I was fortunate enough to grow up in a solidly middle-class family. We weren’t rich by any means; there were many times when we were forced to really pinch pennies — but for the most part I never wanted for anything.
According to the US Census Bureau, in 2005 income for the middle third of all households fell between $30,000 and $62,500. I suspect those levels haven’t increased much since then. In fact, today the US median income still sits at approximately $54,000.
Last month, USA Today highlighted seven items that the middle class is finding increasingly difficult to afford: new cars, vacations, debt payments, medical care, dental work, emergency savings and retirement savings.
After reading the piece, I only had one question: “That’s it?”
Off the top of my head, I can think of at least ten other things financially responsible middle class families could afford in the 20th century — but struggle paying for today. I’m sure you can think of even more. Here’s my list:
A house. In 1962 my dad bought the 1700 sq. ft. Southern California house I grew up in for the inflation-adjusted equivalent price of $128,000. According to Zillow, my childhood home supposedly costs more than twice that much today.
Cigarettes. I worked at a grocery store as a teenager. I still remember packs of cigarettes selling there in 1983 for 81 cents; that’s equivalent to $1.87 in 2014 dollars. Good luck finding a pack for anything close to that today — which is why I say cigarettes are one of the four horsemen of personal finance.
Disneyland. Growing up, my folks took my sister and me to Disneyland at least once a year — sometimes twice. And why not? In 1983, you could buy a one-day all-inclusive ticket for $12. Today, the same pass costs $96 (plus tax) — three and a half times more expensive on an inflation-adjusted basis. As a result, the typical family of four can now expect to spend more than $450 per day when visiting the “Happiest Place on Earth.” Incredible.
Concerts and sporting events. According to Forbes: “Peter Frampton at the height of his ‘Frampton Comes Alive’ fame headlined with Fleetwood Mac, Gary Wright, and U.F.O. for $10.50, or $43.98 in today’s dollars when accounting for inflation. Today, terrace seats for Frampton at the Hollywood Bowl are $105-$225.” (I’m sure most of you under 40 are scratching your head at this. Go ask Dad.)
Television. When I was a kid, we had less than ten channels, they were all free, and nobody ever complained about a lack of stations. Today, I pay $1715.88 per year (plus tax) for more than 250 channels, and sometimes there’s nothing worth watching on any of them. I know.
College. When it comes to a college degree, the expected return on investment rarely makes financial sense anymore. According to USA Today, after adjusting for inflation, students now pay more than triple what they did three decades ago to attend a public, four-year university. I’ll say. It took me five years to earn my electrical engineering degree from Cal Poly San Luis Obispo in 1988. The total cost: $15,000 — and that included tuition, fees, books, room, board, and general living expenses.
Divorce. Okay, you got me; I have no idea what a divorce cost fifty years ago — but it certainly had to be cheaper on an inflation-adjusted basis than what it costs now. According to Divorce360, the average cost to litigate a contested divorce in California today is $45,000. Per side. Ouch.
Childcare. The average cost of center-based child daycare in the US is currently $11,666 per year. Wow. Before the 1970s, families like mine didn’t spend much on childcare because they had:
A stay-at-home mom. According to the Pew Research Center, 49% of American women with kids under 18 were stay-at-home moms in 1970; today, it’s just one in five. Sadly, despite more mom’s joining the workforce, real household purchasing power has barely budged.
Kids. In 1960, middle class parents in the US spent an average of $25,230 raising a child to adulthood — that’s roughly $198,000 in 2014 dollars. It takes $245,000 today. Yep, a $47,000 cost increase — and I’m blaming it all on Disneyland.
Photo Credit: DonkeyHotey
I’m not sure if it is the same in the US (but I think it probably is), but I would add “a pint” or “a glass of wine” to the list.
Drinking in public places is now unaffordable for the middle class (or at least those interested in building long term wealth and achieving their main goals) due to the amount of tax and duty that is applied to each glass.
I personally think that many of these are a result of debt as well. Everything becomes a little less affordable when the first 20-40% of your paycheck goes on repaying student loans, credit card, car payments etc…
In fact, 40% is probably an underestimate for most middle class families these days…
Yep. Most households are tapped out, MS. Today, the goal is to just keep treading water.
If I knew that cigarettes were going to be so expensive today, I would not have started some three decades ago. Still now, I just find it so difficult to quit. Sigh.
I remember reading that and thinking, are people in the middle class supposed to be going on fancy vacations all the time?
That being said, the purchasing power of the middle class does seem to be dropping. I think it’s mostly to do with the stagnant wages than increasing costs.
It’s hard for me to figure, because I was most certainly NOT middle class growing up. So I cannot say what was considered middle class then, and can people afford it now.
I think standards have risen though – vacations are fancier, not just road trips and camping. Many families have 2-4 cars, not just one.
And the stay at home mom thing – meh, I dunno. I never wanted to be one. So I can’t really judge that one.
I’d add traveling (not Disneyland, it’s too far for us, even the one in Paris). Most our folks would take their kids to at least 2 BIG vacations (about 2 weeks each) per year: winter / summer (so we’d have sea and skiing). Now, many families can barely afford a very cheap summer vacation (not more than 10 days).
Good one, dojo. Most years, my family took a vacation somewhere — usually a cross-country road trip that lasted three weeks or so. Boy, they were fun!
Darn, but what about the salaries? I think they go the opposite way lol.
Real household purchasing power stopped increasing around 1970 too. For awhile, Americans were able to offset the decline by putting moms to work — but today, I believe it has fallen back to almost par with 1970 (even though 4 in 5 middle class families are two-income households).
When I was a kid, my parents would buy season passes to Disneyland. We lived 30 mins away so it was easy to go. I think my mom said that a season pass was $100 at the time. Oh how things have changed!
When our kids were smaller we bought season passes for Disneyland too, Melissa. If I remember correctly, they were $99 per person. The thing is, it wasn’t that long ago! Maybe eight or nine years ago, at most. Now that’s the price for a whole day! Their rising prices are the reason I haven’t taken our kids to Disneyland in four or five years. It’s sad, really. Anyway, I refuse to pay their high prices on principle.
I’m amazed your childhood home is valued so low now since the Dollar Times inflation calculator says that $128,000 in 1962 would be $994,342 today. It was also a very expensive home for 1962, compared to the rest of the country. My in-laws built a 3600 sq ft very fancy home in 1964 for the princely sum of $40,000 in Texas. My sister bought her first home (a modest 1940s ranch) in 1970 and paid $12,000 for it.
Kari: You misread it — $128,000 is the inflation adjusted price. My dad paid just $17,000 for the home back in 1962. In fact, he told me he paid $2000 for the land, then $15,000 for the home, which was custom built.
Big time agreement on the concerts … what gets me is the fact that groups with meager resumes charge these ridiculous prices … I don’t mind paying top dollar to see Paul McCartney , Streisand , Springsteen etc… but Peter Frampton or some guy who had two disco hits in the eighties??? No thanks
Ya know, George, for what it’s worth, the first album (actually, it was an 8-track) I ever bought was Frampton Comes Alive!. I’d pay to see Peter — but not $225. A hundy, probably.
I just wish that every product cost just like it was before. Before, people were like more satisfied with what they had, like you not complaining the number of channels. But now, people want more than 10 channels. People really change.
Likewise, solidly middle class growing up, but can’t help notice the decline in financial power from my grandparents to my parents to me. I fear for my children…
One odd outcome of the general rise in costs over the years is that of daycare. Depending on your income, the cost of daycare has risen to the point where it can be a wash between a spouse working and a spouse staying home to care for children.
Not sure if that’s good or bad… I’m sure the children would prefer being raised by their parents though.
A good supplement to a stay-at-home parent would be running a small in-home childcare operation. My mom started doing this when it turned out she was spending all her income (as a social worker) on childcare.
Good stuff Len. Two things struck me:
1. A good number of items on your list are entertainment and accademia. Those two groups expect to make big bucks and do. (University professor wages is an interesting google).
2. It would be informative to research what it costs today to be “average” in terms of monthly expenses for phones, television, children’s clothing and technology versus yesterday year. I would guess the median cost in those areas is 10x the inflation adjusted cost of forty years ago
Thanks, Kev. Regarding point 1: You would think both education and, arguably, higher education would be highly elastic services — which makes me wonder why they are on the list. As for point 2 … I’ll have to look into that — I bet you are correct though!
Don’t have kids, and look at how many of those listed above you can eliminate..
Kids are the biggest drain on finances. Suck you dry.
Not having grown up middle class, I can’t say what it was like back then to be middle class, but I’ve seen a change in the middle class in my own adult observations. While many folks do have more tech toys and vehicles than when I was a young adult, I see more struggle to afford things like vacation, medical procedures, food, insurance, and utilities. Do we have our priorities wrong? Do we simply have less take home pay than our parents did, adjusted for inflation? Are we expected to have more stuff and therefore overload ourselves? Does buying on credit cause the problem? What is the cause, or are there lots of causes? This is a thought provoking article for me.
You’re younger than me, Len. When I was a kid, it was three channels on that antenna TV– ABC, NBC, and CBS.
Only three channels? Yep, JD, you are definitely older than me! LOL
Houses are definitely more expensive but depending on the part of the country you live in you can get an entry level house for less than $100,000. No, it won’t have granite counters, hardwood floors (well maybe it will if they are original), stand alone shower and Jacuzzi tub with a separate room for the toilet. How many times have you seen a young couple on those house hunter shows who barely have a couple thousand for a down payment and they are looking for a McMansion better than their parents ever dreamed of owning. It isn’t that the houses got so much more expensive but that people’s expectation of what they deserve has skyrocketed. They have champagne tastes on a tap water budget and then declare that the system is rigged against them.
You are so right. They are so blinded by the granite countertops and open concept living space, they choose a house on a tiny lot with a real problem, like train tracks or a freeway over the back fence. They never think of how that will come back to bite them when they need to sell.
I managed to get my whole family of six into Euro Disney (almost) free of charge by slipping the gate agent a $200 euro bill. It was still cheaper than paying the going rate!