GDP is a Big Fat Lie: The Real Wealth is Decreasing Annually

[nameta9]

Ok, let's not get into complicated rich-poor debates left-right etc. It is a very complicated argument and very subjective, the guy in Canada has 5 cars, he sees the world well off, another guy gets laid off he sees the world bad etc. Maybe what I think has changed is the BARRIER TO ENTRANCE into a middle class lifestyle. True everything has always been somewhat hard, but just considering the simplest case of a minimum job 800 dollars monthly and a minimum rent 500 dollars monthly and just considering this very simple system to evaluate a society's wealth, well this number is a lot worse today than in 1970. Of course the arguments and data can be sliced and diced in all possible manners, but I really think these 2 number are the real bottom line. How much will you make at the minimum job? and how much will it cost you to rent 1 bedroom house? well that represents how open our society is in general and a real funny thing is this number is very similar in Europe and Japan that have very different cultural and social differences from the USA. I think the structure of our western industrial societies hve this limiting factor that rents reach the minimum wage and these societies can't get much richer.

 

[russ_watters]

By the way guys, there is a related assertion here, that housing prices are increasing faster than inflation. This assertion is meant to support the assertion that standard of living is decreasing. Because of that, the assertion is factually true, but flawed. It comes with the implicit assumption that housing standards are either constant or decreasing. Ie, that with that more expensive house that you get today, you do not get a "better" house. And that's wrong. Housing standards are increasing. Whether they are increasing in line with housing prices, or across the board, is tough to prove either way, but regardless - they are increasing.

I had a better link, but for now, http://www.eia.doe.gov/emeu/recs/recs97/decade.html" is a link showing that "housing units" (houses and apartments) are getting larger. Ie, from 1978-1997, the percentage of dwellings with 1-4 rooms went from 35%-30%, while the percentage with 7 or more rooms went from 22-29%.

Another good example of both standard of living and housing standard increases is http://www.eia.doe.gov/emeu/reps/appli/us_table.html" . Some of these appliances (air conditioning, for example, is a biggie) are part of the cost of the residence and some (microwaves) are not. Some of these appliances have seen extrordinary increases in market penetration in the past 20 years. A few examples:

Appliance Percent with
...1980...2001
A/C (tot)...57...88
Microwaves..14...86
Computers...0...56
Diswasher...37...53

 

[russ_watters]

Maybe what I think has changed is the BARRIER TO ENTRANCE into a middle class lifestyle.

The barrier for entrance to middle class life is utterly nonexistant for a healthy individual. The primary requirement is finishing high school, and that is paid for by the government. In 2003, the average income for people who only ever finished high school was $30,000, while the average for people who never finished high school was $17,000.
http://pubdb3.census.gov/macro/032004/perinc/new03_001.htm

...but just considering the simplest case of a minimum job 800 dollars monthly and a minimum rent 500 dollars monthly and just considering this very simple system to evaluate a society's wealth, well this number is a lot worse today than in 1970.

I'm sorry, but your made-up scenario simply isn't real life.

 

[ShawnD]

simplest case of a minimum job 800 dollars monthly

Why are you taking numbers for somebody who works only part time at McDonalds? Those jobs are all filled by kids, and kids don't pay for room and board. Adults who need to live on their own work at higher paying jobs; usually full time. The US may not have something like this, but Canada has a government website with job listing for every city in the country; link. Just take a look around at how much some of those jobs pay, usually with no experience needed. My city, Edmonton (in Alberta), has had 549 jobs posted in the past 48 hours, and the lowest hourly rate I see is 7 hourly. It's very easy to find a job that pays at least 10 hourly for 40 hours per week, and most of them are not physically demanding. Pizza cook? Warehouse shipping (that means driving the lift)? Receptionist? These jobs are not physically intense. If you're working for $5 only part time it just means you're lazy.
Also try to keep in mind that the US on average has higher paying jobs (even before the currency rate is factored in), and the US has lower unemployment rates than Canada.

 

[oldtobor]

So russ, shawn I imagine a manager who is layed off and has to work at McDonalds for 8 hours a day in Canada or Philadelphia. Now you are both saying that he can bring home 1,500 dollars a month at that job or any similar entry level job ? Aside from age descrimination or overqualification I doubt he would even get that job. By the way could a person who is overqualified simply say he always worked at his own business and only has a high school diploma to get that kind of a job ?

Don't think it is very easy for laid off professionals to find equivalent work if they are hosed.

 

[ShawnD]

As long as you're not a dickhead, it's easy to get a job. If you went to a job interview for an entry level grunt job like the $12/h 40h warehouse job and you somehow don't get the job, it has nothing to do with being overqualified or too old; it has everything to do with how you handled yourself in the interview. If you still act like a stuck up manager who is too good for physical labour, of course you won't get the job. You don't even deserve that job. In that case, you deserve to live in poverty at McDonalds until you throw out the ego and are willing to work. I may flip flop a lot but I never held the opinion that I was too good for work.

 

[russ_watters]

So russ, shawn I imagine a manager who is layed off and has to work at McDonalds for 8 hours a day in Canada or Philadelphia. Now you are both saying that he can bring home 1,500 dollars a month at that job or any similar entry level job ?

Someone who has manager qualifications needs to find another job as a manager - the McDonalds job is temporary, so the scenario you describe is not relevant here.

Aside from age descrimination or overqualification I doubt he would even get that job. By the way could a person who is overqualified simply say he always worked at his own business and only has a high school diploma to get that kind of a job ?

What job, a job at McDonalds? Anyone can get a job at McDonalds. It is common in my area for retired older people who need a little extra cash to work at McDonalds. And my parents' next-door neighbor is a ~50 year old mechanical engineer who worked at Home Depot for a good year, during the last bad unemployment cycle a few years ago, until he could find another job in his field.

Don't think it is very easy for laid off professionals to find equivalent work if they are hosed.

No, it isn't easy, but they do better than you are suggesting, and regardless, that has nothing to do with your previous assertion. Very, very few people lose high-paying upper-middle-class jobs and work the rest of their lives at McDonalds. And even those who never get another good job don't stay all the way at the bottom.

edit: the biggest real problem in what you are describing is people who have a lot of debts. When they lose a job like that, it can cause them to lose their house. A good friend of my family lost his job at a particularly bad time (his kids were about to go to college) an had to trade his 3000 sq ft. house for a small condo. That guy took responsibility and made his own solution - some ride their debts into bankrupcy.

Shawn's right: getting into (and then out of) McDonalds is all a matter of attitude.

 

[nameta9]

Thanks a lot for your answers. As I imagined there are all kinds of cases, and a lot depends on where you live etc. Just some time ago someone told me the mechanical engineers are a lot better off than software people because they have a stable well defined skill set that is always valid, you don't become outdated because you don't know java etc. But as you just said, your friend was hosed anyways and had to work at home depot. Very interesting , so it really is all mixed up, there are all conceivable stories and situations. I think software today is a bad choice, better something much more stable.

 

[jim mcnamara]

Look at any data of the US in 1970 and you will be quite surprised. Rents were a lot cheaper,...<deleted>... really remeber how it was.

If you're saying that wages have not kept up with inflation, there is some data to support a small divergence of the two in the US since 1970.
However, since 1913, US inflation has averaged about 3.25% with periods of much greater inflation and periods of deflation during the Great Depression.

In 1970, $100.00 from 2003 is worth:
$21.08 using the Consumer Price Index
$25.90 using the GDP deflator
$20.08 using the unskilled wage
$13.39 using the GDP per capita
$9.47 using the relative share of GDP

This shows what 100 US dollars now (or 2003 the max year this page
http://eh.net/hmit/compare/ allows me to enter) was worth in 1970, using various means to calculate the value.
Look at the CPI value you see factor of nearly 5. In other words, $1.00 in 1970 is worth what $5.00 buys today.
According to this page:
http://www.westga.edu/~bquest/2004/prices.htm
with the exception of automobile manufacturing, prices for most durable goods (things like appliances) have gone DOWN by a factor of 5 in relative dollars. ie., an 5600 btu air conditioner in 1970 was ~150 and now is the same.
I think you are mis-remembering, maybe.