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Comment by paulluuk | Hacker News Reader

I don't really know the stats, but I'm curious if this is true. Yes, GDP has been going up for a long time in many countries, and so the "average wealth" of each generation is going up.

However, is the same true for purchasing power?

Sometimes you hear about these mythical stories of janitors who could afford to actually buy a house, despite having two children and their partners being stay-at-home moms.

And yet today, I hear so many stories about 30 year olds with masters degrees who are still living with their parents because they can't afford to rent a studio.

Like I said, and I can't find good stats on this online. If you have any stats on which you based your comment, I'd love to see them!

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The Wall Street Journal has a great infographic here comparing how many hours of worth it would take to pay median rent today versus in 1968: https://www.wsj.com/articles/how-much-does-the-federal-minim...

Spoiler: it’s not pretty.

https://archive.is/vMKTY

A better comparison would be the price per square foot. The median rent today buys a MUCH larger (and nicer) house than it did in 1968. The average house in the US has increased by 1,000 square feet in the last 50 years. https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...

It's a comparison, but I wouldn't say a better one. You can't just rent a fraction of a property without sharing it with someone else, so the comparison is "What does it cost to get a place of your own in 1968 vs today?" and the answer is you either rent today's bigger but more expensive property, or don't - even if you could afford a 1968 property today.

As Adam Smith observed, when people get more income it almost always goes to better places to live. Better can be more space, better location, or more luxury in the space.

You can still find apartments built in the 1950s that are functional (places where the maintenance was done so they are essentially just as good as 70 years ago) and the rent is cheap. Most people want better.

The more interesting information on that page to me is that the living space per capita has increased. I was suspect that while square footage may be increasing, that could easily be offset by the number of people living in those houses but that doesn't seem to be the case.

The key information missing here though is a more generalized cost of living space per person, beyond housing. This data can still be biased, in general, because it may be the case that fewer people own homes, say more successful wealthy people, while the majority are renting these properties. I have a bucket of anecdotal examples of friends who still don't own homes in their 30s and are still renting.

This data would exclude all of those people painting a picture that people are doing well while some unknown population is renting, paying more per square foot than owning, and rates could be increasing per person per square foot over time. That population could be smaller or larger than those who own homes. I'd be interested to see those distributions of renting/owning and a similar cost comparison for renter square foot costs per capita.

If a young millennial cannot afford a small apartment, it's a poor consolation that house sizes have grown.

Most renters are not renting "New US homes" and rent does not buy a house. It's a pretty poor comparison.

I just looked at graphics, but that's comparing minimum wage against various goods, isn't it? So it would be interesting to see the comparison between median wage and rent, etc. From the data, however, it looks like income inequality expanded quite a bit.

The second infographic compares rent.

But that's still comparing minimum wage rather than median wage, like the parent poster was talking about.

worthless graph because it compares minimum wage to the price of goods, not median wage. The minimum wage today is $7.25 but essentially no one makes that. Target, Chipotle, Amazon, and other start out at $15, others aren't far behind.

You're wrong. Sorry, you don't get to handwave away the many places that are paying $9 an hour and were paying $7.25 last year. Some are still trying to around here.

You can look at the BLS stats. Less than 0.2% of the workforce is making minimum wage.

Half the reason why minimum wages don't work: If they are too low they do nothing.

The other half is that if they are too high they don't create jobs that pay minimum wage. You can't legislate private jobs into existence.

The point of the minimum wage is not to create jobs, it is to ensure that jobs that exist already pay a certain minimum.

The more coherent argument against the minimum wage is that it destroys jobs which cannot be profitable for the employer at the higher wage. The problem with this argument is that the preponderance of research indicates a small magnitude for the elasticity of minimum-wage employment with respect to the minimum wage, generally around -0.05. If a 50% increase in minimum wage results in a 2.5% increase in unemployment in the cohort of people earning near the minimum, and if your aim is to increase the average wage for that cohort, then minimum wage increases do work. The idea that they don't is based on non-quantitative reasoning about the rightness of interfering with markets, or the virtue of work, or a value judgment about a small amount of unemployment outweighing an overall increase in compensation, etc.

I've elided a bunch of detail here, in particular the distinction between minimum-wage elasticity and own-wage elasticity, but this is a good starter:

https://www.gov.uk/government/publications/impacts-of-minimu...

So in this hypothetical what happens to the 2.5% that lost their jobs? It seems to me that in an attempt to raise the average wage we’re reducing the cohort and removing those with little to no skills and putting them on the gov dole to make statistics happy.

>> And yet today, I hear so many stories about 30 year olds with masters degrees who are still living with their parents because they can't afford to rent a studio.

Part of the problem here is a different problem -- the concentration of jobs in super high cost metro areas, and often also, the NIMBYism that prevents such high cost metro areas from building more housing to address demand.

There are so many affordable studios to rent. And so many jobs, and sadly they aren't co-located...

> Yes, GDP has been going up for a long time in many countries, and so the "average wealth" of each generation is going up.

GDP does not correlate to "average wealth" and is itself a dubious measure for economic progress depending on what figures you pick to calculate it.

Also, no matter what metric you use, the "average wealth" of the younger generations, particularly millennials, is not in fact higher than their predecessors. The level of their productivity is a historical high point, but this is infamously contrasted by stagnating wages, assets, and by some metrics even overall quality of life.

>Also, no matter what metric you use, the "average wealth" of the younger generations, particularly millennials, is not in fact higher than their predecessors.

That's only if you look at developed nations. The average wealth in Asia has exploded. The market for labor is far more globalized now, so you have to compete with people used to lower standards of living.

>The level of their productivity is a historical high point

Who's deserves credit for the productivity? Warehouse workers didn't suddenly get twice as good as good as moving inventory by themselves, they did so because Amazon investors invested in automation

A lot of things that are social “musts” today were “wants” 30 years ago. Smart phones, unlimited data, eating out 3-4 times a week, Uber Eats delivery. None of this is necessary in order to survive, but not indulging is seen as odd or socially awkward.

Also living space per person has nearly doubled since the 70s.

https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...

This was linked elsewhere and it only talks about home ownership and says nothing about renting which is the only viable option for many Americans. It doesn't say how many are renting vs owning and how renting has fared in growth/decline per capita.

Agree, it also doesn't help that we haven't been building enough new housing to keep up with growth.

Or even worse, poor. These are honestly very decadent habits and the majority of people can't afford them.

I'd disagree about "not necessary". Cellphones are a necessity now because payphones have gone the way of the dinosaur, there go 100 dollars for a family plan, internet is a necessity, there go 50 dollars more, and especially the expenses for the second car because no one can make do on one income, especially at the lower end of the income scale.

And childcare expenses, of course. Especially childcare.

Big difference between a 5 year old $50 Android smartphone and the latest $800 iPhone. I know a lot of people who own the latter yet claim to struggle financially.

It's not the one-off expenses that hurt, it's the recurring expenses every month. 100 dollars for your regular family plan, that's 1200 dollars every year that you can't cut, even if the kids get the cheapest Android 8 phone you can find.

Also, when your cellphone is how you access the Internet because you can't afford a decent laptop, at some point it makes sense to go for a more powerful phone.

A $150 Android would work just as well in that case.

The difference between the $800 phone and the $150 phone amortized over 3 years is 18 dollars/month. That's not what breaks the bank.

It’s a bit higher than $18/mo, and your average american changes their phone every 2 years, and further phones are not $800 anymore. But let’s assume they are, over 2 years that’s $34/mo and let’s say 4 people in the plan. Over the same period you’ve doubled your phone bill. If $100/mo is expensive then so should the $134/mo or so to upgrade phones every 2 years.

The penniless American will keep their phone for longer than the average 2 years. You'd actually predict that the parents hand down the old phone to the child when they get a new one, and now we know why Apple recently extended the time they keep their phones in support.

> The penniless American will keep their phone for longer than the average 2 years.

Sure but they’re not the majority. This article from forbes (a bit old now) was enlightening. But note that those running their phones into the ground aren’t too far behind those upgrading as soon as they can.

https://www.forbes.com/sites/niallmccarthy/2015/07/09/how-of...

If you are struggling financially who cares if you are paying an extra $10 a month to rent-to-own an $800 phone? That sort of shit is just more judgemental dog whistling.

Everything that you don’t agree with isn’t “judgmental dog whistling.”

I have been watching the laziest members of society sit at the top and complain about the hardest working people with the shittiest jobs for 40 years.

Smartphones replace a lot of things though: * camera (including film & development costs) * camcorder * long-distance phone service * answering machine * portable music player (walkman, iPod, etc.) * GPS navigation devices

Depending on their use they can save a lot of money relative to the the products/services they replace

> eating out 3-4 times a week

What percentage of the western population eats out 3-4 times a week? I'd bet it isn't more than 10-20%, depending on the country.

> Uber Eats delivery

Not sure the people who do the delivering can afford having food delivered in turn (at least not 3-4 times a week).

According to the survey, 56 percent say they dine at a restaurant, get take out or have a meal delivered 2 to 3 times a week.

Fully 10 percent said they eat out 4 to 6 times a week, and 6 percent said they eat out everyday.

https://minnesota.cbslocal.com/2019/05/16/survey-shows-how-o...

It's unfortunate that the link to the actual survey:

https://www.fourth.com/resource/truth-about-dining-out-infog...

is now dead. All this is is a news site quoting it, second-hand, and I have seen enough news sites get original reporting wrong not to place a great deal of stock in them getting it right.

This seems to contain the stats you were looking for https://www.fourth.com/wp-content/uploads/2019/10/US_Infogra...

But how is that any different than saying in 1918 a car was a want but in 1950 a car was a requirement for many people?

I suspect that the answer to these types of questions is that most people don't want to admit how mind-fucked we all are in to believing the bullshit that we are inundated with from the most powerful classes and how little freedom and financial mobility exists in the USA.

I’m not sure how requiring a car (because you need to drive to work) is equivalent to owning the latest hot gadget or having food delivered to you on demand.

Was it your intent to conflate things that are arguably necessities for participating in modern life ("smart phones, unlimited data") with things that are not ("eating out 3-4 times a week, uber eats")?

Because when someone pushed back on you, saying that smartphone ownership now is like car ownership became at some point in the past -- a necessity -- and then you changed it from "smart phones" to "the latest hot gadget".

So it's no longer clear whether you think smart phones and unlimited data are indulgences like ubereats is, or where one might draw the line according to you.

> And yet today, I hear so many stories about 30 year olds with masters degrees who are still living with their parents

Stands to reason. Dedicating five or more years away from the workforce at least partially, if not in full, is an enormous setback financially. As money compounds, your earnings when you are young are dramatically more important to your financial stability than those when you are older. It would be surprising to learn that such a person is on equal footing with a janitor of the same age who started working at the age of 14.

30 year olds with masters degrees who are still living with their parents? There must be additional information because this is just crazy. In 'flyover' country you don't see this. I'm assuming this is California or NY?

I think another component might be the major.

It's a mistake to think all masters degrees are equally 'bankable'

The fact that the master degrees claim was made without specifying what degrees those masters were in is telling.

There might also be a skew due to COVID. Many single people moved back in with their parents because why not, no rent to pay and you can WFH anyways. And it’s not like the social life would go anywhere.

In this case I was referencing my own country, the Netherlands. We're heavily urbanized and no location in the country is ever more than 4 hours driving away.

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