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Why anyone born after 1970 should be pissed.

by on September 19, 2013

Discussions on inequality seem to have been quite prevalent since the Occupy Wall Street protests started and phased out.  It looks like their protests were done for good reason; our economy is in a place where it seems things are good and recovering but it really isn’t.  In fact, my guess is that we are heading towards another recession/depression within the next year or so.

I also keep seeing blogs and news articles about generations x,y,z and anything in between those, and they seem to be all upset at what they are facing, and they should be.  But instead of saying one generation should be more pissed than another, we should be pointing out that since the early 1970’s things have become utterly disastrous financially wise for the majority of the population.

Let’s take a look at “real wage” growth since the late 1970’s (a time where the people born in 1965 might have entered the workforce): Just click this link and scroll to the bottom to see an interactive graph that shows real hourly wage growth by percentile.  Here is a decent graph in case you forgot to click the link above:

RealWageGRowth

“One of the reasons inequality gets so deep in this country is that everyone wants to be rich. That’s the American ideal. Poor people don’t like talking about poverty because even though they might live in the projects surrounded by other poor people and have, like, ten dollars in the bank, they don’t like to think of themselves as poor.” Jay Z

What this means is that if you are in the lower half of income in this country, you experienced only a 3.3% gain in wage growth since 1978.  Ouch!  Since it is a positive number it seems ok, but you have to take into consideration that real wage growth doesn’t take into consideration rising costs of housing, and student loans, and doesn’t accurately represent health care costs.  All things that are tremendous chunks of change for the average American.  So let’s take a look at what they are hitting us for.

When it comes to student loans and health care, it should seem as no surprise that tuition and health care has far outpaced wage growth, which is at near 0% growth if you are near the bottom half of this country.  This graph should make you cringe:

MedicalCostsTuitionCosts

This means that, while we are barely keeping pace with cost of living expenses, we are not near approaching keeping pace with staying healthy and educated, and being able to pay for it.  How can a generation be productive and stay healthy if they aren’t receiving the wages to pay for it?

Then there is the cost of housing, or the ability to build wealth buy purchasing a home, trying to attain that all American dream.  It seems that dream may now be impossible for half of the country as well:

HomePriceIndex

It sure looks like prices of homes have dropped recently, but that is solely on the backs of people who had to foreclose because of an economic crash.  In other words, the poorest in our country had to go bankrupt or damage their credit because they were forced into a situation where buying meant getting loans that were built to bust.

There is no middle class anymore, there is only the above the 50% line and below the 50% line.  Those below are faced with increasing costs and decreasing wages, if they have a job.  Where does that leave capitalism?  Where does that leave the American dream to jump into higher incomes?  If jumping into a higher income only means paying off debt faster and having a lower wage rate decline what kind of incentive is that?

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