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American Standards of Living:1918-1988

Basic, Variety, and Status

The transformation of consumption norms encompassed substantial improvements in basics for working-class families from 1918 to 1973, especially between 1950 and 1973, when homeownership, car ownership, and a biannual vacation became an accepted part of working-class life. (See Figure 8.4 and Table 8.2.) After purchasing basics, families mainly purchased variety through 1950. In 1973, family spending turned toward status purchases. In 1950, laborers spent 12% of their budgets on variety and 2% on status; salaried families spent 25% on variety and 18% on status. By 1988, laborers spent 11% on variety and 21% on status; salaried families spent 25% on variety and 31% on status.

During the seventy years surveyed, laborer families progressed from a situation of spending 100% of their budgets on basics in 1918 to spending 32% on variety and status in 1988. Still, laborers’ ability to purchase variety and status in 1988 did not match that of salaried families in 1935. In 1988, laborer families purchased only one-third as much variety and status as salaried families. Laborer families spent some of their savings to augment their status purchases between 1973 and 1988, when they experienced a decline in real income. Even without a decline in real income, wage-earner families also spent some of their savings in order to expand their purchases of status. The working class must have felt enormous social pressure to purchase status in order to keep up appearances. The meeting of basics, or the achievement of absolute social norms, did not mitigate the coercion to purchase variety and status, or the achievement of relative social norms. If anything, the attainment of basics seemed only to intensify social conflict over who would be able to buy variety and status.

Salaried families’ consumption included all the basics in 1918. Wage-earner families were also able to buy the basics in all categories except food and transportation, and basic consumption in these two categories was attained in 1935. In 1918, laborer families did not meet basic requirements in any major category¾food, clothing, housing, transportation, and recreation and education.5 They made great strides in 1935 when they purchased basics in food, clothing, transportation, and recreation and education. They would not consume basics in all categories until 1973, when they finally bought basics in housing.

Salaried families attained basic transportation that allowed car ownership in 1935; wage earners attained basic car transportation in 1950 and laborers in 1973. Salaried families met the housing basics that allowed home ownership in 1950, and working-class families attained basic home-ownership in 1973. Overall, 1973 was a watershed year in that working-class families had finally achieved consumption above basics in all categories. This achievement presupposed that families were covered by an employer-sponsored health insurance plan. Families without this important benefit could be denied basic medical care. Even those with health insurance had to worry about losing the insurance if they became unemployed.

Even though blacks’ economic position had improved considerably by 1950, they met or exceeded basics in only four unimportant categories ¾ furnishings, energy, household operations, recreation, personal care, and gifts. Their segregation from the white community allowed them to create their own criteria for consumption norms. They focused on less costly areas where extra spending could make life more pleasant and foster a social life¾making inside their homes nicer and more acceptable, having their hair styled, going to the movies, and giving gifts.

In 1973, after a decade of the war on poverty, families living at the government-defined poverty threshold consumed sufficient food only if they participated in the food stamp program. They received basic health care only if they were eligible for Medicaid. They economized on personal appearances and did not purchase the basics in clothing or hair cuts. They had to rely on public transportation.

By 1988, poor families were substantially better off in many ways, but their housing situation had deteriorated. Their budgets allowed them sufficient food and car transportation. They were able to consume above the dependency level, and almost reach the basic level, in recreation and household operations. They still were frugal in their purchases for personal appearance. Poor families, however, were no longer living in acceptable housing. This contributed to the already difficult lives they led, since many were forced to live in unsafe areas with inferior schools. At the extreme, they were living on the streets as the phenomenon of homelessness reappeared, reminiscent of the Depression. Just like the Depression, the homeless are not represented in expenditure data in 1988.

For many immigrants from developing countries, being poor in the United States provides an enormous improvement in the standard of living along with the opportunity for their children to be educated. For this group, improvements in living standards are hidden and are not recorded in the standard of living index, which measures only the modifications in living standards over generations of native-born Americans.

In the 1960s and early 1970s, as basics were being met by laborer families in all categories, the economic growth and the ensuing high standard of living appeared to facilitate the development of a social consensus to distribute income in a more equal manner and to shorten work hours. As income growth slowed after 1973, these goals were quickly replaced by the objective of increasing private spending, which led to the tax revolt in California in the mid-1970s. The tax revolt quickly spread to the rest of the country. The public’s demand to lower taxes successfully diverted resources from public to private spending. As families spent more on private goods and services to obtain variety and status, public problems such as environmental degradation, homelessness, and crime worsened. Even as traffic congestion lengthened commute times and added to air pollution, the public resisted using public transportation. The societal and market bias against public goods and in favor of private goods was in full force.6 Within their private spheres, employed families were experiencing a rising standard of living; outside their homes, however, the quality of life was rapidly deteriorating in many ways.

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