It’s Harder to Get Started Today

Over the past weekend, I had a long conversation with a man in our community who was nearing retirement age. He felt comfortable about his own coming retirement, but he seemed very pessimistic that his children would ever be ready to retire. “They just don’t know how to save money,” he told me.

I told him that, although I agreed with him that young people should save more, there is also a strong case that it is much more difficult today for a young person to establish themselves financially as he did when he was a young adult.

He looked at me strangely. “What do you mean?” he asked.

So, I laid it out for him, piece by piece. Afterward, it occurred to me that the entire discussion might make for a good post here, particularly with some specific research to back it up.

Real wages Let’s start with income. In 1970, the average wage earner took home $312 per week (in 1982 dollars). In 2004, the average wage earner brought home $277 per week (in 1982 dollars) – and it’s still falling. That means that, once you factor out inflation, the average wage earner in 1970 brought home about 18% more than the average wage earner today.

Home prices Even if you adjust for inflation – and even if you take into account the crash of the housing bubble from 2007 to today – the median price for a home in the United States has gone up more than 50% since 1970. Remember, that number accounts for inflation, so what that number actually means is that the cost of a home requires 50% more of a person’s paycheck than it did in 1970.

Education prices The cost index of an average undergraduate education since 1970 drastically outpaces the growth of the Consumer Price Index. In short, disregarding inflation, the cost of an undergraduate degree today is roughly 30% higher than it was in 1970.

Other essentials In order to compete in today’s workforce, a young person often must have items – paid for out of their own pocket – that weren’t needed in 1970, including a cell phone, a computer, and home internet access. Often, when searching for work, it becomes very difficult for a young person to compete without these extra expenses.

So, to summarize, in order to have housing and an education comparable to what a young person had in 1970, they must spend 50% more on housing, spend 30% more on education, and do it all while earning about 18% less money. That doesn’t even include the extra expenses needed to compete.

I look at my own parents for an example. My parents purchased the house I grew up in for $20,000 – and that included seven acres of land. At the time, that was approximately what my father earned in a year. Today, if I were to purchase a similarly-sized house with seven acres of land, I would be spending well over $100,000 – significantly more than an annual salary.

My parents were also able to find good work without the cost of a college education. Today, the jobs they both had would be completely unavailable to someone if they did not have a college education, putting significantly more expense on the back of a young person today.

“Get tough!” This isn’t meant to be an excuse for people of my generation not living up to their potential. Instead, it’s an encouragement for everyone to not obsess over comparing the success of young people today to the things that young people in the past had at a similar age.

Simply put, things that were quite possible for a 25 year old in 1970 – owning their own home, having a fully-paid-for education, having a high-paying job – are much more difficult for a 25 year old today.

It’s not so much a matter of getting tough. It’s more of a matter of recognizing that comparing the way things were when you were younger to the way things are now for a younger person isn’t really a valid comparison.

Rather than focusing on results, look for signs of progress and for the status of the journey as a whole. It’s not even remotely fair to compare results – the income you have, the house you have, the education you’ve paid for – between eras, so instead focus on positive steps in the right direction.

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  1. Elizabeth says:

    Good points. I think it’s especially difficult now that people are getting married (or finding partners) later rather than sooner. More people are establishing their own household (be it a tiny apartment or a condo) rather than living at home until they marry. I often wonder how much further ahead I’d be financially if I had found “the one” when I was 22 like my parents did.

    However, whenever I get frustrated comparing myself to my parents’ generation I remember a couple of things:

    1) As a woman, I have far more career opportunities and better pay than my predecessors. Today there are so many opportunities out there for everyone that weren’t around even ten or fifteen years ago.

    2) Society’s expectations are changing. I don’t have to stay home and raise the kids. I’m encouraged to have my own career, my own money and I have the means to be better informed about my finances.

    3) I think the generations following the baby boomers have a better sense of work/life balance and hence a better quality of life overall.

    I’m very curious to hear what other people think :)

  2. eva says:

    @Elizabeth: There is still a gender pay gap, especially for working mothers. And children can be expensive. There are also opportunity costs for ‘settling young,’ and young couples now have all the same constraints that Trent mentions in his post. The comparison is still not the same.

  3. Des says:

    @eva – I’m curious about the opportunity costs you speak of. I married when I was 20, and DH and I are financially on par or ahead of our cohort today (7 years later). Are you just talking about those who have kids young? I’m actually curious, not that I can do anything about it now…:)

  4. Josh says:

    @eva I disagree with that there is a gender pay gap — especially for working mothers. Yes, if the mother decides to work less hours to spend more time with a child that is her choice and it will effect her career and earning potential, but the same would be true for men. All things being equal, a woman will make just as much as a man in a similar job with similar experience.

  5. Jennifer says:

    I’m sorry, but once you account for compensation (wages + benefits) per hour, the trend is reversed. There is tons of data that real wages (and median household income) have risen substantially, controlling for inflation. In addition, the real price of food and electronics have fallen. I’d like to see a link to the claim that real wages have fallen because a lot of economists, myself included, do not agree.

    Regarding housing, yes the average house costs more but the average house is much larger than the average house in the 1970s…..

  6. E says:

    If only I had the guts to present this to my parents-in-law…

    Our relationship is ripe with tension, particularly when it comes to the subject of money; a subtle insinuation that we’re somehow not managing our money well despite the generational and situational differences.

    My husband’s parents are still together. My husband, divorced from his first wife, has given nearly every penny he earned in his 30′s to his ex-wife (making it rather difficult to save for a down-payment). My father-in-law’s company paid for half his home as a work incentive, plus moving expenses. We’ve struggled to maintain the outrageously high rental costs of a major metropolitan area (necessary to my husband’s area of expertise).

    My issue isn’t rooted in the actual differences; after all, our generation faces radically different political and social circumstances (and benefits) than theirs did. The issue is that when it comes to financial apples to apples, frugality, conscientiousness, and fiscal responsibility aside, we’re not even playing in the same orchard.

  7. Linda Kanagawa says:

    Retirement Expenses. As a retiree, I have found some expenses decrease and others increase. My transportation costs have decreased dramatically. I spend more on maintenance (house and yard) and anticipate spending more on security. What are your thoughts?

  8. Elizabeth says:

    @Eva, I know we’ve still got a long way to go in terms of wages, but things are better than they were forty years ago when my mother finished college! Still, some studies have reported that many women are now earning more than their husbands.

    I also don’t understand what you mean by “opportunity costs”. Could you explain? I’ve often been told that I’m “lucky” to be single because I can move anywhere I want to take a job and I didn’t have a husband or kids to keep me from going to grad school. (The fact that I knew married people with kids in grad school never occurs to anyone, or that I know couples who have moved due to the wife’s work).

    I think the grass is always greener. Sure, you miss out on things by marrying young but you also miss out on a lot of things by being single longer. The fact is that you have more control over your career and finances than you do over when you’re going to meet the person who completes your life, so I don’t know how this is a fruitful comparison.

  9. Beth says:

    It’s a pet peeve of mine when people complain about how expensive kids are. (Just out of curiosity, when were kids cheap?)

    Besides, aren’t people having fewer kids these days? Does that count as a financial advantage too? ;) ha ha.

  10. moom says:

    Average (i.e. mean) incomes are up, maybe this is the median? Anyway, I think you are doing some double counting here. You say that this person has less real but needs to pay more for housing and education. Those higher prices for housing and education should be included in the price index that was used to figure out that the real income had fallen (because the actual dollar number has gone up). All should say is that real incomes have fallen.

  11. MP3 says:

    Jennifer, you are incorrect. Over the last 25 years, real wages have stagnated for the middle class, and fallen for low wage earners. Most other expenses have skyrocketed, including education and housing.
    What has changed from 1970 is the proportion of one’s income spent on food. Food is much cheaper today than it was in 1970.

    Household incomes are up, only because more women are in the workforce than ever before. The middle class stayed middle class because women left the home and went to work.

  12. Kathryn says:

    @Josh: Parenthood is a major factor in the gender gap, but it is not the only factor. Controlling for labor market and family characteristics, the gender employment gap among the childless is still six percentage points (20 points among parents). (Source: the GAO, as of September 2010.)

  13. James D says:

    Jennifer,

    Your real wage argument is simply not true. The benefits provided in the 50′s through early 70′s were near equivalent to today’s when you account for unions and pensions. The level of health care benefits has increased only due to technological advance and average costs will only begin to come down in the near future due to health care reform and before that the prescription benefit plan which was added to medicare in the last decade. I wouldn’t argue that real income has dropped significantly but that mainly it has simply remained stagnant. The problem with this arises in the fact that the rates of production in the United States have far exceeded this stagnant growth in income.

    The middle class expects the standard of living to continue to increase along with the rate of production in the US. However, this never occurred because a larger and larger portion of actual income was directed into the hands of the wealthiest individuals. As a result American’s increased their debt load to accommodate the standard of living they knew to be possible.

  14. Jessica says:

    Here are some opportunity costs for you:
    1. Can’t work overtime because daycare closes at 6pm.
    2. Cannot work weekends- no childcare (no family nearby to do this either)
    3. When kids get sick, a parent (usually the mommy) calls off work to stay home or take the child to the doctor
    4. I am breastfeeding and use the lactation room. This limits my schedule somewhat.
    5. Not going to conferences, dinners out, etc due to having children – fewer networking opportunities
    6. Do not engage in work related or skill improving activities due to parenting – my evenings are spent parenting, not working on computer skills and whatnot.

  15. James D says:

    @ MP3 – Two other reasons families were able to accommodate for the reduction in real income are individuals working longer hours and the draw down in the savings rate versus increases in family debt loads. The problem today is that families have run out of coping mechanisms to match the reductions in real income.

  16. Sheila says:

    That tidbit about housing really hit home with me (pardon the pun). Our house is just an average home and it cost well over a years worth of my salary combined with my husband’s. And it’s smaller than my parent’s house!

  17. Shelley says:

    It may be harder but not impossible. But families must work together and that is not something that American families are necessarily used to doing. Both my kids are currently paying their own mortgages at age 20 and 19 respectively. Yes they needed Mom to co-sign and Dad the realtor to represent them. And yes, they have three room-mates apiece to help them meet their budget. But, they are doing great with their homes, keeping them maintained, attending public colleges and learning life lessons along the way.

  18. MikeTheRed says:

    As someone in his late 20s, this is a very real problem for me. Combine the decrease in real dollar value and increase in housing/education with the fact that very few people in my generation will work for just one company (or even just a small number) over our careers and the financial situation for this generation is much more difficult in many ways than it was for our parents.

    My father has worked for two employers in his post-college life, and one of them was only for 3 years. He’ll retire from the second job he’s held for 17 years now (it’ll be closer to 25 when he retires). This career stability provided financial security, and reduced costs that simply aren’t available to me.

    As anyone who has ever been laid off or has gone to a new job can tell you, switching employment can be a very costly thing. Even more so when you have a family. Any interruption to employment can cause odd gaps in income that need to be made up for (some people go into major debt this way). And if you have to relocate, there are significant additional costs depending on timing and your situation.

    If the average person these days has 7-10 jobs over their lifetime, that can be a lot of money out the door.

    Does this mean we’re all doomed to a lower standard of living? Of course not. It does however mean people of my generation (and younger) have to be MUCH more actively engaged in our financial futures than our parents did. We don’t have pensions to depend on. We don’t have homes that cost $20k that will now sell for $300k. We do have large student loan debt, and possibly excessive mortgage payments, but that just means it’s even more important to be conscious of our money in ways our parents didn’t even dream of.

    It’s my estimate that those who are in their mid-30s and younger today will, in order to have a secure retirement, be relative experts in investing, frugality and general money management. We’ll need to know where all of our money is, and we’ll need to have aggressively invested early, and attentively managed our funds the entire way. We have to be much more engaged than any previous generation to ensure we have what we need to retire in relative comfort.

  19. Telephus44 says:

    Thanks for articles like this! I really hate the “Well, I was able to buy a house and still take a vacation or 2, kids nowadays just can’t save/too much instant gratification/ havetoo many gadgets/etc.”

    It’s nice to hear someone acknowledge that yes, things HAVE changed.

  20. Elizabeth says:

    @ Jessica — I don’t doubt parents face “opportunity costs” but won’t I still face them whether I had kids at 25 or 35? If anything, my opportunity costs could be higher because I’m losing out on things like overtime and professional development at a point in my career where I’m earning more than a young parent. (Hmmm. Not sure if this will be the case… I’m just throwing ideas out there.)

    My original point was that people who don’t marry young face additional expenses setting up their own households. For instance, my parents lived at home until they married. Then then both worked, lived on one income and saved the other for a house down payment. In the pre-children years, they had two incomes to save and establish their lives. I’ll be an older bride so I won’t have had the advantages of a few years worth of dual income. My married friends have two incomes to pay their rent and pay expenses (like internet and phone) and have two incomes to buy a home or condo.

    I understand that married life and life with kids has many financial challenges, but I’m constantly hitting my head against the prejudice that single people have so much more free time and free cash than people who are single. (Anyone remember how time consuming dating is?) It’s not so easy as people think.

  21. Pat S. says:

    Great points. No wonder it feels so difficult to save money sometimes!
    Pat
    http;//compoundingreturns.blogspot.com

  22. Josh says:

    While there are some new costs (internet, cell phones, etc…) there are also many costs that have gone down or are no longer necessary.

    The first two that come to mind are landlines and long-distance minutes.

    I think anyone can make it quite easily today, you just need to be disciplined enough to live below your means and not waste money on things that are not important to you — as Trent so often points out.

  23. Des says:

    @Jessica – Those are all opportunity costs of having kids, not of getting married. The two are not the same (and haven’t been for quite some time.)

    Eva seemed to imply that there were opportunity costs to marrying young, and I was wondering what those were. Like Elizabeth, I would think there would be financial benefits. I had actually never thought about how my decision to marry might have affected my finances, so I’m curious to hear other people’s thoughts on how the age one settles down might affect the ability to save.

  24. Des says:

    @Elizabeth – I would think kids would be more expensive at 35 than 25 for the reasons you mention, but also because it is harder to conceive at 35. People think it won’t happen to them, but infertility affects a great many people, and fertility treatments and/or adoption are very expensive (think $20k-$30 per kid, sometimes more).

  25. Courtney20 says:

    @ Des – that’s why we’ve already decided, as part of our decision to not to try to have kids until 35, that if it doesn’t happen we’re okay with that too. Some people put ‘biological children’ as a priority at any cost; I fully support them making that choice and I’m glad they have so many options available to them now compared to our parents’ generation. But that’s not the case for me.

  26. leslie says:

    Every single generation has had challenges that previous generations did not. Just as the previous generation had challenges that the current generation doesn’t. The reality is that things are always changing…ALWAYS. Does this generation face challenges? Absolutely! Are they any more difficult (or easier) than the generations before. Nope…just different so they require different solutions. People in their 20′s may not be able to just blindly follow the path laid down by previous generations but that does not mean their financial lives are harder…just following a different path.

  27. Sonja says:

    What about cars? And gas? In 1970 you could get a new car for around $3000. And gas was about $0.27 a gallon.

  28. Josh says:

    @Sonja

    Cars and gas are both more affordable today than in 1970.

  29. Tizzle says:

    Thanks for this. For me, I can be optimistic only on top of completely understanding any problems. I don’t have kids, and will not be buying a house while single. I can use this explanation.

  30. Jennifer says:

    I disagree with the information in this post and think it just gives people an excuse. As a personal finance blogger, Trent shouldn’t be promoting excuses.

  31. AnnJo says:

    @MP3, I’m pretty sure Jennifer is correct. When considered on a “per working hour” basis, and including all benefits, real wages are up.

    First problem: The figures Trent cites refer to private sector wages, and excludes public sector workers. About 1 in 6 workers is in the public sector, a significant increase over 1970, and their compensation has also seen a very substantial increase over 1970s (or what are they paying their union dues for, anyway?), so it gravely distorts the data to omit them.

    Second, keep in mind that many middle class jobs now offer benefits that were unheard of 40 years ago: Longer vacations, more paid holidays, paid sick leave, more generous retirement plans, expanded health insurance and disability coverage, significantly higher Social Security contributions, etc.

    I also have to wonder whether such gross comparisons are very useful. Whatever the average wage-earner’s real wages were 40 years ago, they were probably supporting a considerably higher number of people than they are today. Family size has shrunk, and the number of paid workers per household has risen.

    As for home prices, the “median home” of today would be practically unrecognizable by someone from 40 years ago. It’s not only the size, but the much greater insulation, the enhancements to the quality and number of appliances and utilities, and (assuming you consider these an added value), governmental regulations in aid of construction quality, schools, roads, and public health and safety.

    While the cost of a formal education has indeed skyrocketed, the cost of informal education has plummeted, along with the cost of food, clothing, furniture, housewares, and just about anything that can be imported from China. The cost of new vehicles has gone up (along with their crash-worthiness, amenities, and fuel-economy), but the cost of used vehicles, after accounting for inflation, is actually down.

    Is it harder for a young person to get started today? Well, it’s never great to be trying to get a start in a severe recession, but back in 1970, the good jobs were all listed in the “Employment Available – Men” columns and the men didn’t have it so great, either – they were getting drafted.

  32. Diane says:

    Who says someone just starting out needs to buy a home?!? I save until 39 to buy my little CA cottage. My parents rented for a while until they first bought a house in their mid-30′s. My grandmother rented most of her life, after my grandfather died and she was left a young widow. My family is NOT poor in the remotest regard, but we had no expectations of “having” to have a house.

    Everyone in previous eras didn’t expect to buy a 4 bedroom house right away at the start of their careers. It boggles my minds that people think this is normal, and then get all “woe is me” when they cannot have it.

  33. Rich says:

    Lots of excellent comments in this article. I think it really strikes a cord with a lot of people because I, for one, as a Millennial, constantly hear near-retired people talking about how our generation is lazy, can’t save, blah blah blah. This while I’m working my ass off and have to help my baby boomer parents because of many mistakes they made in life.

    As others have said, there are a lot of facets of modern life that cost way more today than in 1970, including housing and transportation. Some things cost less, like food.

    The political and economic environment has changed so much: What job do you know of that gets you a pension? Hardly any, aside from a government job, and those are few and far between, and subject to drastic cuts in the near future.

    There’s very few decent jobs for those without a college degree, and those degrees require incurring tens of thousands of dollars of debt, and rising every year as public institutions lose round after round of funding.

    Our parents are more likely to be deeply in debt or require extensive medical care (and lacking access to health coverage) than previous generations’ parents. The United States and Europe are no longer the sole players on the world scene, and we face an unprecedented amount of competition for raw materials and natural resources from other countries. This generation will have to deal with the looming threat of peak oil.

    Furthermore, we have to pay more attention to the effect we have on the environment, implementing costly pollution controls on industry and commerce that didn’t exist in 1970. The steady advance of technology has eliminated entire industries. American corporations are freer to offshore than they were in 1970, both because of increased competition and because of government rules that allow such processes. Cuts to K-12 education across the board, plus annual cuts to higher education, will have a very real effect on the ability of our nation to compete in the future.

    Of course, entire new industries have been created seemingly out of thin air over the past few decades. If you’ve got an education and some luck, you can succeed and thrive in today’s environment. Most Americans do. It just takes a lot more work to get there.

  34. kristine says:

    No one here has mentioned the skyrocketed costs of healthcare. If you have to self insure, it is the second largest expense after shelter. Just sayin…

    Josh- no idea where you get your no-gender gap wage discrepancy info from. Everything I have ever read says it has gotten better, now bout 80 cents on the dollar as opposed to 70 on the dollar. But not equal. Wish I’d stored citations, but I’d love to know your source. Personal experience is too narrow to be a valid study.

    To me, it seems the real issue of shrinking wages is actually the shrinking of the middle class. The widening of the gap between the upper classes and the middle class mans more money is now concentrated at the top-and I must assume that this post is referring mainly to the middle class.

    I do agree that excess has been normalized, (particularly in housing and cars) but that does not invalidate the argument that real wages have gone down. It merely exacerbates the debt result!

  35. Beth says:

    @AnnJo — you might want to check out the latest news on food prices. It’s actually quite scary. Here in Canada, they’re predicting another 5-10% increase on many common products like wheat, coffee, etc.

  36. kristine says:

    Ann Jo,

    What is “informal” education? Apprenticeship? Internship? Job out of high school? Not judging-truly asking.

    “the cost of informal education has plummeted, along with the cost of food, clothing, furniture, housewares, and just about anything that can be imported from China.”

    That fact that we make very little in our own country anymore has a lot to do with the lack of jobs. The only way to compete is in a race to the bottom in wages. In a truly global workforce, we are losing all the job bids for any job that can travel. I think the advantage of cheap imports is overshadowed by the damage to our job base. High tech is fine, but once the innovation is made, very little of the production occurs here. We can’t all invent the i-phone. The dirth of opportunity for a secure living wage for the non-college educated is very real.

  37. SwingCheese says:

    #31 (Diane): Agreed. My parents lived in an apartment until about a year before I was born. I’m not sure why owning a home has seemingly become a “right” as opposed to a “privilege” or a “goal”.

    FWIW, when I was in England, I was talking to a man who, in his early 40s, was very, very proud that he and his wife had saved up the money to buy a home. There the expectation was that renting was the norm, and buying a house was something that you had to work towards. I realize that in the states there were a couple of generations who were able to buy houses at a proportionally lower amount of income, but that doesn’t make owning a home a right for all Americans once they turn 25.

  38. Steve in W MA says:

    Nice post and I agree with the whole thing.

    Here’s the new recipe for economic security for the average american wage earner:

    learn to live like a low wage immigrant to the U.S,, and work as hard as one. What I mean is, get used to paring down your fixed expenses until it feels like the new normal to you.

    at the same time, earn as much as you can while still having a life. While you’re at work, work. While you’re at play, play.

    Save what is left over after basic expenses. If you can put away 15K or more per person in your household, begin to consider increasing your level of consumption. If you can’t put away at least as much as this, then keep your level of consumption down there as close to the “world level” of consumption as possible.

    Do this for 30 years. If you are a high wage earner (70K or more gross per year) then you could do this and have enough to live at your current level of expenses after 10 years. If you earn 40K or less you will likely have to do it for 20 to 30 years but you will get there if you start now.

  39. Steve in W MA says:

    @ AnnJo “First problem: The figures Trent cites refer to private sector wages, and excludes public sector workers. About 1 in 6 workers is in the public sector, a significant increase over 1970, and their compensation has also seen a very substantial increase over 1970s (or what are they paying their union dues for, anyway?), so it gravely distorts the data to omit them.”

    public sector is getting claw back pressure from the private sector that actually pays the taxes that pays for these jobs. Inflated salaries of the public sector, as well as inflated benefits, are close to being “equalized” due to the political pressure by those who work in the private sector and don’t think its fair that their neighbors who are no more skilled than them get double the health care benefits as well as a full pension after 20 years of service.

    This summary is a bit broad but by and large it is true and it describes what is beginning to happen in municipality after municipality across the country.

    So I wouldn’t assume those public sector wages are safe at all.

  40. Steve in W MA says:

    The best thing (perhaps the only good thing) about consistently voluntarily downgrading your consumption level is that by and large you discover you can have as much fun spending $13K per year as you did spending $26K per year. it all comes down to what you get used to (the new normal), appreciating what you have and what you are building and your fulfilment of your purpose (savings, not a big collection of gimcrack purchases, and an actually enhanced appreciation for the things you do buy.

  41. Kerry D. says:

    Cost of housing here in the SF Bay Area is insane, while incomes often are higher but not proportionally so. Our house today would cost–6 years, yes, SIX of our income. (My husband, with a PhD and the debt to go with it, is a post secondary educator.) Thank goodness we bought 20 years ago. It’s not fancy, not huge.

    Our 19 year old is rightfully depressed about his employment prospects, particularly without a college education. And that is unlikely given his learning disability.

  42. Julie says:

    I am 46 and heard many of these same concerns/complaints when I got married 25 years ago. I didn’t know how we would ever afford to stay in California, buy a home and raise kids. And many of our friends did leave the state in the late 1980′s during our last real estate bust. But, 25 years later, we own our home free and clear and are on the tail end of raising 3 kids, and frugality was the key.

    Interest rates when we bought our first home were about 13%, so even though the houses might have been cheaper then, our payment was quite high for a loan of $120,000. Today’s interest rates give home buyers an advantage we certainly didn’t have.

    And I wonder where Josh (#4) is getting his information that women are receiving equal pay for equal work. This might be true for government or union type work, but not private industry. I have never seen any type of study that supports his statement.

  43. Julie says:

    #31 Diane,

    I totally agree with you about how crazy it is that people just starting out expect to have a 4 bedroom home as their first house. My daughter and I occassionaly watch some of those House Hunter type shows and even she notices how these young couples want everything in their first home. She loves it when a couple is featured that doesn’t have to have stainless steel and granite in the kitchen of their first home…and she is offended by those couples who walk into a kitchen that looks just like ours (mid 90′s) and exclaim, “This needs to be totally gutted!”

  44. deRuiter says:

    Air fares are much cheaper than they were 25 years ago. Electronics are cheaper and we have more things than were imagined 25 years ago. Expectations are higher. The averave starter home 25 years ago was tiny by comparison to today’s McMansions. People owned less, had less, expected less, did not have access to such advanced health care. Go to yard sales and see how much extra “stuff” people have that they are discarding for pennies on the dollar. Most of it is near new or NEW stuff which is being sold for a pittance. While you are out at yard sales, BUY what you need for next to nothing from those who paid full price, and you will be on your way to accumulating wealth. You will not be paying large sums for things, plus your money will be staying in America, not be sent to China. Yes, the “House Hunter” shows are entertaining, and yes, #42 is correct, you have to wonder about people who walk in, see a perfectly usable kitchen, and say, “Yes, it has to be gutted to update it.” Well, there is $50,000. down the tubes! Also there is not enough negotiating on price on those shows, in this climate of real estate prices still dropping like a stone. It’s hard to succeed if a person runs up a hundred thousand in student loan debt for a degree for a low wage paying job or a job for thich they are no openings. “I’ve got a $125,000. debt for my degree in English, the humanities, or sociology.” is a sign that you may not be headed towards a bright financial future. On the other hand, “I’ve got $150,000. student loan debt and I am a scientist or engineer.” might signal that you are going to do well, America being busy turning out a lot of tree huggers, lotus eaters, graduates in “Black Studies” and “Women’s Studies”, and business majors who aren’t aware that the first job of a business is to earn money for the shareholders, and not enough graduates in the hard areas like science, engineering and math.

  45. kristine says:

    Julie- you made me laugh. My husband rants about the exact same kitchen statements. He used to watch it, but the sense of entitlement turned him off.

  46. Elizabeth says:

    @Julie — Thanks for the laugh! I watch a lot of home improvement shows for ideas, but get really frustrated with the people who complain about how out of date things are, and how rooms are “the size of closets” when they’re the size of what I grew up in :) It’s no wonder there was a housing crisis!

  47. Claudia says:

    @Julie-I feel the same way. Our first home had 3 metal cupboards above the sink and 2 below with another small one and a couple drawers-again metal. No granite counters as there were no counters just a dish drain! The last owners had left behind a small metal storage cupboard and my husband built some shelves. I used an old table for counter space. And horrors, we only had ONE small bathroom! How did we ever live?
    Our current house has the original cabinets from 1930. My husband covered the much painted doors with bead board which I stained and I faux painted the surrounding wood to match the stained bead boards. Still no granite and no stainless steel appliances. But, I’m good, I hate granite, it reminds me of tombstones and I don’t care for stainless as it reminds me of the restaurant kitchens I used to work in as a waitress.
    Those expensive granite counter tops will soon be out of date too and the stainless steel appliances will be the Harvest Gold and Avocado appliances of the 70′s.

  48. Jon says:

    Generalizations about whether it is easier or harder today for young people starting out are fine, but it really depends a lot on choices made by the individuals.
    My daughter graduated from college in three years – it took me thirty. Our son-in-law graduated in four years, got a good corporate job right away, and they have both gotten raises and promotions regularly. After two years of marriage, they are buying a home, saving for retirement, and doing quite well. Better, at this point, than my wife and I were doing at their ages.
    They’ve made good choices financially, choosing to learn from the mistakes I made and told them about, leaving them perhaps to find some mistakes of their own.

  49. Kevin says:

    @Jennifer:

    “real wages (and median household income) have risen substantially”

    Yes, because more and more households now have 2 earners, rather than 1. Of course that’s going to result in a higher median household income. But INDIVIDUAL incomes have stagnated.

    There’s actually an article on CNN’s Money site on this very topic, today, entitled “How the middle class became the underclass”.

    money.cnn.com/2011/02/16/news/economy/middle_class/

    “In addition, the real price of food and electronics have fallen.”

    And just how much of your monthly budget is comprised of “electronics?”

    I don’t know about you, but most of my budget is housing (which as Trent pointed out has risen dramatically), and energy (natural gas, electricity), which has also skyrocketed in the past 2 generations.

    “yes the average house costs more but the average house is much larger than the average house in the 1970s”

    As Trent pointed out, his parents were able to buy a home for an amount equal to 1 year’s wages (of a SINGLE earning, not the household). This wasn’t a shack, it was a family home on several acres of land. It had enough rooms to raise a family.

    How much home would 1 year’s income (again, of ONE earner, not two) buy you today? Would you get several acres, or a fraction of an acre? Would it be big enough to raise 2.5 children, or would you be crammed in? Would it be in a good neighborhood, or a hotbed of crime and drugs?

    Yes, houses have gotten bigger, but even ignoring that, housing has gotten much more expensive.

  50. valleycat1 says:

    Looking back at my life as a child in the late ’50′s/early ’60′s, and my parents’ & grandparents’ lifestyles, there are other big changes involved.

    Going out to eat as a regular activity is a very recent change – even in the ’60′s we maybe went somewhere a couple times a month, which includes fast food and real restaurant meals.

    Cell phones, computers & internet connections, cable TV, videos, etc. were nonexistent. My family had the same, single B&W tv well into the 1970′s.

    People didn’t automatically take an annual (or more frequent) vacation – I can count on one hand how many vacations out of town my grandparents took. My parents took a few more, but not every year.

    For most of my antecedents, weddings were low-key events.

    Books & records were purchased, but nowhere in the volume I buy them.

    Shopping for anything other than food was also kind of a big deal, not an everyday activity.

  51. Alu says:

    Thanks for this post!! Looking at the organized list and numbers to back it up really helped it all compute.

    It’s really frustrating sometimes when speaking to older generations about it. I don’t want anybody to think I’m being lazy and not doing anything with my life. But, I’m 21 and live with my parents and don’t have a car. Yet I’m also working and this is getting me through college out-of-pocket and debt-free with a small savings (enough for a car by the time I graduate).

    Where I live, anyway, when I get into conversation with the silent generation (65+) they don’t tend to be as judgemental that I’m not out on my own. They are generally really hurting financially here and can see and relate in ways.

    It’s a bummer. I want to move across the country and get married like my mom and dad did at 19, but today that’d be a stupid move bwahahaha.

    Oh well, things are different.

  52. tentaculistic says:

    valleycat1, I was going to post something similar, although only focused on food. I have found over and over in my own life that cooking at home/bringing in lunch allows for huges savings… and whenever I see videos from the 1950s/1960s/1970s I am always struck both by how slim the average person is, and (related I am sure) by how cooking at home was totally the norm. I think there are huge cost savings in preparing one’s own food, which in today’s world can be pretty rare (guilty as charged!).

    Of course, that in turn links to the issues of gender opportunity/equality (cooking every meal at home is easier when women are expected to stay home and not work, but I for one wouldn’t want to live in that world!), and the increasing need for dual incomes to meet increasing costs.

    Just one thought I had…

  53. tentaculistic says:

    One huge way that our generation has a leg up on the previous generation: we know to consider that all promises of future payouts are quite possibly chimeras, or even outright lies. Pension? Ha. Social Security? Riiight. Investments? Mmm, maybe.

    It breaks my heart thinking of all the older couples who paid into the system for decades, expecting to be taken care of in their old age, just to have the pension swept out from under their feet. To be staring at an inadequately funded Social Security. To have to pay insane amounts for medical care and medicines, and not have that kind of money coming in.

    I feel like our generation (broadly defined) at least gets a leg up by knowing the score, and having time to prepare. We know not to trust that something else will take care of us. We know that we need to pay into systems all our lives, but won’t get much if anything back. We know that experts can be just as wrong (or worse) than the rest of us, so we have to try to use common sense that when things seem really screwy, they may indeed be screwy. We don’t expect companies/government to act with honor or integrity, or to keep their promises. And in a real sense, forewarned is forearmed.

    I sound so cynical. But I don’t think off the mark, sadly.

  54. Jonathan says:

    I think that the biggest reason the current generation has harder time getting started that past generations is the feeling of entitlement. It seems that people today have a sense of entitlement that causes them to take on a lot of debt. It isn’t necessary to own a home right away, own a new car, own fancy gadgets, eat out regularly, take regular vacations, etc. People seem to think that “working hard” during college (and raking up thousands in debt) entitles them to all of those things and more, even though in many cases they can’t afford those things, so go farther into debt. Not only does this behavior cause the individual to go into debt, it also drives up prices.

    For the record, I am 31. While I am not a member of the latest generation, my generation had these same issues and I see several of my friends living pay check to pay check because they thought they deserved luxuries that they could not afford.

  55. Jonathan says:

    “Everything I have ever read says it has gotten better, now bout 80 cents on the dollar as opposed to 70 on the dollar. But not equal. Wish I’d stored citations, but I’d love to know your source. Personal experience is too narrow to be a valid study.”

    This matches what I have heard as well, but I’ve always wondered if any variables other than gender are taking into account. Does the pay discrepancy exist for all women, or just those with kids? Do men who take time off to have and take care of kids or who limit their hours/schedule to care for their children also see decreased pay?

    My theory, although I have no data to back this up, is that the primary reason women make less is related to having children. Many women take time off (whether it be months or a few years) to have and raise their kids. I think that people underestimate the long term effects of leaving a career-path for even a year.

    I also think that, as mentioned above, many women miss more work, have more restrictive schedules, and miss out on after-work networking opportunities because of their children.

    We can’t really expect a woman whose top priority is her family to make as much money as a man whose top priority is his career, or at least is able to put more time and effort into his career. Until we see more equality in sharing of child-rearing activities I don’t expect to see truly equal pay for men and women.

  56. Preston says:

    Someone explain the “food costs less today than in 1970″ idea to me. When I was a kid our family of 6 spent less than $100/week at the grocery store. Today I’ll easily spend $600/month feeding my family of 3 and the cupboards are bare at the end of each week!

  57. Julie says:

    Some exact numbers….my first house in Southern California cost $120,000 in 1985. (about 1000 sq on small lot in need of much TLC) Assuming zero down and a 13% interest rate, my payment was $1,327. This house, at its peak sold for about $600,000. Today it is worth about $350,000. With zero down and a 5% interest rate, the payment would be $1,878.00. The starting salary in my profession has more than doubled in 25 years. This appears more affordable to me…not less. I disagree that today’s generation has it so much worse than we did 25 years ago.

  58. Beth says:

    My husband and I both work full-time, and unfortunately that hasn’t provided enough income for us to meet a monthly mortgage payment in the San Francisco Bay Area. We’re fortunate, however, in that we decided to purchase a house with my husband’s brother. Now the 4 of us share the house, 3 of us share the mortgage, and can continue to add to our savings accounts each month. We’re expecting Social Security, pensions, etc may not exist when we retire.There’s no laziness from us here–we’re just trying to do our best each day, and eventually support any future children, without facing financial disaster.

  59. Des says:

    @Julie #54

    Your starting salary may have doubled, but your house value nearly tripled! Yes, cost to borrow funds has definitely gone down, at least in the last several years, but the house cost still went way up. Whether or not that is a good deal depends on how much one puts down. Interest rates will not stay at these levels forever (though, they won’t be 13% for a while either).

  60. James D says:

    @ 54 Julie,

    You’re basing your world view on an individual account (your own) which bears little resemblance to the statistical averages throughout the nation. It’s like your trying to determine the image of a 1,000 piece puzzle from your own single piece. You need more context. The biggest point in your argument is that your profession’s starting salary has more than doubled in 25 years. I take it you’re either in a technical, professional or soft-service field. Many of these jobs have done well. But most blue collar positions have been crushed if not completely done away with.

  61. Kevin says:

    @Julie:

    Did you seriously just claim that inflation-adjusted housing is cheaper today than it was 25 years ago? In CALIFORNIA?

    What are you smoking?

  62. Julie says:

    #58, Yes…if you consider interest rates. Do you realize that houses in certain counties in Southern California have fallen 60 to 70% in the past 3 years?

    I see a number of young people that are now perfectly positioned to buy a first home…and get what appears to be a great deal. However many are afraid to do so because they fear housing prices will fall more as the news in January stated that 5 million additional homes will be forced into foreclosure in 2011. Unfortunately potential buyers must balance this concern with the fear of rising interest rates.

    And to #57…James. If the biggest problem with my argument is that only professional salaries have doubled, I will also refer to my individual account. I have worked at the same company for more than 20 years and I handle the payroll for 150+ employees. Our warehouseman, drivers, customer service reps, and all non-professional staff also make twice what they did 25 years ago. We have given, on average, a 4% raise per year. It takes about 20 years to double your salary at 4% per year.

    Sometimes I think this discussion boils down to the difference between being an optomist and a pessimist. I would rather look for opportunities than excuses.

  63. James D says:

    @59

    You do realize a 4% raise per year is only slightly above the average inflation rate of this period making your real wages essentially static.

    Also, making it an argument of optimism vs pessimism is a dangerous road to travel. While I agree people should look for opportunities at all times (its just good business), acknowledging real problems in a system doesn’t constitute making excuses. How far would you be willing to take that excuses argument. As an extreme example would you have told the middle class of the great depression who were pummeled by systemic issues and who demanded aid and reform that they were just making excuses? Many of the same issues are in play today. Ignoring the root problems is what leads to further trouble for everyone.

  64. socalgal says:

    I think this is one of Trent’s best posts in a long time. Thanks Trent for all the hard work! Great discussions, too.

  65. Julie says:

    # 60 Everyone realizes that the system has problems, but are you insinuating the solution is for the next generation to demand aid because they can’t afford to buy houses due to the sins of their parents?

    I agree with #29 overall regarding this post, and it appears that about half of the other posters do too. I would say that is a fairly typical split for just about every controversial topic. However I think this post is particularly interesting/amusing for those who live in expensive areas. You can’t help but wonder how someone in the midwest, who can still buy a house for $100,000 could possibly complain about how tough it is to get started today.

  66. Julie says:

    #56. Yes, I realize that. But the payment didn’t increase by 300%. It increased by 41%…or actually 33% if you consider a minimum amount of California SIT and FIT. That is a 33% net increase in a 25 year period for a California starter home. And in the late 70′s and early 80′s it was common to pay upwards of 18% for interest.

    The real point here is I think it is remiss to completely ignore interest rates when having a discussion on housing prices and how difficult it is to get started today verses 25 or 30 years ago. I am in finance and my husband is in real estate, so this subject is near and dear to my heart… :)

  67. jim says:

    #30 Ann Jo said: “About 1 in 6 workers is in the public sector, a significant increase over 1970,”

    The 1 in 6 ratio is almost right but the % of workforce in government jobs dropped since 1970.

    1970 : 12.6 million government jobs out of 71M total for 17.7%. or 1 in 5.6
    2010 : 22.4 m gov. jobs out of 129.8M total for 17.3% or 1 in 5.8

    The percent of jobs in government went down a little in the past 40 years.

  68. James D says:

    @ Julie,

    No, I’m not insinuating the solution is for the next generation to demand aid. This is far to general a statement. However, I would say that the answer lies in income/wealth inequality, and an extended progressive tax system and other regulatory legislation.

    Looking at basic economics, a larger portion of wealth in the hands of the middle class relative to the upper class will always be better for the economy. For example, a top hedgefund manager earns $100 million a year. Assume that same wealth were divided among 1,000 individuals earning $100,000 a year. 1,000 individuals are likely to use 75% or more of that income for their family in a year, and that is on the low end given today’s savings rate and debt levels! The hedge fund manager would have to spend approx $205,000 a day to match that level of consumption. Not going to happen, especially on a long-term basis. People get tired of buying estates after their 4th or 5th, its the law of diminishing returns. More consumption from the middle class increases demand which causes organizations to fund investment to match. Even if a wealthy individual is extremely philanthropic, they can’t possibly match the level of demand produced from 1,000 individuals.

    You can take this even further with 2,000 individuals earning $50k a year from the $100 million. At this level of income people consume near 100% of income to provide for their families increasing demand even further. Before Reagan taxation on the extremely wealthy averaged over 70% since 1900. The economy hummed along without a hitch through much of this time period.

    Okay rant over, time to get back on topic.

  69. Kirk Bond says:

    I would be curious if that Real Wage number included the cost of health insurance borne by an employer. Since health insurance is such an integral part of pay, I find it hard to compare the numbers without that information. Since the technological level of the care in 1970 is very different than what is available in 2011, the comparison is difficult. Example, our options on hip / knee replacement look vastly different in 2011 and 1970.

  70. I try not to get impatient with my situation and keep in mind that when my parents were my age they lived in run down fixer upper houses and drove old cars too. It takes time to work up to nicer things…my whole generation is impatient.

    Back to the House Hunters thread…
    Oh, I can’t live here, the walls are painted the wrong shade of beige…
    What about the roof? The furnace? The hot water tank? The crappy rental next door?
    I suppose it is an escape-type show, certainly not reality! :-)

  71. GregG says:

    I haven’t read all the comments but I didn’t see anyone take this angle (below) when questioning the following statement:

    “Real wages Let’s start with income. In 1970, the average wage earner took home $312 per week (in 1982 dollars). In 2004, the average wage earner brought home $277 per week (in 1982 dollars) – and it’s still falling. That means that, once you factor out inflation, the average wage earner in 1970 brought home about 18% more than the average wage earner today.”

    This is obvious cherry picking of the data by whoever came up with these stat. Peak inflation occured in 1980-81. Economics 101 says that wages are postively correlated to inflation. Essentially picking 1982 as their inflation adjusted dollar value they picked the high point of “real wages”. Subsequently and then the low chose the low point (2004). Its a pretty shady move and used all the time by people. Its obvious our standard of living is much higher now than the 70s. This type of analysis is simplistic.

    Here’s a graph of the CPI illustrating my point

    http://www.teachmefinance.com/Charts/Consumer_Price_Index_Less_Food_and_Energy.JPG

  72. GregG says:

    @ James D

    That is such fallacious reasoning. Taking the bulk of that $100 million earned by the hedgefund manager and redistrubting it to the middle class warps incentives in both groups. It warps incentives to such an effect that, one, the hedgefund manager has no incentive to produce that 100 million if the majority of it will be confiscated by the government.

    Two, those 2000 people getting the FREE $50k earned by the hedgefund manager will have absolutely no incentive to produce. In the end both groups end up not producing and neither group is better off.

  73. Interested Reader says:

    From what I’ve heard about House hunters is that often the people featured have already picked one of the houses by the time they are filming.

    In the early days of the show if you watch they almost always picked the emtpy or semi empty houses. Usually because that’s the house they were going with all along. So the other nit picky things have to be like that for show.

    I don’t know how often that happens but stuff like that goes on tv all the time. i know someone else who was living in CA and at the time there was a show where they redeocrated (or staged I can’t remember) houses for “cheap”. The person I know was having a garage sale and people from the show came up and asked if they could stick a couch in there and act like they bought it at the garage sale rather than having bought it retail. Friend said no but someone else said yes.

  74. Kate says:

    I’m not sure that I can agree with this post. I think, like anything, people have an easier time getting somewhere if they don’t load themselves down. As in: load themselves down with a housepayment before they are ready for it, load themselves down with a cellphone plan that has all the bells and whistles, load themselves down with lots of clothes and shoes. It is much easier to travel lightly and much easier to retire if one lives lightly.

  75. Andrew Stevens says:

    #60. Point of factual clarification. The inflation rate for the last 20 years has been 2.6-2.7% per annum, depending on the figures you use, not 4%. A 4% raise per year is amply compensating for inflation. I can’t vouch for Julie’s claim that the employees at her company have actually gotten 4% raises per year, but if they have, their real wages have risen significantly, not stagnated.

  76. Celia says:

    Dear Friends: I’m wondering if someone could provide a source reference for the “real wage” statement(s)? The CNN piece someone did send the URL for really doesn’t source it and I’d like to try to understand the issue a bit better by reading/referencing the hard numbers. I found some information at the US Bureau of Labor Statistics, but insufficient (or I gave up too soon?) to provide the math I’m needing on this one. Sure do like to see the give and take of respectful perspective sharing. Thanks. :)

  77. Eivind says:

    The really odd thing, to an outsider, is how the American public have not only *accepted* the stagnation of real wages, despite the wealth of the nation as a nation as a whole growing and an ever-increasing fraction going to the top 3% – but indeed it appears they’ve even cheered it on.

    Really odd. Over here (Scandinavia), real wages ain’t stagnated at all, but instead have aproximately had a growth-rate of around 2% a year.

  78. James D says:

    Over 20 years then that’s a real exponential increase of around 29% on original income or 1.3% annually. I wouldn’t call that a significant raise over that period but it’s definitely positive and I hope she really has been successful.

    Again, my issue with #59′s comments was that she was basing her opinion of this economic discussion on a single individual perception, her own. I’m not going to try and criticize her own experiences, as I don’t know her. I’m criticizing the logic of forming an opinion on a whole puzzle while holding only a single piece.

  79. Anitra says:

    Re: Opportunity cost of marrying young. My husband and I married right out of college; most of our friends at the time didn’t.

    1) It makes job considerations different (if you don’t have someone to come home to, you don’t mind a longer commute or working overtime). Single people can do more to quickly advance their careers, since they can move to change jobs (more easily), and have more time to work on new skills outside of work.

    2) Combining 2 people’s ideas of what is “frugal” and what is a “necessity” means that more money is spent and less is saved. Cases in point:

    (a) My husband was sharing an apartment with FIVE other guys until we got married. Rent and utilities was costing him less than $200/month. I, on the other hand, valued my privacy, and was paying over $900/month for rent and utilities in my one-bedroom apartment. Guess who moved in with whom?
    (b) I had no TV, no game systems, and no cable. He had 2 game systems and multiple computers. Within our first year of marriage, we bought a large TV, signed up for cable, and bought many new video games and DVDs.
    (c) My usual forms of entertainment were free events and reading books. His were video games, restaurants, and throwing parties.
    (d) If you’re alone and come home hungry from a long day at work, you may grab a cheap freezer meal or make yourself a sandwich. But when TWO people both don’t feel like cooking… they usually go out to eat, rather than both eating cheap single-serving meals.

  80. James D says:

    @ GregD

    Whose talking about handing out free money? You progressively tax the rich, maintain taxes for the lower class. Use the taxes to rebuild infrastructure (which needs it), support education, research, etc… The jobs that follow provide opportunities for the lower class to earn a living which they will spend more of than the rich person. This creates larger demand which in turn makes companies invest in programs and product lines to meet that demand. The government provided jobs will run out eventually but the point is to get the ball rolling. This increase in demand from the lower class having more wages will increase the number of jobs needed in the country. Excessive saving by the rich adds nothing to the economy unless that economy is already running full employment.

    This won’t make the excessively wealthy happy but it won’t truly hurt them all that much either. The difference between 10 million and 100 million is really negligible compared to the difference of average middle income wages rising by some figure, example 10k, when it comes to people’s standard of living. The incentives are not that distorted once you reach that level of wealth. It’s the law of diminishing returns again. As well, you can’t tell me a hedge fund manager provides enough of a benefit to the economy to earn over $100 mil a year let alone the top 10 who are pulling $1 billion a year. Its ridiculous.

    People will argue the rich will just move elsewhere to countries with looser taxation laws. While some will, the potential loss of citizenship, family, friends, etc will negate this.

  81. James D says:

    @ Trent,

    It would be awesome if you could implement an edit comment function for people who sign up as members. Or maybe even a forum for your readers to interact with each other. Just a couple of thoughts. Thanks for the blog, its one of the few that has held my interest over an extended period.

  82. Julie says:

    #78 James,

    I hear you…and while I was giving my own circumstances just to prove the point that I wasn’t making up numbers, the fact is that these circumstances aren’t unique to me. Anyone in So. California during this time period would have been in the same situation related to housing prices and interest. It would be more affordable for many (thousands? millions?) to purchase their first home today verses 1978-1986. This would not have been true 5 years ago, but it is reality today.

    And I appreciate the kind thought behind hoping I did well. I work for a wonderful company and we chugged right along through the recession.

  83. SLCCOM says:

    What value, exactly, do hedge funds provide? Are any products made? Any services provided to people who are willing to pay for them? Are any Americans employed, especially those with lower levels of education? Are houses built? Roads repaired?

    $100 million is an abstraction. It is not incentive; studies have been done showing that the more the CEO is paid the poorer the performance.

  84. Cortney says:

    The discrepancy in pay is not only for working mothers- a great example is the largest class action suit in history at the time it was filed, against Wal-Mart, for paying its female managers sometimes almost half as much as its male managers, for the same job role. In addition, there have been several recent studies comparing the exact same job title and level of education required, that showed that women are making an average of 80 cents on the dollar to men- not comparing teachers to lawyers, but lawyers to lawyers, teachers to teachers, etc.

    I agree that things have gotten far, far better, and I also agree that working mothers are usually punished more aggressively in terms of wages- “The Price of Motherhood” by Ann Crittenden is a fabulous book on this- but there is still a very real problem of outright wage discrimination. Please see the Lily Ledbetter Act, that was passed within the last few years.

    To say, as Josh did, that there isn’t a wage gap is quite surprising to me. It might be getting better, but it is certainly still there, even when factors such as education and children are controlled. It is disheartening to me that people seem to buy into the idea that all is right and equal between the sexes in terms of workplace equality. Again, better, much better, but not equal. Not yet. If we falsely believe that it *is* equal, then we won’t know what we need to be working on to make things better and more fair.

  85. Des says:

    RE: Anitra

    I hear what you’re saying, but I don’t think these offset the financial benefits of early marriage.

    1) Yes, singletons can move easier, but a “dependent” is also huge incentive to progress in one’s career. I know a number of young husbands who didn’t really get serious about their money and career path until they had a wife to provide for (even when that wife was working, too.) Plus, there is more time to focus on career progression when you are not focused on finding a mate (Dating is a huge time-suck). And without kids, there really isn’t anything to keep you from working long hours. One spouse can prepare dinner while the other is working late, whereas a singleton would have to either make dinner whenever they got home or, more likely, grab something easy and processed.

    2a) So, he was spending $200 and you were spending $900, for a combined total of $1100. Now you are only spending the $900. How is that not more frugal? Same thing goes with b & c. He was already spending that money, so it really isn’t extra.

    2d is the only one that really would increase the total money being spent, and this occurs with DH and I as well, but I still think this this is offset by 1)Young Marrieds go out on the town with friends less than singletons in the same age cohort (at least the ones I know) 2)There are no more dating and courtship expenses 3)Shared room & board.

    PLUS, you can share one vehicle more easily, which is a huge money-saver (and your insurance is cheaper just for being married).

    It goes without saying, but I would in NO WAY encourage people to get married for financial benefits. Obviously, no amount of financial savings would offset the potential personal downsides to choosing the wrong partner. But, I’m still not convinced that marrying young is detrimental financially.

  86. Nicole says:

    Kristine asked what constitutes informal education. Well, my immediate thought is, what are we all doing right now? Reading a personal finance blog and learning from other people’s experience. What’s remarkable is that these people may come from all over the world, or if not the world, at least the country. The internet is a huge library. Less dependence on in-person, print, or brick-and-mortar operations lowers overhead costs for those providing information and makes it easier for seekers to get ahold of that information. With lower costs, it’s more appealing to offer part or even all of one’s knowledge on a topic for free.

    For a musician, things like the IMSLP Petrucci Library, Youtube, and online discussion communities have opened up unprecedented resources for learning. It doesn’t take the place of practicing and face-to-face networking, but it’s a great supplement.

  87. Nicole says:

    I should clarify: perhaps it’s misleading to suggest that free information is really free all the time. Some may offer free things to attract more paying customers, or have altruistic aims but encourage donations (IMSLP does). A pure hobbyist may have different motives.

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