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American Standards of Living:1918-1988

Where We Stand

At the end of the 1980s, the public was voicing discontent about the nation’s economic fortunes. The incorrect perception that private living standards were falling and children were not living as well as their parents was widespread.7 However, our income and expenditure data show that families generally contin-ued to do better than families of the same class in 1973, and considerably better than in 1950. Only laborers did not do better in 1989 than in 1973, but they did not do worse. Laborers did consider-ably better than in 1950. The findings of a Congressional (CBO) study are consistent with these conclusions. The CBO found that baby boomers, those born between 1946 and 1964, had both higher real median income and household wealth in 1989 than their parents had at a comparable age.8 The financial improvement reflects both the higher educational achievement of the boomers9 along with the increase in labor market participation of women. Yet we have seen that forces at work that might explain this rising discontent. Here we will consider three possible sources of discontent¾what is acquired with higher income, declines in the public standard of living, and conflict over distribution of resources both within the U.S. and across the global economy.

With employed families spending one-third to over one-half of their incomes on variety and status, the question arises¾what are variety and status buying in terms of quality of life, as opposed to a standard of living?

What are the forces that propel families to purchase variety and status in recreational goods even though they dread to leave their homes during the day because of smog and at night because of crime? Feeling powerless to influence public problems that significantly undermined their own standard of living, people have turned inward to focus on their private consumption. Disillusioned with society’s ability to tackle social problems, much less solve them, families have withdraw to their private lives and sought solace in consumption of variety and status. For many people, the demands in their private lives of going to work and taking care of family deplete their time and energy. Yet social pressure to maintain consumption norms prevents them from expanding leisure time or focusing on social problems.

The economic distance generated through purchases of basics in an earlier period resulted in substantial differences in the way people lived and in their well-being. The standard of living and the quality of life were almost congruent, and economic growth produced noticeable improvements in both. Economic distance created during the present time through purchases of variety and status result in only subtle differences among classes in the way people live and in their well-being. In a more mature economy and crowded society, the standard of living and the quality of life coincide less and less. Yet people yearned to augment their variety and status in private consumption between 1973 and 1988. This longing does not seem to have diminished in the 1990s, the decade when the popular home shopping stations became the "fifth" network on television.

The tax revolt was only one sign of the ensuing conflict over income distribu-tion. Several forces had converged to heighten the conflict. Expecta-tions were not met as the growth of the economy abated; poverty appeared to be more costly to eradicate as the poverty rate declined; and government programs seemed to have provided most people with the basics. President Reagan reinforced this belief that no one was denied the "necessities of life," even though the poverty rate for children was growing as he spoke. If absolute needs were met, people apparent-ly reasoned, then fighting over the distribu-tion of relative wants seemed justifiable (if self-serving). Between 1973 and 1988, social concerns about poverty and equity ebbed and individ-ual concerns about making and spending money blossomed. Flaunting one’s money and status spending were in vogue, and we see that this permeated consumption norms across the income spectrum. We left our American families at this point in history.

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