Median family income adjusted for inflation was $29,000 in 1955. In 1965 it was $42,000. Today it’s just over $62,000.
There’s widespread belief that the 1950s and ‘60s were peak time for middle America to secure a good-paying job. But it’s a quantitative fact that the median American household earned more in 2018 than they did at any point in the 1950s or 1960s, adjusted for inflation. That’s true for hourly wages too.
Part of the disconnect between feelings and reality can be explained by the shift in expectations over the last 60 years.
To generalize only a little: In the 1950s camping was an acceptable vacation. Hand-me-downs were acceptable clothes. A 983 square foot house was an acceptable size. Kids sharing a room was an acceptable arrangement. A tire swing was acceptable entertainment. Few of those things would be acceptable baselines by most households today.
But – and this is the important part – they were acceptable back then because other median households accepted it.
John D. Rockefeller never had penicillin, sunscreen, or Advil. But you can’t say a low-income American with Advil and sunscreen should feel better off than Rockefeller, because that’s not how people’s heads work. People gauge their wellbeing relative to those around them. Everyone does. And goalposts move both ways: Sebastian Junger’s book Tribes details the long history of comradery during shared disasters, like soldiers during war and neighbors during natural disasters. Hardship is more palatable when everyone around you is in the same boat.
You can be an optimist and say living standards will keep improving, which I think is likely. But you can’t say that people will feel proportionally better off, because the goalpost will always move up with improvements in living standards. There is a correlation between money and happiness, but it diminishes with each additional dollar gained. This is especially true at the micro level where people live their day to day – the hedge fund manager who makes $100 million a year compares their life to other hedge fund managers who make $100 million per year, so their life doesn’t feel nearly as amazing as others imagine. Their goalpost moved to the next town over.
If the 1950s and 1960s felt like a better time, it’s because there was less dispersion between income groups, with fewer extremely wealthy people inflating the lifestyle aspirations of everyone else. But that highlights the point here: when you watch other people live a better life, your benchmark for normal and acceptable rises. The goalposts moves.
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איזהו עשיר???? השמח בחלקו!!!!
Appreciate what you have and you will be happy. Take it for granted and you won't. DON'T COMPARE!!! Unless you compare to how much we have today compared to how little we used to have.
Guaranteed!
