Quite often you hear people from Generation X and the Baby Boomers talking about how Millennials and Generation Z are unmotivated and make poor choices, especially with money. They’ll often talk about how things were better back in their day. Maybe things were better in their day. Let’s take a look at some things. We’ll leave feelings and opinions out of it and take a look and cold hard numbers.
You can also click here to watch this as a YouTube video with more charts and images.
We’re going to look at the US economy of today compared to 25 years ago and 50 years ago. That is 2023, 1998, and 1973 respectively. Generation X was becoming adults around 1998, born roughly between the early 1960s and early 1980s, they were in their late teens to late 30s at this time. Baby Boomers were becoming adults around 1973. Born after World War II, between the mid-1940s and mid-1960s, they were in their late teens to early 30s at this time.
I want all three generations to come together and see how things were and how they are now, and we can find out together why some people just don’t seem as motivated as previous generations were. Believe it or not, while inflation has worked against us in some ways, the place of work has a lot to do with it.
Let’s cover changes in income over the years, then we’ll look at some differences in the cost of living and inflation. Once we’re all on the same page here we can see what the real problem is, and it’s unfortunately not as simple as inflation.
Income
Over the years, the average income has seen a significant decline. In 1973, the average income was around $12,000 each year. that’s equivalent to approximately $82,500 in today’s money. Fast forward to 1998 and people are making around $38,000, which is approximately $71,000 today. See the slight decrease there? However, in the current year of 2023, there has been a continued drop in the average income, plunging to $52000. This decline may have been influenced by various economic factors and challenges faced in recent times.For those who have trouble understanding these numbers and why they matter, a person of average income today earns only 73% of what they would have 25 years ago and 63% of what they would have made 50 years ago. For the same work, I am paid 25% less than my dad was at my age, and 37% less than my grandfather was.
If you grew up and became an adult between the 70s and 90s, you enjoyed a very different world than my generation inherited from you. You could say you lived in a golden era while we suffer in dystopia. This is why millennials ate struggling financially, it’s not because we are lazy or bad with money, it’s because the world is screwing us over and not paying us what we deserve.
Now I was surprised to see that taxes hadn’t really gotten much worse in the last 50 years. Our average modern tax rate for federal tax is 22% now as opposed to 28% in 1998 and 25% in 1973. So that means that the government is not stealing another 3% of our paychecks that they were a quarter of a century ago. Still more than the 0% that it should be though. All taxes are theft.
When I say the world is screwing us over, the world we live in was created by the previous generation, the same generation which raised us I might add. Then to add insult to injury my generation is criticized by the older generations for not being motivated, smart, or ambitious enough when we struggle, and honestly we’re fucking tired of it. Imagine how your life would have been with a quarter to over a third of your income missing. Would you be where you are now or would you have had a much more difficult life?
Housing
One thing that I did not expect to see, is that the cost of buying a home has gone down over the years. In 1973, it was $22 per square foot, which is equivalent to $151 in today’s money. In 1998, it dropped to $77 per square foot, or $143 in today’s money. And now, in the present time, it stands at $137 per square foot.Based on this data, we can estimate the costs of an average house in the area for different years. In 1973, it would have been around $34,096, which equals $234,301 in today’s money. In 1998, the cost would have been approximately $122,000, or $228,363 in today’s currency. Today, you would expect to pay around $219,480 for a similar house.
Overall, this shows a clear trend of decreasing housing costs over the years, which might be good news for potential homebuyers. But it also indicates that it is an investment that loses buying power while leading you to believe you’re making a lot of money.
Additionally, stricter credit requirements that previous generations simply did not have to deal with are now more important than who you know or whether or not you have good rental payment history. Just because you’re a good person and can afford to pay your rent does not translate to being able to afford to buy a home, even if the payments are cheaper.
Now, let’s talk about rent. The rental costs have shown a dramatic upward trend over the years. In 1973, the rent was $150, which, adjusted for inflation to today’s currency value, would be $1,030.77. In 1998, the rent increased to $500, equivalent to $935.92 in today’s money. Presently, in 2023, the rent has risen further to $1300.
This data indicates a consistent increase in rental prices over the years. In 1973, renters paid considerably less, but in today’s market, the cost has significantly gone up. Tenants need to be aware of this trend while considering their housing budget. So in the last 25 years, the difference in the cost of renting is the difference in being able to make a car payment or pay your family’s phone bill, both of which have also skyrocketed in cost. It means that many people my age will not be able to purchase a home, even if they can make rent every month.
All of this is compounded by the fact that, as I’ve pointed out I’m the previous section, you have to work around 30% harder and longer to get each one of those dollars that your cost of living goes up by. This is in addition to being masked by inflation lowering the value of that dollar.
Transportation
Now, how are you going to get between your low-paying job and an expensive apartment? It’s time to buy a car. The cost of new cars has generally shown an upward trend over the years. Let’s look at the most purchased cars of each of these three years. In 1973, a Chevrolet Impala was priced at $3,500, which, adjusted for inflation to today’s currency value, would be $21,000. In 1998, a Ford F-150 was priced at $16,000, equivalent to $26,000 in today’s money. Presently, in 2023, a Hyundai Elantra costs $23,000.This data clearly indicates that the prices of new cars have increased significantly over the years. In the past, purchasing a Chevrolet Impala would have cost considerably less compared to today’s prices for a similar vehicle. It’s evident that inflation and other economic factors have played a role in this price escalation. In more recent years, people have switched to purchasing cheaper or lower-model cars due to the upward trend slightly skewing the pricing data for a new car. An Impala cost considerably more than an Elantra after all, and not everyone can afford a truck.
Now how do we fuel these vehicles? The cost of gasoline per gallon has witnessed a steady increase over the years. In 1973, it was priced at $0.39 per gallon, which, adjusted for inflation to today’s currency value, would be approximately $2.68. In 1998, the price rose to $1.06 per gallon, equivalent to $1.98 in today’s money. Presently, in 2023, the cost of gasoline per gallon is $3.59.
So the cost of a gallon of gasoline costs around one of today’s dollars more than it did years ago, but keep in mind that we have to work twice as hard for that dollar, and that’s for each gallon. That could easily be $60 per car per month, that increase is equidistant to paying your water bill.
What about electric cars? No gas, right? Well, here we burn coal to produce power and we don’t have enough coal to produce enough electricity for everyone to charge these electric cars. So now the cost of electricity goes up and it will cost much more to charge your vehicle than it would to fill up a gas tank. Of course, if you can afford an electric vehicle you probably don’t care what it cost to charge it.
Now our government forces you to purchase products, which is not a very “free market” of them. One of these is car insurance. In 1973, car insurance was approximately $42, which, adjusted for inflation to today’s currency value, would be approximately $288.62. In 1998, the cost moves to around $69, equivalent to $129.16 in today’s money. Presently, in 2023, car insurance costs have increased to $115. As with almost everything else here, while the dollar cost is higher, that dollar is worth less. The product actually appears to be costing less. However, this is likely because those who actually use this government-mandated product will have their personal rates increased dramatically. The rule seems to be that you are legally required to buy it, but don’t you dare use it.
Again, all of this is compounded by the fact that you have to work around 30% harder and longer to get each one of those dollars that your cost of living goes up by. This is in addition to, and being masked by, inflation lowering the value of that dollar.
Groceries
In 1973, just a weeks worth of food expenses were approximately $30, which, adjusted for inflation to today’s currency value, would be approximately $200. In 1998, the cost increased to around $125 per week, equivalent to $230 in today’s money. Presently, in 2023, food expenses are $250 per week if you want to eat well. Honestly, I can’t afford that, and feed a family of five on just half that. It’s not great, but we make it work.This data reveals a clear trend of increasing food costs over the years. In the past, purchasing food was considerably cheaper compared to today’s prices. The inflation-adjusted values demonstrate the impact of rising prices on food expenses, which reflects the general trend of increasing food prices over time due to various economic factors, supply chain dynamics, and other influences on the cost of living.
However, the food we are buying now is not the same as what was being bought back in the day. This is masked by the fact that further back in time the more organic the food was. Purchasing organic foods like they had in 1973 would take that modern-day coat of $250 per week up to $400 or even higher.
Again, my family of five survives on merely $125 per week, but that’s an empty refrigerator by payday. By the way, if you are struggling, add garbanzo beans to everything you cook. They are very filling and just two or three cans stretch a Hamburger Helper meal for a few days longer for just a dollar or two.
Now let’s go over GMOs for a moment, the opposite of organic produce. GMO stands for Genetically Modified Organism. GMOs are organisms, in this case, foods, whose genetic material has been altered or modified through genetic engineering techniques. This involves the manipulation of the organism’s DNA in a way that doesn’t occur naturally through traditional breeding methods.
In agriculture, genetically modified crops have been developed to possess specific desirable traits. For example, some GMO crops are engineered to be resistant to certain pests, diseases, or environmental stresses, which can improve crop yields and reduce the need for chemical pesticides. Other GMO crops may be designed to have improved nutritional content or longer shelf life.
Now there is a problem with GMO crops, as they are generally designed to be less desirable to wildlife and insects and also encapsulate and ignore Glyphosate, a deadly herbicide that kills most plants and causes cancer in humans. Instead of the GMO crop dying, it forms a kind of cyst around the chemical and continues growing. This is great for crop production, but then you eat the plant containing the glyphosate and absorb the chemical yourself. The crops also grow faster but have less nutritional value.
Why would work 30% harder to buy crops of lower quality that give us cancer for twice as much as organic crops of the past went for? That’s simple, it’s better than starving to death which will kill you faster than cancer.
Healthcare
Now that we have covered what our food is doing to us, let’s segue into healthcare costs. There has been a significant and steady increase in healthcare costs per person over the years. In 1973, the annual cost of health care per person was relatively low, at approximately $73, which, adjusted for inflation to today’s currency value, would be around $500. This is health insurance premiums, medication costs, hospital visits, and more. By 1998, the expenses had risen to $986, equivalent to $1,846 in today’s money. Presently, in 2023, the cost has surged to $4,400 per person. That is 10% of what is considered average income in this country.This data underscores the remarkable escalation in healthcare expenses, highlighting the complex factors driving the rising costs within the healthcare industry. Factors such as advancements in medical technologies, increased demand for healthcare services, pharmaceutical developments, and the overall complexity of healthcare systems may have contributed to this upward trend.
There have been several instances of insane and significantly inflated prices for simple items or services.
For example, there have been cases where patients were billed hundreds of dollars for basic items like a single Tylenol tablet, or thousands of dollars for a routine blood test that would typically cost much less outside of a hospital setting.
Another well-known example is the cost of an “average” hospital stay, which can amount to tens of thousands of dollars, depending on the country and the specific services provided.
This is not only due to inflation, but shady medical practices. But keep in mind, that these prices are still compounded by your work being devalued by around 30%.
Conclusion
So why would we work harder for less money to pay much higher rent which prevents us from ever being able to buy a home and continue eating food that is actually killing us? Because it’s slightly better than being homeless and starving to death. As for the healthcare issues, do you know what living under this kind of stress does to both the body and mind? This is why we are all depressed and suffering from anxiety, it’s a form of PTSD from living in the world we inherited from the generations before us There is no mental energy left to care about work ethic, especially when we are all severely underpaid.If you are or are close to being retired, and your house is or is almost paid off, you have no idea what this world is like for people not lucky enough to have been born when you were. America is on the edge of falling into the state of a third-world country, in fact, most of the rest of the world is too. Let’s quickly go over a budget plan for each decade using average numbers for income and expense. If you’re older than even just 40 years old, I think this will surprise you.
Let’s look at the budget for 1973. The average income during this time was $1,000 per month. After factoring in taxes ($280), rent ($150), car payment ($58), car insurance ($42), gasoline ($26), health care ($6), food ($120), electric/gas ($30), water ($7), internet ($0), trash ($3), phone bill ($20) and Cable TV ($15), the total expenses come to 737. Consequently, in 1973, there is a surplus of $243, which means income exceeds expenses by this margin.
Now of course countless other things appear in a monthly budget, or unexpected things that pop up, eating out, etc, but that $243 in 1973 money is equal to $1,800 today. With that, you can save up a big down payment on a home and make a few extra payments to pay it off sooner. You can fairly comfortably afford to tithe, put away a few hundred dollars a month for retirement, and go on a few vacations here and there.
Moving forward in time to 1998, the average income was $3,167 per month. After considering taxes ($887), rent ($500), car payment ($266), car insurance ($69), gasoline ($71), health care ($82), food ($500), electric/gas ($110), water ($24), internet ($12), trash ($10), Cable or Satellite TV ($60), the total expenses sum up to $2,721. In this year, the budget shows a surplus of $536, suggesting that income exceeds expenses. This is good.
That $536, while some of it will still go to other random expenses, you still have a budget surplus. Keep in mind, pay is coming down and expenses are going up. While it looks like more than the generation before it, it’s not that much, that’s $146 in 1973 money, so you see it’s getting tighter. However, you can still most likely afford to tithe, put away a little money for retirement, and go on a vacation at some point.
In 2023, the average income stands at $4,333 per month. After accounting for taxes ($953), rent ($1,300), car payment ($380), car insurance ($115), gasoline ($240), health care ($366), food ($1,000), electric/gas ($300), water ($45), internet ($90), trash ($20), phone bill ($180), and streaming services ($120), the total expenses amount to $4,929. This indicates that in 2023, there is a budget deficit of -$776, meaning that your expenses exceed income by this amount.
What do we do? You cut the streaming services, buy less and cheaper food, maybe not pay that phone bill on time, fall behind on the car payment every few months, etc. Additionally, if you have the option to work a ton of overtime and find some side hustles, that helps. Maybe you qualify for food stamps or WIC depending on how many kids you have. Also, those kids are tax credits and skip federal tax altogether and break even. Now there are no vacations or saving for retirement, but hey your family has a roof over their head and enough food to not starve to death, and even electricity to keep the lights on.
Yes, this really is what life is like for most people my age in America. Before you look down on my generation for having trouble with money, or mental health issues like anxiety and depression, or not feeling as motivated or ambitious as your generation was, or posting things like “If you want to help my family, my PayPal is https://www.paypal.com/paypalme/mfougnie”, look at how good you had it and what we have to deal with.
Not everyone can find a good fit with anxiety and depression medication, I’m lucky enough to have found some that work for me, and that helps a lot, although that’s also just another expense to add to the budget. Some people are not even that lucky, maybe their brain chemistry doesn’t play nice with these meds, so what do they do? Illegal drugs or video games, both of which also hit the budget and your health pretty hard. Some people can’t even do that and they can not find an outlet or anything to help, and it just builds up until they snap and you see them on the news an hour later. I’m not condoning that of course, but I’m not surprised when I see it either. When you have an entire society of people pushed to the breaking point at all times, people break down.
If you want to help, there are things you can do. Write to politicians to have them ease the tax burden on the less wealthy, or if you run a company simply pay your employees a wage that they can live on. The main problem here is not inflation, it is that wages are not keeping up with inflation. If you’re struggling, and you have the option to work overtime, do it! I work over 60 hours a week to make sure my kids can eat.