I was dating someone whose dad worked at GM in Janesville and made close to $50K, REALLY good cash in those days, her brother started on the line at $20K with a full month and 1/2 of vacation about the same time I did. I got two weeks -- the benefits were better at GM than at IBM in those days.
A teacher at Barron made about $12K in the early '70s when I was considering teaching as one of the options for a career. A number of them were married to other teachers and had a small home in Barron and a small lake place on Silver Lake about 40 min north. Times were pretty decent, and with the election of Regan in '80, they got a lot better.
Things were just starting to really go berserk in '78 -- prices would shoot up and taxes would shoot up even worse. I remember one great raise I got of something like $50 a week that moved me a bracket or so and I got all of $5 in actual take home pay. Inflation would push 20% and eventually, interest would exceed 20%.
Today a programmer starts at IBM around $60K, so barely one Corvette. According to this, a new GM hire (of which I'm sure there are not very many) hires on at a bit less than $16 per hr, or $33,280 annually. Experienced old hands push $60 an hour for $124K ... hey, so two Corvettes for the old guys (but 5 in '78)! A median teacher salary in Eau Claire is $45K, so less than a Corvette.
According to this calculator, $1 in 1978 worth $3.81 today, so I REALLY started at $15,500 x 3.81, or $59,036 in todays dollars. Todays programmers are basically identical given inflation. The GM worker starting at $20K was making the equivalent of $76K today, so starting manufacturing workers are doing WAY WORSE. The $12K teacher would be doing $46K in todays dollars -- so teachers are doing about the same as well as programmers.
If the $10K corvette had just inflated, it would cost $38K today rather than $60K. The starting auto worker gets less than 1/2, and even the experienced worker would be getting $190K today if they had kept pace with inflation! Yet, the price of the car -- with materials costs down, automation supposedly saving money and WAY less labor input in both cost and actual hours has risen in relative value far beyond inflation!
But let's face it, none of the above really feel that they are doing better today than we did in 1978!!
We sure as hell felt we were doing better in 1988, and even 1998 in many cases, but certainly not today!
So what happened? I'm really not all that sure, but I'll throw out some thinking:
- The inflation calculations are lying -- for many things it is much worse than the calculator indicates. The vettte shows us one example. Sadly, they are lying WORSE than that because taxes are much higher (income, property, state, sales, etc) plus medical is MUCH higher. (think for a second, is government more or less involved in medical aspects today than it was in '78? Which way do YOU think government causes costs to go?)
- The media and "The Party" (D) likes to focus on "inequality", but unless you foolishly believe that the economic pie is a fixed size (which means you don't know enough to even think of economics at all and need to study), what matters is "what you can do with what you make". What someone else makes is meaningless. Teachers kept pace, programmers kept pace, auto workers did terrible -- but EVERYONE in that comparison got screwed in the last 40 years to some extent relative to the vette.
- The chart doesn't show DEBT and UNFUNDED liabilities (FICA, Medicare, BOcare, etc ... now $19T and $125T respectively. The costs of these problems are starting to siphon off any government funding going into "productive investment" -- roads, research, education, space programs, etc, and requiring ever more pure transfer payments. Primarily from old to young, but also from productive to unproductive as more and more votes are purchased to keep the rising percentage of government ever growing even as GDP is stagnant or shrinking. We started "eating our seed corn" with the stench of BO arriving in earnest.
- I suspect if we looked at medical or government jobs we would see some people who have improved their relative position a bunch since '78 -- "administration" is the REAL "growth area" almost everywhere. More government = more bureaucracy = more administration and less productivity. Even worse, government tends to keep the numbers -- "the house wins"! I've covered the GDP and Inflation shenanigans. We are being lied to -- A LOT, which is why EVERYONE inside the beltway is DESPERATE that neither Cruz or Trump get elected!
A lot of government taxation and spending has been increasingly hidden at the state and local levels due to "Federal Grant In Aid".
Add this together with increased Federal spending and you get the following.
Remember, this chart is RELATIVE TO GDP ... so when we are doing well economically, our spending can be high without increasing the % of GDP much if at all. WWII and BO are the big events. From the '90s to BO we can see the relative prosperity, and then the disaster of BO struck!
Certainly, for manufacturing things went bad starting in the '80s, but neither teachers or programmers as examples are ACTUALLY keeping pace with inflation because the numbers are cooked. We can see it is bad, yet it is WORSE than that and all we are being told is "the rich make too much".
BULLSHIT! The government TAKES TOO MUCH!!! Sure, some of that sticks to some palms more than others (try Hillary going from "penniless" in 2000 to worth $100M in 2016! You can still buy A LOT of vettes with $100 Mil!)
This is not one of those blogs that I feel satisfied with -- "work in progress". I feel like there is a lot more truth hiding in plain sight here, but I'm not seeing it yet. Later.