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The average American: 1967 and today
They’re earning more, but think previous generations had it better
When you compare them with previous generations today's "average" Americans are making more — though enjoying it less.
Forbes
By Tom Van Riper
Updated: 12:09 p.m. CT Oct 18, 2006
As the U.S. population crossed the 300 million mark sometime around 7:46 a.m. Tuesday (according to the U.S. Census Bureau), the typical family is doing a whole lot better than their grandparents were in 1967, the year the population first surpassed 200 million.
Mr. and Mrs. Median's $46,326 in annual income is 32 percent more than their mid-'60s counterparts, even when adjusted for inflation, and 13 percent more than those at the median in the economic boom year of 1985. And thanks to ballooning real estate values, average household net worth has increased even faster. The typical American household has a net worth of $465,970, up 83 percent from 1965, 60 percent from 1985 and 35 percent from 1995.
Throw in the low inflation of the past 20 years, a deregulated airline industry that's made travel much cheaper, plus technological progress that's provided the middle class with not only better cars and televisions, but every gadget from DVD players to iPods, all at lower and lower prices, and it's obvious that Mr. and Mrs. Median are living the life of Riley compared to their parents and grandparents.
So why are they so unhappy?
Yes, despite their material prosperity, the Medians are a grumpy lot. A Parade Magazine survey (a good source for all things median) performed by Mark Clements Research in April showed that 48 percent of Americans believe they're worse off than their parents were.
A June 2006 study by GFK-Roper group showed that 66 percent of Americans said that their personal situations in the "Good Old Days" — defined by the bulk of respondents as anywhere between the 1950s and the 1980s — were better than they are today. And in May, a Pew Research Center poll showed that half of U.S. adults believe the current trends point toward their children's future being worse than their own present.
Attribute some of the dissatisfaction to what economist Milton Friedman dubbed "Permanent Income Theory," which assumes that people measure where they are relative to where they expected to be a few years ago. They don't care a bit what the average income was four decades ago.
"If you expect a 3 percent rise in income and you get 2.5 percent, you're disappointed," says Ken Goldstein, an economist at the Conference Board, a private research group in New York.
And because people generally judge their fortunes not in absolute terms, but by comparing themselves to others, the super-success of the top 1 percent can make Mr. and Mrs. Median feel relatively poorer. Take CEOs — the $19 million that Wal-Mart Chief Lee Scott raked in last year was 410 times what Mr. and Mrs. Median made, as opposed to the $469,000 a year earned by Exxon's Ken Jamieson in 1975, which was a mere 40 times more.
It's the same with celebrity athletes. Those who worshipped Joe Namath in the 1960s could at least identify with the $142,000 a year he made ($848,000 in today's dollars). But how many can identify with the $87 million Tiger Woods took in last year? And not only are the elite making much more today, relatively, than the Medians, the rise of cable television and the Internet assures that they know all about it.
They’re earning more, but think previous generations had it better
When you compare them with previous generations today's "average" Americans are making more — though enjoying it less.
Forbes
By Tom Van Riper
Updated: 12:09 p.m. CT Oct 18, 2006
As the U.S. population crossed the 300 million mark sometime around 7:46 a.m. Tuesday (according to the U.S. Census Bureau), the typical family is doing a whole lot better than their grandparents were in 1967, the year the population first surpassed 200 million.
Mr. and Mrs. Median's $46,326 in annual income is 32 percent more than their mid-'60s counterparts, even when adjusted for inflation, and 13 percent more than those at the median in the economic boom year of 1985. And thanks to ballooning real estate values, average household net worth has increased even faster. The typical American household has a net worth of $465,970, up 83 percent from 1965, 60 percent from 1985 and 35 percent from 1995.
Throw in the low inflation of the past 20 years, a deregulated airline industry that's made travel much cheaper, plus technological progress that's provided the middle class with not only better cars and televisions, but every gadget from DVD players to iPods, all at lower and lower prices, and it's obvious that Mr. and Mrs. Median are living the life of Riley compared to their parents and grandparents.
So why are they so unhappy?
Yes, despite their material prosperity, the Medians are a grumpy lot. A Parade Magazine survey (a good source for all things median) performed by Mark Clements Research in April showed that 48 percent of Americans believe they're worse off than their parents were.
A June 2006 study by GFK-Roper group showed that 66 percent of Americans said that their personal situations in the "Good Old Days" — defined by the bulk of respondents as anywhere between the 1950s and the 1980s — were better than they are today. And in May, a Pew Research Center poll showed that half of U.S. adults believe the current trends point toward their children's future being worse than their own present.
Attribute some of the dissatisfaction to what economist Milton Friedman dubbed "Permanent Income Theory," which assumes that people measure where they are relative to where they expected to be a few years ago. They don't care a bit what the average income was four decades ago.
"If you expect a 3 percent rise in income and you get 2.5 percent, you're disappointed," says Ken Goldstein, an economist at the Conference Board, a private research group in New York.
And because people generally judge their fortunes not in absolute terms, but by comparing themselves to others, the super-success of the top 1 percent can make Mr. and Mrs. Median feel relatively poorer. Take CEOs — the $19 million that Wal-Mart Chief Lee Scott raked in last year was 410 times what Mr. and Mrs. Median made, as opposed to the $469,000 a year earned by Exxon's Ken Jamieson in 1975, which was a mere 40 times more.
It's the same with celebrity athletes. Those who worshipped Joe Namath in the 1960s could at least identify with the $142,000 a year he made ($848,000 in today's dollars). But how many can identify with the $87 million Tiger Woods took in last year? And not only are the elite making much more today, relatively, than the Medians, the rise of cable television and the Internet assures that they know all about it.
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