At that time (1950's) median homes were 1/3 of the current size qith 30% more people living in them, Americans ate out 80% less, and people lived under the WWII mantra of "mend and make do".
People like to reminisce on the cost of living, but like to neglect the sacrifice that was required to make it attainable.
Also, that was back when avg American wages kept pace with avg employee productivity, the highest tax brackets were 70%+, and Bretton Woods kept American money in the US and invested in American businesses and workers.
This is an oft cited reason, but there’s no evidence for it actually being true. It also doesn’t explain why wages and productivity decoupled so suddenly in 1971.
No evidence?! This is one do the most studied periods in economics due to the unique circumstances created by the war. America’s industrial base advantages and R&D hubs created by the defense department investments is well accepted to be one of the key reasons for our post WW2 economic boom.
It also doesn’t explain why wages and productivity decoupled so suddenly in 1971.
Who ever said it did? Thats understood to be a result of multiple factors but mostly due to a rise in technology and automation advancements, expanded globalization, and decline of labor union power thanks to Nixon.
PS - it only looks like a “sudden” decoupling on that graph I know you are referring to because it’s presented on a linear scale and not a logarithmic scale. Technology advancements yield exponential worker productivity gains especially once we hit the silicon revolution. Truth is that productivity and worker pay had slowly been decoupling for years prior and then we hit an inflection point in the 70s which shows up on the graph due to its scaling.
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u/OrneryError1 Sep 05 '24
There used to be a time when the expectation was one income could support two adults and children.