Originally Posted by
ohaiyo
A major thing missing from this inflation discussion is the rise in asset prices. It's one thing to compare the relative dollar amount of a wage, but focusing there masks what the value of your labor is actually worth. It's another discussion altogether when you compare today's wages and their ability to acquire important assets, like houses, for instance.
In the 80s, my dad was making in around $85K/yr and homes in SoCal would sell for around $140K. Those same houses now go for $1.5M+. So in other words, it would take an (asset) inflation adjusted wage of approximately $970K/yr to reach actual parity with a slightly upper-middle class worker from the 1980s. $440K/yr sounds like a lot of money, but it's not, given what has occurred in the housing market.
In other words, we make slightly less than half of what a 1980s middle class white-collar worker made.
While I disagree that we make <50% of what a white collar worker use to make overall, our purchasing power in certain areas certainly has fallen. In CA you're competing with a lot of foreign money as well as the CA good-weather and NIMBY tax.
I found a graph starting in the late-80's for LA, and home prices were very consistently averaging $150k until the late-90's where they eventually hit $500k by 2006, then dropped due to the recession, then have climbed up again.
Housing has been compressed everywhere starting around 2015 or so. If you owned prior to Covid you're doing OK, ours was $175,000 bought in 2008, but those who are new entrants are really hurting. At least with our income you can out purchase most of America even on one income (except in certain hotspots like Socal).