American Standards of Living:1918-1988
Where We Stand
At the end of the 1980s, the public was voicing
discontent about the nations 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 societys
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 ones 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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