The Shrinking Middle Class

[Yodamaster]

Socialism.


I would live happily in a system where there is no wealth gap, where items are distributed in accordance to need, and luxury could be obtained for all by means of progress as a whole.

[ScizzMoney]

Originally Posted by jasonturbo

You are so wrong if you think people didn't live "indulgent" lifestyles 25 years ago... and by people I do mean the vast majority of people...Yeah that shit seems lame to us now, back then a "Donut phone" was iphone! ...Do some reading, consumerism popped in the 1950's
I can't beleive people actually thanked your post, so naive. North Americans have been pissing money away for a long time... + people are stupid and lazy.

Were people living cheque to cheque and upgrading their 'donut phone' every year? There are differences from 25 years ago and today. Every household had a phone, I will agree. Now every household has a phone plus personal cell phones for each member of the house.

North America has always been known for its excess, yes. It has almost always been a 'keeping up with the Jones' type of place. I thanked him for his line '..the middle class pay for it with borrowed money they cant pay back..'.

[noclue]

Originally Posted by Yodamaster

Socialism.


I would live happily in a system where there is no wealth gap, where items are distributed in accordance to need, and luxury could be obtained for all by means of progress as a whole.

Aside from quality, the main point of luxury is that others cant get it.

[Noir]

I fail to see the connection between the shrinking middle class and frivolous expenses like smart phones or a flat screen TV's and the like

First of all. $500 smart phones, (if people even still pay for it and not have it subsidized by 2 or 3 year plans) and $500 - $1000 flat screen TV's shouldn't be setting you back by much. $500 should just be at most, be a quarter of a middle-class' monthly income. Much less, in a dual-income household as we're not in the 50's and 60's anymore where the wives primarily stay home, and women make considerably less.

And if $500 is a big drop for you that it will set you back almost a year, and not just a month (or two at most)... well, that's not middle-class in the first place IMO.

[ScizzMoney]

Middle class in my eyes are generally the people that will pay for a 'luxury-ish' vehicle with their wages.

Of course that is not the only criteria for me. But, that is a common trait among the middle class that will keep them from reaching the next level.

[Traum]

Originally Posted by Yodamaster

Socialism.

I would live happily in a system where there is no wealth gap, where items are distributed in accordance to need, and luxury could be obtained for all by means of progress as a whole.

Unless you live in Utopia, the ideology would never work. We live in a real world where real people have both altruistic and selfish tendencies.

As an aside, I don't think what you describe above is socialism. It seems a lot more like communism than anything else, and the whole world knows communism doesn't work on a practical level.

[coolname]

Originally Posted by Yodamaster

Socialism.


I would live happily in a system where there is no wealth gap, where items are distributed in accordance to need, and luxury could be obtained for all by means of progress as a whole.

ya you would be happy to live in that system till you notice your dead beat neighbour bill who calls in sick every other day and when he does show up work spends the whole time on a coffee break is making the same yearly salary as you who always shows up to work and works your ass off well there. At this point you would probably say "fuck that im not going to work hard any more" and next thing you know the whole country is fucked because nobody shows up to work and nothing is getting done, but at least there isnt any income gap and everyone is suffering equally.

your post also implies that in are current system luxury and living standards are only improved for the rich and the lower class and even middle class never get to experience their living standards increasing. This isnt true at all, the rich become rich be offering a service that people are willing to pay for because it makes there lives better. If what the rich where offering didnt improve the living standards of consumer then the consumer wouldn't purchase the service and the rich wouldn't be rich.

"but, the rich have all these other luxury's no middle class or lower class
could ever afford like multiple houses and cars that cant be fair. "

and the middle and lower class currently also have many luxury's that previous generations couldnt afford either such as cars, iphones, tv's, laptops, etc. Fact is everyone on this planets living standard is improving and the people who are the most to responsible for that is the rich.

If there was no reward for inventing a new product that would improve the living standard of the world why would someone put in all the effort required. Do you think Henry Ford would of bothered making cars accessible to the average person in north america if he would of made the same wage doing the bare minimum of work required at a much simpler job as would be the case in your ideal country? How about Thomas Edison do you think he would of stayed up late countless night in a row trying to invent something everyone said was impossible if there was no reward in the end?

you are now going to reply with something like "i know it is not feasible in the real world, but wouldn't it be great if it was and everyone still worked really hard"

well sure just add it to list of the rest of things that are impossible but would be really cool if they weren't, you could put it in-between humans being able to fly like birds and humans being able to shoot lasers from are eyes.

Honestly how cool would it be if we could fly around like birds with laser eyesight, it would be totally insane!

[Manic!]

Originally Posted by Noir

I fail to see the connection between the shrinking middle class and frivolous expenses like smart phones or a flat screen TV's and the like

First of all. $500 smart phones, (if people even still pay for it and not have it subsidized by 2 or 3 year plans) and $500 - $1000 flat screen TV's shouldn't be setting you back by much. $500 should just be at most, be a quarter of a middle-class' monthly income. Much less, in a dual-income household as we're not in the 50's and 60's anymore where the wives primarily stay home, and women make considerably less.

And if $500 is a big drop for you that it will set you back almost a year, and not just a month (or two at most)... well, that's not middle-class in the first place IMO.

The phones are not free your are just paying for them monthly. Both parents have a $500 phone, kids also have them. That's minimum $120 to $180 a month. If the kids are not old enough for one they have a Ipod and an Ipad plus maybe a laptop. Also those things have to be updated. lets not forget
the cable,internet bill, and line bill. that's another $100 plus a month. Then you have your video game systems and all the expenses that come with that.

Remember wives staying at home only meant one car and no child care expenses.

[Noir]

Originally Posted by Manic!

The phones are not free your are just paying for them monthly. Both parents have a $500 phone, kids also have them. That's minimum $120 to $180 a month. If the kids are not old enough for one they have a Ipod and an Ipad plus maybe a laptop. Also those things have to be updated. lets not forget
the cable,internet bill, and line bill. that's another $100 plus a month. Then you have your video game systems and all the expenses that come with that.

Remember wives staying at home only meant one car and no child care expenses.

Okay.

1) Who says parents pay for the kids phone bill? I know of many a teenagers that have to pay for theirs

2) I know many a parents who pay for their kids phone bill. Why, because:
a) they can afford it
b) they want the security that they can reach their kids at any time... and vise-versa. The kids can reach their parents, or anyone, at all times.

So okay. it bumps your monthly bill by $50 per child. Do you prefer the alternative?

3) Lastly, even if you're right and the expenses of parenthood is sky-rocketing... well thank goodness the trend shows that we're having less and less babies. Mean's that people are keeping it in line aren't they. Unless your a dumbass parent, people are only having kids they can afford.

So, shouldn't that be a mitigating factor?

And please, by update, don't make it sound that it's traditional for families to buy Ipads and Laptops once a year. let's not exaggerate just for the sake of making a point.




Okay, let's continue on about these other luxury items. Ipads and Laptops. Yes I see them a lot, but are they per child, per family member, or per household?

Honestly, I only see the case of "per family member" either when each kin is of age and can afford to pay her own way, or if you come from affluent families themselves.



Yes I will agree that the standard of living has improved greatly over the decades, but I refuse to blame smart phones and laptops to be the downfall of the middle class.

[Manic!]

Originally Posted by Noir

Okay.

1) Who says parents pay for the kids phone bill? I know of many a teenagers that have to pay for theirs

2) I know many a parents who pay for their kids phone bill. Why, because:
a) they can afford it
b) they want the security that they can reach their kids at any time... and vise-versa. The kids can reach their parents, or anyone, at all times.

So okay. it bumps your monthly bill by $50 per child. Do you prefer the alternative?

3) Lastly, even if you're right and the expenses of parenthood is sky-rocketing... well thank goodness the trend shows that we're having less and less babies. Mean's that people are keeping it in line aren't they. Unless your a dumbass parent, people are only having kids they can afford.

So, shouldn't that be a mitigating factor?

And please, by update, don't make it sound that it's traditional for families to buy Ipads and Laptops once a year. let's not exaggerate just for the sake of making a point.




Okay, let's continue on about these other luxury items. Ipads and Laptops. Yes I see them a lot, but are they per child, per family member, or per household?

Honestly, I only see the case of "per family member" either when each kin is of age and can afford to pay her own way, or if you come from affluent families themselves.



Yes I will agree that the standard of living has improved greatly over the decades, but I refuse to blame smart phones and laptops to be the downfall of the middle class.

I know kids that have broken multple Ipods/pads. Those screens are easy to crack.

But it's not just cell phones and laptops it's everything else. A hockey stick use to cost 20 bux now every kid has a $100 plus carbon fiber stick every year. Before it was one TV and one computer now everyone has one. People are having less kids but every kid is getting way more. Back in the 80's a Million dollars was a lot. In Nanaimo you could buy a water front house 2 Mercedes and still have 500K left. Now a Million is nothing. Also look at house sizes. family's have gotten smaller but houses have gotten bigger.

[jasonturbo]

So there seems to be a few people who insist that the shrinking middle class is a result of our newly acquired taste for luxurious goods we do not need.

In 2011 average house costs approx. 750k.
In 1987 average house cost approx. 130k



In 2011, median household income was 57.2k
In 1987, median household income was 52.7k



So using simple logic, we have the average person, buying the average house, in their respective time periods. (Numbers below based on 10% down, 5% fixed, 25 year mortgage)
2011: 3925/month, or roughly 83% of gross income.
1987: 680/month, or roughly 15% of gross income.

So if households in the 80's only needed to spend 15% of gross income to afford the average house, WHAT THE FFFF did they spend the other 85% on?????

There is a big difference between your "perspective" and statistics/reality. Just because you don't remember people living lavishly during the years gone by doesn't mean they weren't, it only means you were not exposed to, or aware of it at the time.

(Yes I am aware of the period of hyperinflation during the 80's, sure it's a factor, but not nearly significant enough to offset the dfference in cost of housing vs. income in my example.)

[SideOfCarrots]

Originally Posted by Manic!

Back in the 80's a Million dollars was a lot. In Nanaimo you could buy a water front house 2 Mercedes and still have 500K left. Now a Million is nothing. Also look at house sizes. family's have gotten smaller but houses have gotten bigger.

But what you are talking about it all relative.

Yes, back in the 80s a million could buy that. Back in the 60s a million could by twice that. Back in the 30s a million dollars was unheard of (yes, I know I am reaching).

Humans have a bad habit of only thinking about the present as "time" is a hard concept to process. We also seem to always think that the here and now is the best/worst/most expensive/complicated/etc. period, but it never is.

I don't know what type of world that you exist in where every adult and child has an iPad, iPod, laptop, cell phones, etc., houses have TVs in every corner, and people have multiple cars. I get that it DOES happen, but it certainly is not the norm.

I deal with a lot of people. A lot of people from all various types of backgrounds (racially, socially, economically, etc) and I have a big family with a lot of kids. This shit ain't the norm.

Take that pick of the Zack Morris kid from the 80s. You know the one leaning back in his chair with the commodore 64 computer on his desk, the brick phone on his ear, the atari console on the floor, tube tv in the corner, etc. Looking at that, would you assume every kid had those things? Of course not.

I think you are over-exaggerating what "everyone" has and the financial gaps between the decades. As I said above, it is all relative.

[ScizzMoney]

Originally Posted by jasonturbo

So there seems to be a few people who insist that the shrinking middle class is a result of our newly acquired taste for luxurious goods we do not need...

Not sure who is saying that. Everyone should agree that housing is the main reason for most cities (There is still affordable housing in the country, you just have to not mind living away from major cities). Consumer debt has risen like mad over the past few decades. Credit card debt is a serious problem for a fair amount of people.

EDIT: Basically what I'm saying is people are spending money they don't have more than ever before and it is not helping the problem. Combine that with the cost of living and it will make it worse.

[Traum]

Originally Posted by jasonturbo

So there seems to be a few people who insist that the shrinking middle class is a result of our newly acquired taste for luxurious goods we do not need.

Originally Posted by ScizzMoney

EDIT: Basically what I'm saying is people are spending money they don't have more than ever before and it is not helping the problem. Combine that with the cost of living and it will make it worse.

I don't know what to make of either claims, but a quick search on Canadian bankruptcy numbers came up with the following chart:

Canadian Bankruptcy Statistics - 1980 - 2013.



The info is obtained from Canadian Bankruptcy Statistics - 1980 - 2013.. I dunno how accurate these Canadian bankruptcy numbers are since it isn't coming from an authoritative source. The chart also doesn't say how much the debts are before the person / companies declared itself bankrupt, so it certainly isn't telling us the whole picture.

But assuming that the Canadian bankruptcy info is correct, it seems like the total number of them over the past 15 years or so has been quite stable -- except for the obvious blip of anomaly during the Great Recession of 2008/2009.

[Geoc]

I find this whole shrinking middle class unsurprising. What was the middle class before? It ranged from factory workers to paper pushers.

With the proliferation of computerized automation, ease of communications (email, phone, fax etc) and globalization, all these jobs can get shifted elsewhere or replaced completely.

It has reached a point where the only reason your job still exist and hasn't been replaced by a robot or a random dude in India is either because of your specialization or you aren't compensated appropriately for your cost of living.

Even those who feel safe in their job right now are in jeopardy as software continues to improve and developing countries grow more and more educated and resourceful.

[Traum]

Originally Posted by Geoc

I find this whole shrinking middle class unsurprising. What was the middle class before? It ranged from factory workers to paper pushers.

With the proliferation of computerized automation, ease of communications (email, phone, fax etc) and globalization, all these jobs can get shifted elsewhere or replaced completely.

It has reached a point where the only reason your job still exist and hasn't been replaced my a robot or a random dude in India is either because of your specialization or you aren't compensated comfortably.

You are overlooking the sizable number of reductions in SME/SMB. These are your mom and pop shops, your indie mechanic shops, your independent restaurants, and most importantly, a vital source in creativity on new business ideas, products, and services.

Traditionally, SME/SMB has been a staple in driving our economy forward. Increasingly, however, they are being driven out by big companies, either through sheer competition and/or acquisitions, and probably many other additional reasons. But at the end of the day, it is all because everyone places to fxxking much emphasis on the bottom line. Other intangibles are simply just ignored.

[RRxtar]

Someone dig up comparisons between personal consumer debt in the 80s and today.

It might just be my own experience talking, but everyone I knew when I was a kid, if they couldn't afford it, they didn't have it. Now if you cant afford it, its ok, because you're entitled to borrow for it.

My family car was 20 years old, and only the well off people that my parents were friends with had new cars and I dont think leasing was around back then. And I dont mean a BMW either.


My point that is under discussion wasn't so much about the cost of the things people have today, but more so, the luxuries that EVERYONE has. And almost all of it is bought on borrowed money. Even cellphones are paid for with borrowed money rolled into the contract. Everywhere you look is luxury this luxury that, and everyone feels they need need need it right now.

[Sid Vicious]

this chart should be all you need to consult.




people arent borrowing more money for random pointless shit, but you know...stuff like shelter

[Geoc]

Originally Posted by Traum

You are overlooking the sizable number of reductions in SME/SMB. These are your mom and pop shops, your indie mechanic shops, your independent restaurants, and most importantly, a vital source in creativity on new business ideas, products, and services.

Traditionally, SME/SMB has been a staple in driving our economy forward. Increasingly, however, they are being driven out by big companies, either through sheer competition and/or acquisitions, and probably many other additional reasons. But at the end of the day, it is all because everyone places to fxxking much emphasis on the bottom line. Other intangibles are simply just ignored.

That's because technological changes has enabled companies to use an unfathomably high level of operational leverage.

Companies have always been seeking the bottom line and only the bottom line. It just happened that they had high marginal costs and had to take significantly larger risks to expand and compete against certain small shops in the past.

[4444]

Originally Posted by jasonturbo

So there seems to be a few people who insist that the shrinking middle class is a result of our newly acquired taste for luxurious goods we do not need.

In 2011 average house costs approx. 750k.
In 1987 average house cost approx. 130k



In 2011, median household income was 57.2k
In 1987, median household income was 52.7k



So using simple logic, we have the average person, buying the average house, in their respective time periods. (Numbers below based on 10% down, 5% fixed, 25 year mortgage)
2011: 3925/month, or roughly 83% of gross income.
1987: 680/month, or roughly 15% of gross income.

So if households in the 80's only needed to spend 15% of gross income to afford the average house, WHAT THE FFFF did they spend the other 85% on?????

There is a big difference between your "perspective" and statistics/reality. Just because you don't remember people living lavishly during the years gone by doesn't mean they weren't, it only means you were not exposed to, or aware of it at the time.

(Yes I am aware of the period of hyperinflation during the 80's, sure it's a factor, but not nearly significant enough to offset the dfference in cost of housing vs. income in my example.)

Are these real or nominal numbers? I'm shocked if in 1987 dollars ppl made $52k or so, with housing costing $150k in '87 bucks, mind you 3x earnings is actually bang on.

I'd imagine the 150k price is in 87 bucks, and $52k earnings are in 2013 dollars

[RRxtar]

Originally Posted by Sid Vicious

people arent borrowing more money for random pointless shit, but you know...stuff like shelter

Just because you live in the fucked up real estate capitol called Vancouver.....

Most areas of the country, prices are fairly flat up until 05/06. Did we all forget what happened then? And then what happend 3 years later because of it? People who previously could not afford a house and rented decided they could now buy a house (and be house poor because of it) partly because the cost of borrowing money for it (interest rates) were so low. Housing prices in the 80s would have climbed the same was as they have over the last 8 years if interest rates werent 20%. If it is cheap to borrow money, more people will borrow more money than they can afford.

Rent prices haven't really changed at all, and in alot of areas have come down. Having shelter does not mean buying a house.

[Anjew]

Originally Posted by Traum

You are overlooking the sizable number of reductions in SME/SMB. These are your mom and pop shops, your indie mechanic shops, your independent restaurants, and most importantly, a vital source in creativity on new business ideas, products, and services.

Traditionally, SME/SMB has been a staple in driving our economy forward. Increasingly, however, they are being driven out by big companies, either through sheer competition and/or acquisitions, and probably many other additional reasons. But at the end of the day, it is all because everyone places to fxxking much emphasis on the bottom line. Other intangibles are simply just ignored.

I think the internet (ebay, kickstarter, facebook, blogging etc..) has replaced many old ways of doing business.

[Mr.HappySilp]

Originally Posted by RRxtar

Someone dig up comparisons between personal consumer debt in the 80s and today.

It might just be my own experience talking, but everyone I knew when I was a kid, if they couldn't afford it, they didn't have it. Now if you cant afford it, its ok, because you're entitled to borrow for it.

My family car was 20 years old, and only the well off people that my parents were friends with had new cars and I dont think leasing was around back then. And I dont mean a BMW either.


My point that is under discussion wasn't so much about the cost of the things people have today, but more so, the luxuries that EVERYONE has. And almost all of it is bought on borrowed money. Even cellphones are paid for with borrowed money rolled into the contract. Everywhere you look is luxury this luxury that, and everyone feels they need need need it right now.

Right on. i heard it awhile back so it might not be accurate but on the news it mention that average Canadians debt is about 30k per adult and that's not including mortgage, or car loans, car lease........ So yea we sure borrow a lot of money to buy the luxury........

I wonder what would happen though if interest rate is to even raise by 1 to 2% and people can no long afford to pay min payment to afford these luxury items.