Date: Fri, 18 Aug 2006 16:18:47 -0500
From: BreadWithSpam@fractious.net
Newsgroups: misc.invest.financial-plan
Subject: Re: Standard of Living
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"bo peep"  writes:

> dapperdobbs wrote:
> > I think the average income has tripled from 1950, while the CPI index
> > has doubled, and if those numbers are right, we should (again) have
> > more money ...
> 
> It probably increased a lot more than that, as the 1950-2006 period
> includes some very high inflation/wage growth years. In my own case, I
> entered the civilian workforce in 1969. Between then and 2004, my
> income increased about 800%. However, if I compare car prices, my most
> recent purchase (an economy car) cost almost 9 times as much as my

>From 1950 to 2006, the CPI increase is 8.44x.  So if something
cost $100 in 1950, the same or equivalent price today is $844.

here's a handy CPI inflation calculator from the BLS:

http://data.bls.gov/cgi-bin/cpicalc.pl

Wages go up faster than inflation.  (Total compensation has 
been going up faster than wages, what with healthcare and such).

I wouldn't be surprised if average *real* (ie. inflation
adjusted) income has gone up by about 3x since 1950.
According to the census, indivual income has gone up
by about 2x between 1967 and 2003.  (Again, that's
inflation adjusted.  In nominal terms, that means that
the dollars themselves have gone up by 2x * the CPI
adjustment, which, between 1967 and 2003 gives a total
nominal increase of about 10x)

http://www.census.gov/hhes/income/histinc/p01ar.html
for example

> So while it is true that I make more *dollars* than my parents would
> have ever thought possible, in most cases I can't buy as much with my
> income as they did. So I have a lower standard of living than they did.

That's not true, at least according to the numbers,
your perceptions thereof notwithstanding.

Do not think that I'm minimizing your perceptions - they
are very real and have a huge impact here - but the amount
of stuff you can buy - and that includes everything from
shelter to healthcare - has vastly increased if your income
kept up with overall wage growth.

It's mainly that things that we all take for granted today -
from long-distance phone calls to color televisions to 
high-tech medications to cars to air conditioning - these
things were far fewer - as many of them as existed at all -
during our parents generations.


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