An interesting article from NBC asks that question, but, as in all cases, the article must be read carefully.
The reason they pick $50,000 is that this is the new household median income, and (adjusted for inflation) it has fallen over the past few years. They ask readers to send in their stories. Just as I said last time, this idea of telling someone’s story is typical of reporters and often misleading. They are trying to get examples of people to show how they are struggling to make it. (This is my assumption, that they are trying to highlight another "crisis." I admit that I am reading into their motives.) None of these examples, however, will be typical, because later in the article they explain that the median income of a family, two or more related people living together, is about $62,000 and that of a single person is just under $30,000. So a family at $50K would be below average and a single person at $50K would be above.
Nevertheless, my main point comes from the interesting graph near the top of the article. It shows the median income (adjusted for inflation) over the last 50 years. Despite the recent dip, the overall trend is upward. Looking at the big picture, the long term, in other words using perspective, we see that on average we are better off than we were in 1965, 1975, 1985, 1995, even 2005 (in pure dollars, adjusted for inflation). If we could get by then, we should be able to get by now – unless our needs and expectations have change significantly. As usual, there is no crisis, just a problem of behavior.
What drives the question of whether we can make it on $50K is the underlying assumption that we must be on a continuous upward slope, with no year-to-year dips. As our resources increase, so do our appetites - our wants, not our needs. The graph shows that the world doesn't act that way. The upward slope is punctuated by dips and sharp rises. Why should we expect different? This is what, not too many years ago, led so many people to be lured into buying houses they eventually couldn’t afford. They were encouraged (by bankers and realtors) to assume that their income and the value of their house would both move on a continuous upward path.
What drives the question of whether we can make it on $50K is the underlying assumption that we must be on a continuous upward slope, with no year-to-year dips. As our resources increase, so do our appetites - our wants, not our needs. The graph shows that the world doesn't act that way. The upward slope is punctuated by dips and sharp rises. Why should we expect different? This is what, not too many years ago, led so many people to be lured into buying houses they eventually couldn’t afford. They were encouraged (by bankers and realtors) to assume that their income and the value of their house would both move on a continuous upward path.
The article presents a picture of America self-deceived with the notion that life will steadily get better, with no temporary setbacks, either personally or nationally. How unrealistic! Based on that assumption, wants from years ago become the needs of today and we seem unable or unwilling to adjust. Our requirements keep growing, and what was sufficient to live on comfortably ten or twenty years ago, no longer is. As C. S. Lewis so well put it: “Whatever men expect, they soon come to think they have a right to: the sense of disappointment can, with very little skill on our part, be turned into a sense of injustice.” What's needed is a sense of perspective.
Thanks for providing that sense of perspective.
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