When my father started his naval career, a college graduate in the officer’s program, he made $8,280 per year.  Adjusted for inflation, that amount would equal $32,706 today.

First year college graduate naval aviators make $28,000 today.

When my father went to college, he paid $355 per year to go to a state school.  It rose a bit every year, but that was the average.  Adjusted for inflation, that amount would equal $1402.25 today.  Totaling that amount over four years of college would equal $5609.

Tuition at the same school today is $14,200 per year.  That’s equal to $56,800 for four years.  In order to pay this, most college students borrow a great deal of money.  When they graduate, they have to incorporate a substantial loan payment into their monthly budget (which, as I’ve noted, is already smaller to start with).

When my parents were first starting out, the average rent for a 1BR, 1BA house was $220 per month.  Adjusted for inflation, this would be $869 per month today.

The average rent for such a house today is $955.  I also did this calculation for a number of staples, including gas, bread, milk.  These are just averages, and not adjusted by location, but in every single case the cost of the staple outstripped inflation by a significant amount.

A naval aviator in the 70s and 80s paid no money for health insurance – premiums, deductibles, co-pays were all paid by the Navy.  The same was true for many other workers – at the very least, full premiums were covered by the company.

The average monthly premium today is $500 per month.  This covers less and less, as the average yearly deductible is over $2000, the average co-pay for an office visit is $30, and (prior to Obama’s healthcare law, which outlawed lifetime maximums) many plans were beginning to put a cap on lifetime benefits.  With these caps in place, once you reach a million or two,  you’re out of luck – and a million or two is a drop in the bucket when you have cancer, for example, or a lifelong chronic illness like diabetes.

My father paid a good bit of his salary into a pension fund, but now enjoys a very healthy pension, guaranteed for the length of his and my mother’s lives.  He has additional savings as well, but even when it was decimated in this market, my parents knew that they’ve got more than enough to live on with the military pension.

Somewhere in the neighborhood of 1-2% of employers still pay pensions.  The bulk of the remainder provide 401ks, which are subject to the rise and fall of the market.  The amount that employers contribute to these funds has fallen and fallen over time, until now the average is 1-2% of a worker’s salary.  (Taking our freshman naval aviator salary above as an example, that would be between $280-$560 for the year.)  Many boomers with only IRAs and 401ks are now facing extremely lean years, given the behavior of the market.  Social Security, itself facing the chopping block, is their only safety net while they ride out the market woes – and even it isn’t enough to live on.

My parents scrimped and saved and struggled to stay on one salary so my mother could stay home and raise a large family.  If they’d had less kids and two salaries, we would have been able to eat out more, have nicer clothes, and taken better vacations, but as it was they opted to have my mother stay home and tighten their belts a bit.  It was a good life, and none of us would trade it.  For several years, my father’s parents lived with us as well.  That made nine people living in a four bedroom house, living off my dad’s salary plus my grandfather’s pension and their Social Security payments.  My grandparents’ medical care, which was extensive, was covered by Medicare.  (They had no savings or property to contribute to the family coffers.)  Eventually, when caring for two very old people and five very young children became a burden my poor stay-at-home mother could no longer carry, my parents made the difficult decision to put his parents in a nursing home.  The only payment required to do this was my grandfather’s pension, Social Security, and contributions from Medicare.  My parents paid nothing out of pocket.

Today, if my father had exactly the same career trajectory, none of this would have been an option.  No five kids, no mom staying home, no pension to count on, and with cuts in more and more social safety net services, no free healthcare for aging parents, no nursing home.  The sandwich generation are already making large payments on their student loans, while trying to save crazy amounts for their kids’ college funds and their own retirement funds – they will also have to carry a bigger financial burden for their aging parents as well, including those parents who wisely salted money away in 401ks year over year, and then saw them shrink down by half (or more) just when they needed to cash in.

CEOs paying themselves big bucks and their workers little bucks is not just something to tsk tsk about.  They are diverting huge amounts of money from the pool, leaving less and less for people who work – people who are skilled or unskilled, educated or not, all of us.  Having social programs may create an incentive for laziness, but the flip side is that people who get up and go to work every day have to be able to pay their rent, pay their bills, save a little, and have a little fun money.  This makes life worth living, and work worth going to.  The niceness of their house, their ability to afford cable or vacations, the kind of car they drive, and other luxuries should fall on a range from crappy-but-survivable to totally-outlandishly-awesome.  But crappy-but-survivable has got to be the bare minimum, and it isn’t anymore.  The burger flipper and the manufacturing-line employee should be able to afford to live, even a small life, let alone the college graduate who made an investment of money and years on getting skills and education – but right now that’s not possible, for either group.  Starting wages for jobs requiring a college degree are getting lower and lower, while those graduates have to pay higher and higher loan balances off.  It is crippling us.

I’m neither a socialist nor a Communist.  Incentives must exist to keep people doing the tough jobs.  Pay should be graded according to skill or hazard or education or any number of factors, and the people with more skills and more ingenuity and more value to the marketplace should be rewarded for that by getting a bit more of the pie.  But the gradations should not go from “Cannot afford rent or healthcare even while working 50 hours a week in a horrid job” to “Can fail to bring any value whatsoever to my company, and in fact have it go bankrupt, and still walk away with a golden parachute of multiple millions.”  Not only because it is not moral, not only because it is not right, but because allowing the working folks to keep their heads above water financially is the only way to have a healthy society.

So here’s my thing, Republicans.  If you want fewer people on social programs, you have to either lower their costs or raise their wages, or do both, so it is possible for them to get by – and not just to get by, but to have hope of doing MORE than just getting by.  If you want to preach the give-a-man-a-fish, teach-a-man-to-fish parable, you have to make sure there are enough fish for all of us to feed our families.  My family barely scraped by back in those days when my parents were young, but we made it through with a little imagination, a lot of sacrifice, and an ordering of priorities.  Even with all of those admirable virtues, my parents could never had done all of that while operating with a third less income.  With the burden of huge student loan payments, huge healthcare payments, having to make huge retirement contributions and hoping the market stays strong, coupled with a smaller wage to start with and basic costs that outstrip inflation – all of these would have combined to kill my parents’ dreams of a large, boisterous, noisy, loving family, with a mother who stays home with the children.  I know I’m being preachy here, but this really pains me, especially when I hear middle class Republicans talking about waging a class war on the rich – when they don’t realize just how much the super rich are taking from them.  They don’t seem to realize how much better a life they themselves could have if the nation’s GDP was distributed a little more fairly among the working members of our society (even leaving aside debate about social programs!)  They don’t seem to realize how important an indicator income disparity really is.

Sometimes I deeply wish I hadn’t been born when I was born.  Wallowing in self pity is pointless, I know, but it seems so unfair that we are so tightly pinched, that our dreams and hopes have been curtailed, simply by virtue of the decade into which we were born.  Economies rise and fall, I know we’ll get through – but only when both parties take into account what’s really happening here, and big changes are made.  The government has to either create regulation or create one heck of an incentive program to correct the increasing income disparity, but given the violent and uneducated rhetoric that gets tossed back and forth out there, I just don’t know if it’s going to happen anytime soon.  All I know is that I’m pleased with my upcoming job, and I’m pleased that we’ll finally have some relief from our personal financial woes – but you shouldn’t have to be a PhD and a lawyer just to make ends meet.  In America today, it seems like that’s the case, and it makes me ill to think of it.

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3 Responses to Fishing

  1. Jennifer says:

    Did you read Warren Buffet’s op-Ed? To see substantive change, we need those in power, and with the wealth, to change. The adage holds true, “he who owns the gold makes the rules…”. The rules need to change, and that will take those with the gold changing. I’m with you 110%. I can’t believe the choices my family is making in order for me to stay home with our kids. We rent, we don’t own our home. We live simply. Very simply. And we pay $1200/month in a health insurance premium (which is provided by the employer, but who is too small a business to shoulder the premiums, so we do…, plus the $30 co-pay every time a baby gets a fever, etc…) I’ll rant briefly here (you can delete this comment if it’s too much): I’ve never met my mother-in-law or nephews because for that to happen, we would need paid vacation time (haven’t had in 5 years), and thousands of dollars in airfare to fly our family to see them. If other expenses were more reasonable, we could have done this several times over. How’s that for family values? My kids haven’t met their grandparents because our entire income is being spent on concrete living costs. And…the family court system has us paying such an insane amount of money each month to “equalize the standard of living” for my step-daughter, but if we take what they ordered and added it back into our budget and had her live here 100% (instead of 25%), we would have excess. The amount the courts order is punitive to the non-custodial parent, event when said parent is fully enganged in their child’s life. Argh. At least we’re in good company, struggling, striving, surviving.

  2. GradBaby says:

    This is so brilliantly written! Thank you for taking the time to articulate the argument that has been floating in my mind for so long. I’m currently a graduate student in a PhD program (English) and I’m actually working on important things (i.e. I’m working with multilingual students in composition classrooms) not just ‘fluff.’ Right now I earn about $1500 a month–not much to pay rent let alone live my life. I’m actually married and just had a baby and my husband owns his own business which means that his financial contributions are seasonal with the business. We both work hard but occasionally need help from my parents (which we always pay back).

    My dad grew up much like your parents–worked hard, went to school, had a state government job. . . and made it with a lot of hard work. My mom stayed home when my brother and I were young but only ever worked part-time. They’ve seen their retirement funds cut with the economy, but their state retirement funds + 401k + social security have them covered. They don’t see how hard it is for this generation to work hard and accomplish what they have (materially).

    The money my husband and I do make only stretches to cover our basic expenses; we have no ability to save for the future. Sure, I’ll hopefully be a professor soon and make decent money, but I still worry if we’ll ever be able to afford a house, never mind really appropriately plan for the future.

  3. Pingback: Fishing | The Reluctant Grownup | Phil's Osophies™

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