Much adieu was made this week about the U.S. population crossing the 300 million mark on Tuesday, Oct. 17. The latest report from the U.S. Census Bureau sparked a flood of news articles on the population debate and not a few discussions on how our present standard of living has changed over the years.
One well-known publication made this statement in response to the census report: "[T]he typical family is doing a whole lot better than their grandparents were in 1967, the year the population first surpassed 200 million." This statement was made in a Forbes.com article which appeared recently on Internet news wires around the country. The article went on to tout the incredible level of economic prosperity our generation enjoys compared to the generation 40 years prior. It was entitled "The Average American: 1967 and Today" and was written to convince today's younger generation that they've never had it so good and should stop their grumbling and be happy about their economic lot. Problem was, the article was extremely superficial and just barely scratched the surface of all the major economic influences that determine whether our current standard of living is higher than that of our parents' and grandparents' generation. In other words, it was a propaganda piece in the truest sense.
The Forbes article recognized that there is currently a high level of dissatisfaction among Americans of all ages over their economic lot, principally those in the 25-35 year-old category. As one example, a recent poll found that 22% of U.S. respondents said they had little or nothing left over at the end of the month after paying their bills. Another poll in Parade Magazine found that 48% of Americans believe they're worse off than their parents were (a survey cited in the Forbes article). Also, a study by the GFK-Roper group revealed that 66% of Americans said that their personal situation in the "golden years" of 1950-1980 was better than it is today.
There is a general feeling among countless Americans today that our economic plight is a perilous one compared to that of previous generations. Indeed, as evidenced by the explosive growth in the psychic and fortune telling industry, a growing percentage of Americans are worried about what the future holds for them, especially as it pertains to their financial condition.
So along come our friends at Forbes to assure us that our take on our economic plight compared to that of our parents' is wrong - things aren't nearly as bad as they seem! After reading one blanket generalization after another I was left with a feeling that my intelligence had just been insulted by the folks at Forbes. Let me share with you some of the more outrageous assertions made in this article.
Forbes starts by noting that "Mr. And Mrs. Median's" annual income today is $46,326, which is 32% higher than that of 40 years ago "even when adjusted for inflation." The article also points out that average American household worth is $465,970, or 83% higher compared to 1965.
Right here is where the Forbes article made its first error. The assumption is that the average American is a homeowner. In fact, most Americans do not own their own homes in the true sense of the word. They either rent, or in the case of those with houses of their own, they have a long-term mortgage. Until the mortgage is paid off they can't truly claim ownership. Even if the value of their home has increased relative from when they first bought it, they don't realize a profit until they actually sell. Then there is the tendency for mortgage owners to take out loans against their mortgage, thereby going deeper into debt. This is an illusory measure of wealth since the money isn't truly theirs.
But along with home ownership comes greater financial responsibility. Forbes doesn't mention that property tax rates have increased manifold over the last 40 years. In some parts of the country, notably along the coast of the Southeastern U.S., property tax rates have risen in excess of 100% in just the last 3-4 years alone! This also doesn't take into account higher property insurance rates in light of extreme weather trends in recent years.
Forbes also talks about cheaper airline travel being one of the hallmarks of our generation compared to 40 years ago. I would disagree with this. If one factors into the equation the opportunity costs of having to wait those extra hours before actually boarding the plane (for baggage, security checks, etc.) not to mention the increase in destination times due to the decrease in direct flights, we're paying more for airline travel than our parents did, as well.