 10x in price, then only consumers of bread would really be affected by it. You could argue all the hands that "touch" the bread, yes, but in the end the person paying $40 for a loaf of bread is actually affected by the inflation of it; for them to consider "inflation" in the large sense to have screwed them over.
Similarly, people without student loan debt (or over-burdening student loan debt) couldn't really give two shits about the inflation of SLD.
For me, guitars are a big deal. And I bring that up because there's a regulation now that effectively bans a type of wood used for guitars for centuries. If I were to want to buy a guitar with this type of wood that already exists, the price of it would be super inflated as the remaining safe-to-buy stock are grabbed up. This certainly only affects guitarists who favor a certain kind of tonewood; but is akin to my bread example above in demand/price.
Have a baby and either daycare or one spouse off work for a couple of years. Main bread winner out of work for a year. Sending kids to college. Parents need support or assisted living. Major illness. End of like expenses.
In terms of hours worked, it's about the same, 44 hours although has been trends down since the early 2000's.
[1]http://www.aei.org/publication/update-how-changing-household...
[Edit] Just another thought - that data does not break down the households into percentiles for total household income. I would expect that the fraction of multi and no income households w.r.t. total households has increased more on the lower income side of the spectrum than the middle/upper end. It also doesn't account for how much each earner brings in - which is related to the weekly hours stat in your source - I'd expect this to be even more influenced by accounting for income quintiles (or quartiles).
Once you add the changing rate of marriage, increase in single person households since the 70s, and the fact that real inflation often varies depending on which income quintile you're in, I don't think enough data is available to let you pick it apart meaningfully. So we're left trading anecdotes or stats with gaps. :)
The number of traditionally shaped families, i.e. mum, dad, and 2.2 children has plummeted since the 70s and the number of singles, with or without children has rocketed from both increasing separation and later entry into relationships.
I'm in agreement with your main point, that it's far harder for a single earner family to thrive now than in the past. I doubt I can cite that in any sensible way.
Where in your citation is this claim supported? The /percentage/ has fallen which could either mean that the number has fallen or that the total population increase at a faster pace than the number.
That as enough to support my mom and 2 children while also saving for retirement.
That standard of living now would require both parents working and being rather successful in their white collar careers. Even as a reasonably successful person in an advantaged field (tech), I can't imagine supporting an entire family.
If you cut out everything we have they didn't - cable TV, Netflix, computers, internet, cafes, restaurants, Kindle, better choices in grocery food and alcohol - and ate the sort of cheap food people lived on, things like meatloaf and crappy ingredient dishes, I reckon it would be entirely possible.
The only thing that is prohibitively expensive today vs 1980 is housing. The reasons for that are multiple, but mostly NIMBYism.
Again in constant dollars, health care has seen a more than fivefold increase since 1970, from under $2000 to over $10,000 per capita. Constant dollars, mind you.
Health care and education costs are more or less fixed and unavoidable. They're more like fees than taxes, flat no matter the income.
Flat if you are lucky enough to be healthy. Enormous once you actually have an issue, like a complicated pregnancy, or something that requires an MRI.
You can't pay less to get the world class care of ten years ago. Name one other sector you can't pay less for lower quality
The cost of activities for children has skyrocketed beyond belief compared to 40 years ago.
But if you're talking about any sort of instruction I'd say the prices have tripled. If you're talking about something like organized hockey? Prices are astronomical.
Kids basketball consists of 1) kid. 2) shoes. 3) ball. And you only need 1 ball per group of kids. Ditto for soccer (futbol) A jersey is optional.
Hockey requires a bunch of pads which will be changed out every year or two as the kid gets bigger. Hopefully they have a sibling that can make use of them otherwise it's a sunk cost. Then there are broken sticks, broken teeth, hockey bags, ice time -- non-trvial -- and it adds up.
Hell, the cost of replacement skate blades -- not including the yearly sharpening -- is more than the cost of a basketball and a cheapo pair of wal-mart athletic shoes: https://www.bladzskateshop.com/product/bauer-lightspeed-repl...
Also Netflix is really, really cheap and my computer cost me approx 800 USD and has lasted 5 years.
Housing (and in the USA, healthcare and college I suppose) are by far the most expensive things for most people and have soared in price.
All the other things are negligible in comparison - it's like the people going on about avocado toast.
Assume $120 annually for Netflix. A cost almost everyone assumes now, and most people have (58M subscribers in the US/~120M households in the US). $120 compounded yearly at an 8% rate over 18 years is almost ~$5k. Depending on the year attended that's anywhere between 2/3 years of a degree and half of a semester at a public institution (in today's dollars).
Point is, it all adds up. And taking your example; the most expensive things we spend money on are also inflating at an abnormally high rate. The money has to come from somewhere, and when it's leaking out $10/month at a time, it's sometimes hard to find and easy to overlook.
However, it's housing - in the bay area in particular - that makes it look very impossible. For a relatively modest 1 BR apartment in SF, I'm paying close to half my after tax, after-401(k) take home, as a senior engineer doing relatively well.
If I'd need to pay 50% more to have a 2BR (at a minimum) for a wife and a child or two, that leaves a very small amount (for what's now twice as many people) to live on; roughly 10% of my base salary. It looks nearly impossible.
If you are extremely frugal (no restaurants, no vacations), if you get really lucky in finding housing, and most of all if there are no big surprise expenses (e.g. medical ones), MAYBE.
But none of those caveats applied in the case of my father; his standard of living was higher than mine is now.
Of course, if I were to move to another market, it's quite possible. I might take a 20% pay cut but if real estate is a third the cost than suddenly it doesn't seem like an impossible scaling issue that it currently is. I might even be able to afford a car.
In the 1970s, a single income household could more or less make ends meet when the primary bread winner couldn't work. The other spouse would find a job, the household would consume however much less, and life continued.
Nowadays, it's not unheard of for non-discretionary spending (mortgage or rent, other loans, taxes, health insurance, etc.) to constitute over half of a household's spending. If either of the two spouses can't work, things can rapidly go to hell.
Cooking, cleaning, washing dishes and cloth now are incomparable to 1970. Changing diapers is a lot less work now too.
Micromanaged kids don't need parent at home a lot of it is outsourced to schools and clubs. And parent at home wishing to be needed or useful may be contributing to the perceived need for micromanagement (plus those who want women at home for emotional or ideological reasons want to see all that mecessary).
For the record, I don't actually want to return to 1970 standards. However, I suspect that the extreme micromanagement has multiple reasons, but child's needs are not really the driver.
The reason I ask is that I hear this sentiment from parents a lot, and I got curious so I talked with actual CPS officials who laughed heartily at the things the parents thought.
If everyone in America was in a single-income household, and then we all became, for instance, two-income households, wouldn't it make sense for individual incomes to drop by half?