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Old 01-06-2008, 08:38 PM   #41
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Median individual income for 2006 was $32k and top 10% was $75k

Median family net worth in 2004 was $93,100

I would say an income of $71K and a networth of $257k plus house would qualify as affluent, cetainly in the top quartile of all Americans who are definitely in the top quartile of the world.

We are distorted by our discussions about how most people really live
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Old 01-06-2008, 08:42 PM   #42
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Here's some numbers that seem relevant. They show median income by education level and sex. If you combine data from tables P-16 and P-17, you'll find that the median real income for males with bachelor's degrees has been approximately flat for the last 30 years. The different tables give slightly different results.

Historical Income Tables — People

These numbers don't support the notion that "People today have it a lot harder than people did a generation ago". Nor do they support the notion that "My generation did a lot better than my parents, so my kid's generation must be doing a lot better than mine."

I think that for much of US history, people really did do a lot better than their parents. Now the "up escalator" has stalled. Maybe they do a little better (over this long time frame, I wonder about the accuray of the CPI), but not a lot better. I expect it's easier today to find 20-somethings who thought a college degree was the ticket to a high-paying job, but discovered that it needs to be the right degree, possibly with some extras.
Interesting tables! Thanks. Parenthetically, one thing that most definitely isn't included in such tables is how much people are earning in benefits, such as a strong pension plan and a good group health insurance policy. These benefits have eroded greatly during recent years. So, I think that there has been a corresponding drop in compensation that is not shown in these tables.
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Old 01-06-2008, 08:47 PM   #43
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When I was working, I earned 3-4 times the median income. I also worked with people who were earning the median. There's no way that I was working 3-4 times as hard.
Agreed, my experience also. But in a free market, the pay difference is not so much based on how hard you work, but on what the company needs to pay to get the skills they need.

There are plenty of people to work the assembly line, even though it is hard, demanding work. So $X/hour gets the company as many people as they need.

There are fewer people with degrees in specialized areas, and those people wouldn't put in the time, money, and effort to get the degrees in that area if there were not a good enough supply/demand ratio to command that 3-4X salary.

I also agree with your previous premise - there probably is not that huge of a difference between generations. Obtain education or a needed skill, apply yourself, and you will very likely do better than the median. Yesterday, today, and tomorrow.

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Old 01-06-2008, 09:10 PM   #44
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Many of the readers of this blog are techies so it's interesting to read the writings of Prof. Norm Matloff on the state of the IT/EE market. I saw an article a few days ago about how 40% of the engineering grads of Duke U. can't find jobs in engineering. I have met a number of computer science and electrical engineering grads who are un/underemployed and for a significant time. Students are voting with their feet and pursuing business and finance degrees, with the potential of a healthy ROI rather than beating their brains out for four or five years and ending up behind the grill.

It's true the really bright grads in technical fields are doing really well. Such people always will. The problem is that opportunity declines to come a knockin' for the ordinary geniuses in these fields.

I've not done any formal studies and can't submit a list of works cited in University of Chicago style so I'm posting here rather than submitting to any refereed journals and begging the kind indulgence of you, the reader.
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Old 01-06-2008, 09:18 PM   #45
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Interesting tables! Thanks. Parenthetically, one thing that most definitely isn't included in such tables is how much people are earning in benefits, such as a strong pension plan and a good group health insurance policy. These benefits have eroded greatly during recent years. So, I think that there has been a corresponding drop in compensation that is not shown in these tables.
I refer to these Census tables too, but they always seemed too high to me. Can anyone comment of the accuracy of the information? It seems like the data is gathered by survey and that would very likely lead to inflated figures.

I'd rather see data tables created from IRS data where it's rather harder to fudge the numbers.
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Old 01-06-2008, 09:34 PM   #46
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I have met a number of computer science and electrical engineering grads who are un/underemployed and for a significant time. Students are voting with their feet and pursuing business and finance degrees, with the potential of a healthy ROI rather than beating their brains out for four or five years and ending up behind the grill.
Markets are dynamic. That may not be any different now than in our parents/grandparents time. No 'hard' numbers from me either - just some observations:

Buggy Whip factory is closing. (New jobs for auto mechanics)

Tractors replace 30 plowboys and their teams of horses. (Tractors are going to need fuel - go to the oil fields)

Steel Mill is laying off (get an education, go for a white collar job).

Robots on the assembly line (time to learn how to program robots).

That job is being done by computer now., etc, etc, etc

Is it really any different? Like armor99 pointed out - we are at ~ 5% unemployment. If this was some type of huge cumulative problem, we'd be at 50% by now.

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Old 01-06-2008, 10:15 PM   #47
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The difference is that cost of entry has increased. It took 2 weeks of on-the-job training for the village idiot to learn to make a buggy whip or a pair of spats.

It takes 10years+ to get a Ph.D in computer science and a certain amount of treasure and lost opportunity. One may find at the end of that time that one's field of endeavor is no longer in demand.

I know of B.S.-degreed programmers being retrained in health fields to gain employment. A number of auto workers whose jobs are gone forever are now finishing government-sponsored IT retraining just in time to find they can not find work in their new field and need to be re-retrained in something else. I suppose the wise college student simultaneously pursues two widely divergent fields and hopes that one will pay off.
To end on a positive note, at least a man can end up erudite from a lifetime of "trainings", if impecunious.
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Old 01-06-2008, 10:32 PM   #48
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I am not aware that the job market for CS and EE is on the decline. Our company still has a big need for new grads in biomedical engineering, EE, ME and CS.
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Old 01-06-2008, 10:44 PM   #49
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I am not aware that the job market for CS and EE is on the decline. Our company still has a big need for new grads in biomedical engineering, EE, ME and CS.
That is one of the reasons that I got my degree in engineering. The technology is ever changing, but the ability to understand how things work never goes out of style. I can remember a cousin of mine got out of college and thought he would become ultra weathy, being a web site designer. I warned him to stay away from "fad" type jobs. I am glad he did.... the big bucks in that field only lasted for a few years. One of the big advantages of an engineering degree is not what you know when you leave college. It is the fact that the engineering degree has "taught" you how to learn almost anything.
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Old 01-06-2008, 10:56 PM   #50
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The difference is that cost of entry has increased. It took 2 weeks of on-the-job training for the village idiot to learn to make a buggy whip or a pair of spats.

It takes 10years+ to get a Ph.D in computer science and a certain amount of treasure and lost opportunity. One may find at the end of that time that one's field of endeavor is no longer in demand.
Well, I think you may be titling those numbers in your favor. You don't need a Ph.D to get a decent job, and many trades have a long apprenticeship.

At any rate, you have not answered the 5% unemployment question. If things are so bad, why isn't that number much worse? Why don't the tables Independent provided show a much worse picture (even accounting for some fudge - they are not doom/gloom)? Why do we have people risking their lives to come into this country?

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Old 01-06-2008, 11:11 PM   #51
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By the time someone does 10 years for a PHD, probably everything he learned the first 6 or 7 are worthless...

I have only heard that engineers are in demand around here... don't know why they do not move...

I know of a few people who do computer software and hardware installation and get paid well (kind of like Geek Squad).. and only have a 'limited' training.. people pay up for this for some reason...

Most of the accounting and finance jobs at my mega corp are going to India... I expect mine will be there soon, but I hope I make it to retirement before then... but then again, they usually do a bad job of 'analysis' so maybe I will still have a job... but they can input and download reports all day long.. and make entries, balance accounts, pay bills, payroll etc...
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Old 01-07-2008, 12:30 AM   #52
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Well, I think you may be titling those numbers in your favor. You don't need a Ph.D to get a decent job, and many trades have a long apprenticeship.

At any rate, you have not answered the 5% unemployment question. If things are so bad, why isn't that number much worse? Why don't the tables Independent provided show a much worse picture (even accounting for some fudge - they are not doom/gloom)? Why do we have people risking their lives to come into this country?

-ERD50
The Ph.Ds bagging groceries and flipping burgers count as being employed.

People want to come to the USA because things are even worse in their 3d world countries.

There must be a terrible mismatch of talent if there are companies that truly need tech workers because the Midwest could ship them to anywhere else in the country by the cargo container load. I encounter these guys on a fairly regular basis.
Again, the interested reader is directed to Goolge UofC CS Prof. Dr. Norm Matloff.

Here's another interesting site: Http://www.kermitrose.com/econ.html#2007
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Old 01-07-2008, 05:51 AM   #53
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Working at megacorp, a colleague of mine who was not as ambitious (a nine to fiver), not very aggressive (never volunteered to do any thing above and beyond the job description), not as political (would always tell people 'what he thought'), who thought his MBA (vs my BS degree) gave him god given rights to the fast track, and who by my estimations was not quite as bright as I was, made the following comment when I got 2 promotions (ahead of him) and a bunch of awards (vs his none). .... quote: 'You are the luckiest person I know'. He went on to say that my outgoing nature (not quite the term he used) also 'fooled' the higher ups. My response was that he was right... I found that the harder I worked, the luckier I got. He didn't talk to me for days.

Over the years I have developed my outlook and philosophy on life. I treated the megacorp career as a game. I figured out (really understood what it took to maximize my income and career) the rules of the game and then choose whether or not I would play the particular game. I got to the point where I choose not to play on occasion, due to it not worth the sacrifice expected. I eventually got to the point where my experience and knowledge level allowed me to play the game 'my way'.

After saying this, you do have to have a degree of luck (both good and bad). Being in the right place at the right time. Having the right opportunity arise when you are in a position to take advantage of it. You also have the instances where you are too late for an opportunity (the bad luck side of it), or you are missing a criteria for promotion just when the job opens up. But I find that if you keep your wits about you, you can make sure you get the experiences, the knowledge, the contacts, ...etc. that you need to to be successful.

IMO, you have to take the 'glass half full' attitude and take the responsibility for your actions or inactions. If you don't, then you blame bad luck or no luck on your missed opportunities and then you go into a downward spiral. Don't get caught up in this, it is not useful nor productive.
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Old 01-07-2008, 08:34 AM   #54
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Working at megacorp, a colleague of mine who was not as ambitious (a nine to fiver), not very aggressive (never volunteered to do any thing above and beyond the job description), not as political (would always tell people 'what he thought'), who thought his MBA (vs my BS degree) gave him god given rights to the fast track, and who by my estimations was not quite as bright as I was, made the following comment when I got 2 promotions (ahead of him) and a bunch of awards (vs his none). .... quote: 'You are the luckiest person I know'. He went on to say that my outgoing nature (not quite the term he used) also 'fooled' the higher ups. My response was that he was right... I found that the harder I worked, the luckier I got. He didn't talk to me for days.

Over the years I have developed my outlook and philosophy on life. I treated the megacorp career as a game. I figured out (really understood what it took to maximize my income and career) the rules of the game and then choose whether or not I would play the particular game. I got to the point where I choose not to play on occasion, due to it not worth the sacrifice expected. I eventually got to the point where my experience and knowledge level allowed me to play the game 'my way'.

After saying this, you do have to have a degree of luck (both good and bad). Being in the right place at the right time. Having the right opportunity arise when you are in a position to take advantage of it. You also have the instances where you are too late for an opportunity (the bad luck side of it), or you are missing a criteria for promotion just when the job opens up. But I find that if you keep your wits about you, you can make sure you get the experiences, the knowledge, the contacts, ...etc. that you need to to be successful.

IMO, you have to take the 'glass half full' attitude and take the responsibility for your actions or inactions. If you don't, then you blame bad luck or no luck on your missed opportunities and then you go into a downward spiral. Don't get caught up in this, it is not useful nor productive.
Your post made my day!!! Thanks..... I needed that... I have always believed that we make our own luck. If you suddenly come upon the real estate deal of the century (say a $200,000 home being sold for $5,000), but you were not far-sighted enough to have saved $5,000, then you cannot take advantage of that "lucky break". We have to put ourselves in positions where "lucky breaks" can find us. And that is something each one of us can do to shift the odds in our favor. Even on a roulette wheel in Vegas, with the "0" and "00". It only shifts the odds around 8% in the houses favor. But even that small advantage over time, makes huge amounts of money for the casino. The same logic applies here...
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Old 01-07-2008, 08:44 AM   #55
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the median real income for males with bachelor's degrees has been approximately flat for the last 30 years. The different tables give slightly different results.

These numbers don't support the notion that "People today have it a lot harder than people did a generation ago".
But that only considers income, and completely ignores costs. The biggest single expense for most people is housing, and housing expenses have increased at a rate that wildly outpaces inflation, or even income growth. It's a double-edged sword. Aging boomers are finding that their home has turned out to be their best investment. But that's because it's increased in price so much faster than the rest of the market, to the point of making housing unaffordable to people who could have easily afforded such housing a generation earlier.

So sure, current workers might be making incomes comparable to their parents, but our houses and gas cost way more, even after adjusting for inflation.
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Old 01-07-2008, 09:54 AM   #56
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But that only considers income, and completely ignores costs. The biggest single expense for most people is housing, and housing expenses have increased at a rate that wildly outpaces inflation, or even income growth. It's a double-edged sword. Aging boomers are finding that their home has turned out to be their best investment. But that's because it's increased in price so much faster than the rest of the market, to the point of making housing unaffordable to people who could have easily afforded such housing a generation earlier.

So sure, current workers might be making incomes comparable to their parents, but our houses and gas cost way more, even after adjusting for inflation.
The numbers in the tables are CPI adjusted, so they do include changes in costs.

I'm not sure what to make of "our houses and gas cost way more, even after adjusting for inflation". Doesn't "adjusting for inflation" take care of the increased costs of housing and gas?

You could be saying that the CPI is understating the actual increases in prices. Other people will say it overstates the increase. I'm an agnostic on that issue, other than to say it's not dramatic in either direction. So I still come up with a general statement that things aren't getting worse for college grads, but they aren't getting a lot better, either.

I think things really are getting worse for people who don't have college degrees.
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Old 01-07-2008, 10:09 AM   #57
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The numbers in the tables are CPI adjusted, so they do include changes in costs.
But haven't housing costs consistently outpaced the general inflation rate? If not, then I apologize. But my impression is that the CPI has averaged around 3%, while housing price increases have been closer to 10%.

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I'm not sure what to make of "our houses and gas cost way more, even after adjusting for inflation". Doesn't "adjusting for inflation" take care of the increased costs of housing and gas?
I don't think it does, no. Not entirely, at least. How is the CPI computed? Isn't it weighted more toward consumer goods than basic necessities? That is, do I really care if big screen TVs cost 3% more this year, if I can barely afford the mortgage on my house?

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You could be saying that the CPI is understating the actual increases in prices.
I believe that is exactly the case, yes. It's as simple as looking at what comprises the CPI calculation and considering whether or not it is an accurate cross-section of the typical person's budget. Also, consider the source. It is in the government's best interest to portray the number as small as possible, to minimize the required increases in COLA'd payouts like Social Security (in the US) and CPP (in Canada).

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So I still come up with a general statement that things aren't getting worse for college grads, but they aren't getting a lot better, either.
I've expounded on this issue in great depth already in another thread so I'll try not to repeat myself too much here. My argument boils down to the following assertions:

1. Today's generation is more heavily taxed than their parents were.
2. Housing is currently more expensive, as a percentage of one's income, than it was for baby boomers.
3. The current generation faces higher costs for health-care, combined with the double-whammy of needing to care for aging parents.
4. The current generation's employers have cut back retirement benefits, shifting the burden for retirement savings onto the employees, rather than offering the traditional pensions that their parents benefitted from.


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I think things really are getting worse for people who don't have college degrees.
I wouldn't disagree with that. However, I'd expand that to include people with degrees, too. The problem, as I see it, is that millions of boomers are retiring, and demanding that their portfolios outpace inflation. Of course, in order to accomplish this (and attract investor dollars), corporations need to squeeze every last profit they can out of the market. That means cutting employee benefits, cutting quality, outsourcing, even outright lying in the accounting books. The current generation is paying for all of this, while simultaneously shouldering the burden of massive amounts of government debt that were racked up while fueling the economy that the boomers benefitted from (not to mention the senseless wars).
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Old 01-07-2008, 10:11 AM   #58
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Agreed, my experience also. But in a free market, the pay difference is not so much based on how hard you work, but on what the company needs to pay to get the skills they need.

There are plenty of people to work the assembly line, even though it is hard, demanding work. So $X/hour gets the company as many people as they need.

There are fewer people with degrees in specialized areas, and those people wouldn't put in the time, money, and effort to get the degrees in that area if there were not a good enough supply/demand ratio to command that 3-4X salary.

I also agree with your previous premise - there probably is not that huge of a difference between generations. Obtain education or a needed skill, apply yourself, and you will very likely do better than the median. Yesterday, today, and tomorrow.
-ERD50
I'll certainly agree that an efficient market doesn't pay for "hard work", it pays for "results". Some of us are lucky enough to be able to produce above average results without above average effort.

My point was that, while it always helps to work hard, some people get more out of their hard work than others. If we're talking about people who make significantly more than the median, I think that the primary source of the extra income is better luck, and harder work is secondary.
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Old 01-07-2008, 10:34 AM   #59
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1. Today's generation is more heavily taxed than their parents were.
Generally not true here. I help my son with his taxes, using TruboTax most years. I see no difference between the tax tables/formulas for him as compared to the tax tables/formulas for me. They're the same. No separate tax tables for old folks and young folks. Sales taxes are also the same. One exception in generational taxes might be that you can qualify for a homestead exemption on your real estate taxes if you're over 65.
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2. Housing is currently more expensive, as a percentage of one's income, than it was for baby boomers.
Again, not true here. No discounts for being over a certain age being granted. A 60 year old pays the same $$$/sq ft as a 30 year old. Where are you that older folks are granted discounts on housing? What's the age cutoff?
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3. The current generation faces higher costs for health-care, combined with the double-whammy of needing to care for aging parents.
Again, I don't see the difference. In fact, my health costs have been screaming upward as I get older! And, I help pay for parents living expenses.
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4. The current generation's employers have cut back retirement benefits, shifting the burden for retirement savings onto the employees, rather than offering the traditional pensions that their parents benefitted from.
Here it does seem that the percentages of employers offering DBP's has decreased, but far from all "older" folks haveDBP's. And, older folks paid the price in terms of missed opportunities by being locked into the same job for decades by golden handcuffs while higher paying opportunities languished.

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Old 01-07-2008, 10:40 AM   #60
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But haven't housing costs consistently outpaced the general inflation rate? If not, then I apologize. But my impression is that the CPI has averaged around 3%, while housing price increases have been closer to 10%.

I don't think it does, no. Not entirely, at least. How is the CPI computed? Isn't it weighted more toward consumer goods than basic necessities? That is, do I really care if big screen TVs cost 3% more this year, if I can barely afford the mortgage on my house?

I believe that is exactly the case, yes. It's as simple as looking at what comprises the CPI calculation and considering whether or not it is an accurate cross-section of the typical person's budget. Also, consider the source. It is in the government's best interest to portray the number as small as possible, to minimize the required increases in COLA'd payouts like Social Security (in the US) and CPP (in Canada).

I've expounded on this issue in great depth already in another thread so I'll try not to repeat myself too much here. My argument boils down to the following assertions:

1. Today's generation is more heavily taxed than their parents were.
2. Housing is currently more expensive, as a percentage of one's income, than it was for baby boomers.
3. The current generation faces higher costs for health-care, combined with the double-whammy of needing to care for aging parents.
4. The current generation's employers have cut back retirement benefits, shifting the burden for retirement savings onto the employees, rather than offering the traditional pensions that their parents benefitted from.

I wouldn't disagree with that. However, I'd expand that to include people with degrees, too. The problem, as I see it, is that millions of boomers are retiring, and demanding that their portfolios outpace inflation. Of course, in order to accomplish this (and attract investor dollars), corporations need to squeeze every last profit they can out of the market. That means cutting employee benefits, cutting quality, outsourcing, even outright lying in the accounting books. The current generation is paying for all of this, while simultaneously shouldering the burden of massive amounts of government debt that were racked up while fueling the economy that the boomers benefitted from (not to mention the senseless wars).
I don't want to get into an extended debate with you, because I think I'm closer to your opinion than some other people on this board. However, I should point out a few things:

Since the CPI is intended to reflect average prices, it's not surprising that some components will increase faster than the CPI and some slower. The market basket the BLS uses is determined by the Consumer Expenditure Survey, which tracks how real people spend their money. The commonly quoted number isn't intended to include only the necessities of life. It is very difficult to put truly new products (computers, cell phones, ipods) into the numbers accurately. Older people look at young people using those things and take that as evidence that things are going pretty well. They tend to forget that in today's families mothers are more likely to work outside the home.

Most people see their housing costs as partially the price of the house and partially the price of money. Some of the increase in house prices is offset by (even "the result of") cheaper mortgages. Some is a bubble, which is hopefully temporary. I've heard that the CPI uses "rental equivalents" instead of house prices. People debate whether this is accurate.

The ratio of the national debt to the GDP peaked at the end of WWI, decreased until the late 70's, and has fluctuated since then. One issue with the debt is the difference between "debt held by the public" and "general fund debt". The primary difference is debt held by gov't trust funds (e.g. social security).
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Any of you affluent women care to comment on this? mickeyd FIRE and Money 4 11-12-2006 02:51 PM
'Affluent' Investors REWahoo FIRE and Money 18 08-18-2006 01:38 PM
The 'Semi-Affluent' Investor intercst FIRE and Money 8 08-08-2005 07:59 AM
Bernstein - Boomers among us will have SS.... Cut-Throat Other topics 14 11-27-2004 12:53 PM

 

 
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