On a non-Giants weekend, I thought a little economic/demographics discussion might fit in, particularly with this fascinating and scary article popping up today. As the linked article discusses, Japan's working age population as a percentage of the total is collapsing.
| Japan's population is just over 127 million at present, about 1.04 million less than its historical peak in 2008. But this decline masks drastic shifts in the country's demography. The number of people between the ages of 15 and 64 has declined by nearly 4 million, while the 65 and older cohort has shot up by more than 4 million. |
Clearly. some European developed nations are following a similar track, with longer life expectancies and declining birthrates. And none of these projections sufficiently incorporate all of the massive successes in medical treatment that will be coming down the pike over the next 15 years. (e.g., cancer, diabetes). Lots more people are actually going to die of old age, and the battle for "share of the pie" between those who are employed and those who are retired is going to be fierce.
The battles over "cradle to grave" style Eurosocialism will also be fierce. Ain't gonna work. And that's dempgraphics, not politics.
Link - (
New Window )
Just let some immigrants in from the Middle East. There are lots of young Muslim men looking for new nations to expand to.
Can't see how anything can go wrong with this plan.
I think if you did some research, the number of families with 2+ cars was a lot smaller than you remember. It may have been true in your neighborhood, but I seriously doubt it was true back in the 60's, 70's, or even the 80's.
Also - houses were different back then - much, much smaller and not filled with amenities that are commonplace nowadays (like his & her separate walk-in baths and closets in the master suite, marble countertops, 3-car garages, etc. Find me one of these in a 1960's era home and you're looking at a house built for the 1% of the time for sure.).
I don't know the data, but I was born in 1967, so I remember growing up in the 1970s very well. We weren't rich (my father was a federal employee), but my recollection is that every family we knew had two cars and that many (if not the majority) of the families were one income families. I grew up in large houses on LI and (briefly) in Northern VA (these houses were a good 700-800 square feet larger than the one I live in now which is in a much lower cost of living area). The second house on LI had an inground pool and a ton of property and must be worth $700,000K at a minimum now. There's no way a single income family with an $80K per year federal employee is living in that house now. I imagine that the property taxes alone must be pushing $20,000 (if not more). Same with the house in Northern Virginia. That has to be worth $600K now at a minimum.
Just let some immigrants in from the Middle East. There are lots of young Muslim men looking for new nations to expand to.
Can't see how anything can go wrong with this plan.
An oft-noted barrier to said redress is that Japan is a markedly homogeneous and not so mildly xenophobic society.
America is very lucky in this regard. Although we face to a degree a similar problem, our options (including immigration) are considerably more forgiving. A sensible bill on the issue from Congress would go a long way to putting us on the right path. Unfortunately Congress is presentably a catastrophe and likely will be until at least 2020.
The us can engineer growth as it relaxes immigration limits, if it wants to.
Not to soud xenophobic myself but Belgium germany and France of done it with disasterous results.
Okay - here's the results of my thirty minutes of research on the topic. 1975 was the earliest year I could find data for all things I wanted to research, and 2010 was the most recent. That said - look at my findings.
From the U.S. Census Bureau - median cost of homes 1975 ($39,300) 2010 ($221,800)
From the U.S. Census Bureau - Household median income 1975 ($11,800) 2010 ($49,276)
By my calculations...
Median Home:Income ratio: 1975 ($39,300:$11,800, or roughly 3.33 times household income) 2010 ($221,800:$49,276, or roughly 4.5 times household income).
What does that mean? On the surface it says that housing is taking up more of each household's income, just as you've described. Until you consider how interest rate environments impact monthly payments. Consider this:
Monthly payment on a median home purchased in January 2010 w/30 yr fixed mortgage: $1194.74, which is roughly 29% of the 2010 median monthly gross pay of $4,106.33
The same calculations show that the mortgage payment on a median home in 1975 was roughly 33.3% of the median monthly gross pay. Source for rate Source for monthly payment
That shows it is cheaper now buy the median home than it was then, as a percent of monthly gross pay.
Now, my point wasn't that life is cheaper now than it was then. My point was that we've redefined what our basic needs are, and as a result we have less money left over. The data shows that even clearer if you look closely. Let's see take a look at what we're buying:
From the U.S. Census Bureau - median size of houses in square feet - 1975 (1,535) 2010 (2,169)
So our houses are over 41% larger than they were 29 years ago. This means that the cost/square foot is: 1975 (39,300/1535 = $25.60) 2010 (221,800/2169 = $102.26)
Now - what if house sizes had remained the same size as before? ($102.26*1,535 = $156,969.10), which would make the median home:income ratio today = ($156,969.10:$49,276 or roughly 3.19 times household income, meaning the cost to outright purchase the same size home was cheaper in 2010 than in 1975).
And taking into consideration the interest rate environment, buying a 1535 sq. ft house in 2010 would cost you $845.52, which is just 20.6% of monthly gross pay, compared to the 33.3% they were paying in 1975.
And just for kicks I did a quick search on household vehicle ownership, which yielded this chart. In 1960 only 21.5% of households had 2 or more cars (about one in five American households) and in 2011 that number was 56.6%.
It's not surprising you remember things a bit differently though. By the time you were 13 (in 1980) the number of Americans with two cars or more was already 51.5%, showing that the sixties and seventies were a time when Americans began buying second vehicles.
This quote from the link was noteworthy:
2. Since 2000, fewer than 10% of US households had no vehicles, and almost the same share of households in 2010 owned three vehicles or more (19.5%) as owned no vehicles in 1960 (21.5%).
The data seem to fully support what I tried to state - people who want more children but believe it is too expensive now compared to then, likely have inflated their expectations of what the basic needs of a child (or family) are.
Gives people pause.
Quote:
There is an easy solution.
Just let some immigrants in from the Middle East. There are lots of young Muslim men looking for new nations to expand to.
Can't see how anything can go wrong with this plan.
An oft-noted barrier to said redress is that Japan is a markedly homogeneous and not so mildly xenophobic society.
America is very lucky in this regard. Although we face to a degree a similar problem, our options (including immigration) are considerably more forgiving. A sensible bill on the issue from Congress would go a long way to putting us on the right path. Unfortunately Congress is presentably a catastrophe and likely will be until at least 2020.
Immigration "solves" this problem only if the immigrants and their offspring become net contributors to the state and federal coffers. And when you let in predominately unskilled and poorly educated immigrants - moral though that may (or may not) be - it is unlikely to solve our budgetary problems. The problem is acute in Europe, where pools of unskilled and semi-skilled workers have been brought in from North Africa and the Middle East. They may sate the demand for unskilled labor, but they also provide a false sense of optimism when it comes to demographics and the solving of the rapidly inverting pyramid.
Okay - here's the results of my thirty minutes of research on the topic. 1975 was the earliest year I could find data for all things I wanted to research, and 2010 was the most recent. That said - look at my findings.
From the U.S. Census Bureau - median cost of homes 1975 ($39,300) 2010 ($221,800)
From the U.S. Census Bureau - Household median income 1975 ($11,800) 2010 ($49,276)
By my calculations...
Median Home:Income ratio: 1975 ($39,300:$11,800, or roughly 3.33 times household income) 2010 ($221,800:$49,276, or roughly 4.5 times household income).
What does that mean? On the surface it says that housing is taking up more of each household's income, just as you've described. Until you consider how interest rate environments impact monthly payments. Consider this:
Monthly payment on a median home purchased in January 2010 w/30 yr fixed mortgage: $1194.74, which is roughly 29% of the 2010 median monthly gross pay of $4,106.33
The same calculations show that the mortgage payment on a median home in 1975 was roughly 33.3% of the median monthly gross pay. Source for rate Source for monthly payment
That shows it is cheaper now buy the median home than it was then, as a percent of monthly gross pay.
Now, my point wasn't that life is cheaper now than it was then. My point was that we've redefined what our basic needs are, and as a result we have less money left over. The data shows that even clearer if you look closely. Let's see take a look at what we're buying:
From the U.S. Census Bureau - median size of houses in square feet - 1975 (1,535) 2010 (2,169)
So our houses are over 41% larger than they were 29 years ago. This means that the cost/square foot is: 1975 (39,300/1535 = $25.60) 2010 (221,800/2169 = $102.26)
Now - what if house sizes had remained the same size as before? ($102.26*1,535 = $156,969.10), which would make the median home:income ratio today = ($156,969.10:$49,276 or roughly 3.19 times household income, meaning the cost to outright purchase the same size home was cheaper in 2010 than in 1975).
And taking into consideration the interest rate environment, buying a 1535 sq. ft house in 2010 would cost you $845.52, which is just 20.6% of monthly gross pay, compared to the 33.3% they were paying in 1975.
And just for kicks I did a quick search on household vehicle ownership, which yielded this chart. In 1960 only 21.5% of households had 2 or more cars (about one in five American households) and in 2011 that number was 56.6%.
It's not surprising you remember things a bit differently though. By the time you were 13 (in 1980) the number of Americans with two cars or more was already 51.5%, showing that the sixties and seventies were a time when Americans began buying second vehicles.
This quote from the link was noteworthy:
Quote:
1. In 1960, nearly 79% of American households owned fewer than two vehicles: Nearly 57% of households owned only one vehicle and more than one-out-of-five households didn’t own a vehicle at all. Only one in forty households (2.5%) owned three or more vehicles.
2. Since 2000, fewer than 10% of US households had no vehicles, and almost the same share of households in 2010 owned three vehicles or more (19.5%) as owned no vehicles in 1960 (21.5%).
The data seem to fully support what I tried to state - people who want more children but believe it is too expensive now compared to then, likely have inflated their expectations of what the basic needs of a child (or family) are.
Interesting stuff. I tried to find what the housing market looked like in 1975 to see what the effect those higher interest rates had on home sales in that medium household income salary range but unfortunately couldn't find anything.
Hey Dan, that's great data but it misses a critically important point that I made in my anecdotal post. How many families can "make ends meet" today with one income? I suspect that the number of one income families that make up total household income is quite a bit smaller today than it was in 1975 (see the article below). If true, it's a little bit of an apples to oranges comparison (I don't know if it's true, but I suspect that it is). That issue creates a large number of other potential issues (e.g., daycare). I know that for several years, daycare costs for my two kids made up about 16% of my household income. If my wife quit her job at that time, we would have barely been making it. There's no way I would have been able to save for retirement during that period. That's another issue that is different from 1975 - how many workers had defined benefit pension plans back then compared to having to save for retirement on your own today?
link - ( New Window )
That definition fits two people at a table with two pieces of pie. one person eats both slices without regard to the other. In the case of children, there is no 'other'. The child doesn't exist.
Making choices that are best for ourselves is something all of us do all the time. That doesn't mean those choices are automatically selfish.
And, there is a bit of condescension creeping in to his argument (perhaps unintended). I read a bit of 'better off that potential child didn't have a parent like that'. Not all who choose not to have kids would not make good parents.
Quote:
I grant you that every individual has their own story, and apparently yours is one which would seem to contradict my initial response. So I thought I better do some research.
Hey Dan, that's great data but it misses a critically important point that I made in my anecdotal post. How many families can "make ends meet" today with one income? I suspect that the number of one income families that make up total household income is quite a bit smaller today than it was in 1975 (see the article below). If true, it's a little bit of an apples to oranges comparison (I don't know if it's true, but I suspect that it is). That issue creates a large number of other potential issues (e.g., daycare). I know that for several years, daycare costs for my two kids made up about 16% of my household income. If my wife quit her job at that time, we would have barely been making it. There's no way I would have been able to save for retirement during that period. That's another issue that is different from 1975 - how many workers had defined benefit pension plans back then compared to having to save for retirement on your own today? link - ( New Window )
Dan, it looks like it is true. Check out these two articles. Two income families - 40% in 1960, 50% in 1971, 62% in 1981, 93% in 2003 (assuming these sources are accurate).
link - ( New Window )
link - ( New Window )
93% in 2003
I was looking at the wrong table, it's not quite that dramatic, but there has still been a change.
link - ( New Window )
True, but it still wouldn't have changed the fact that I wouldn't have been able to save for retirement (or at least not an "acceptable" rate). At least financially, it was a no brainer. The costs of daycare, while high, were nowhere close to my wife's income. Plus, those years led to promotions which would not have happened. The net financial impact over a 10 year (or more) period would have been enormous (not that finances are everything).
That definition fits two people at a table with two pieces of pie. one person eats both slices without regard to the other. In the case of children, there is no 'other'. The child doesn't exist.
What about his spouse that was forced into choosing between the marriage or motherhood? Or in my other example the child who will never have a sibling? In my examples there were other people affected by the decision that was motivated entirely around "self".
Not sure if you are seeing my perspective, so I'll try an anecdotal approach.
I have six brothers and sisters. In my youth this was considered a large family, even then. My dad was the breadwinner and my mom was the homemaker. We lived in a town in NJ where almost nobody had families that size, and when we went somewhere people commented constantly on the size of our family. People often asked how we did it. I can tell you how. We went without, a lot.
No cable tv, no air conditioned car, we were a one car family until my oldest sister went off to college. I never had brand name clothing. We rarely ate out, mostly only when we went on our occasional family vacation, which was always a road trip,so Burger King was a special treat. We rarely got to stay in hotels, mostly either camping or staying with family. There were things that other kids had and did that we just did without.
If we wanted spending money we worked for it. When I was 8 I was selling light bulbs door to door,had a paper route from age 11 through senior year of high school. Other jobs I held include dishwasher, caddy, car washer, painter, and delivery boy. None of my friends from smaller families worked as much as I did yet had much cooler stuff.
I'm not complaining about this, I'm explaining what it was like for me growing up.
Now the seven of us are getting older.
Sister number 1 had 8 children via natural childbirth. The oldest one died of SIDS as an infant. She then adopted two more.
The next oldest had four sons,miscarried multiple times trying to have more children and gave birth to a stillborn child.
Number 3 had four children and would have had more had her husband not left her.
I had five children.
My younger sister had six.
My younger brother has five, with his youngest only one year old this summer, but I do think they are done.
My youngest brother has two and has tried very hard for more. He is only 34 so there is a chance they still could have more.
None of my sisters or sisters-in-law have held a job since they started having children,with the exception of providing day care for the working parents in the community. None have been on welfare. They've simply done without. My wife began working as a librarian in our children's elementary school when the youngest was in second grade.
We do it much like my parents did,but our children don't have to do without quite so much. Compared to their friends they have nothing though. I raised my kids with the understanding that they would have to pay for college. As a result they have gotten good grades and received scholarships.
So we are all making it work. It can be done if you want to do it.
You just need to adjust your expectations for what it takes to raise a child.
link - ( New Window )
Now, my point wasn't that life is cheaper now than it was then. My point was that we've redefined what our basic needs are, and as a result we have less money left over. The data shows that even clearer if you look closely. Let's see take a look at what we're buying:
From the U.S. Census Bureau - median size of houses in square feet - 1975 (1,535) 2010 (2,169)
So our houses are over 41% larger than they were 29 years ago. This means that the cost/square foot is: 1975 (39,300/1535 = $25.60) 2010 (221,800/2169 = $102.26)
Dan, you are talking about new houses, right? Perhaps a greater percentage of Americans bought new houses decades ago compared to today? Most of those smaller houses built in the 1950s forward are probably still standing and people live in them. The median size of new houses is not the same as the median size of all houses that people live in. Surely, older neighborhoods with occupied smaller houses still exist all over the place?
The evidence shows that new home size has increased. This doesn't happen overnight, but over years because home buyers want to buy bigger and bigger homes.
Meanwhile family size is getting smaller. Why is it that people today are buying bigger homes for their smaller families?
The evidence shows that new home size has increased. This doesn't happen overnight, but over years because home buyers want to buy bigger and bigger homes.
Meanwhile family size is getting smaller. Why is it that people today are buying bigger homes for their smaller families?
Hey Dan - Seriously I'm not trying to be a pain in the ass or anything. I'm actually interested in this and learning a few things. I know home sizes have increased. I thought you were trying to make the point that the median house is 41% larger than it was years ago. I get that the median new house is larger, but when you factor in all of the old stock that people buy, I imagine that the median size of all houses (i.e., both newer and older) that people live in is larger, but probably not all that much larger than the 1970s. I saw one site that said that the median size of existing homes purchased in 2009 was 1,750 square feet, so it may not be entirely true that the average American family is greatly overextending themselves in terms of house size compared to years ago.
So we are all making it work. It can be done if you want to do it.
You just need to adjust your expectations for what it takes to raise a child.
I agree. I never meant to imply that it *can't* be done, but I think it *may* (I don't know for sure) be harder now than it was in 1975 or so especially when you try to start factoring in things like 401Ks versus DBP, typical family health care premiums now versus 1975, and the huge rise in child care costs, etc. Those are major, major expenses. Plus, as previously posted, there were a lot more one income families doing it back then. Sure, I think it's possible to raise a family of 5, 6, or 7 on one (typical) income today. I also think it would be very stressful for a lot people, and I can completely understand why many people would not want to do that. (I linked another pretty interesting article below.)
Link - ( New Window )
and there's a lot of intangibles. 30 years ago, most household utilities were: wall phone, electricity, newspaper. Now, it's those, plus cable (and people call me archaic for not having digital), internet, cellphones. Cars used to be buy them outright, or a short loan, then hold on to them til they died. now it's a new one every few years. used to be able 4 kids in the backseat. now, if a child can touch the other, need a bigger car. Sports used to be pickup games, or play on the school team. now it's soccer leagues that are on top of that, and parents have to go to every game and drive them to every practice. Used to be you got your own baseball glove, and shared all other balls, bats, etc. nowadays, every kid HAS to have his own cell phone, computer, tv, ipad, game system, etc. Toys for Christmas? I got one. nowadays anyone I talk to buys little Johnny this, that, and the other thing. So what if you're paying off that credit card til September? Used to be it was an accomplishment to go to the local college. Now, let's send Johnny across the country and pay transportation as well as expensive room/board. Bottom line, consumerism as increased mega since the 60's.
Post war (2) prosperity started us off on the wave of owning a home, having a refridgerator, and a tv, and a car, and every generation has accepted this as the norm and then amped it up a little bit til we're at the point now where we expect the consumerism and leisure time to enjoy it.
So, yeah, it costs more to raise a kid today, but it's rarely a direct comparison.
Makes perfect sense. Just what I suspected.
and there's a lot of intangibles. 30 years ago, most household utilities were: wall phone, electricity, newspaper. Now, it's those, plus cable (and people call me archaic for not having digital), internet, cellphones. Cars used to be buy them outright, or a short loan, then hold on to them til they died. now it's a new one every few years. used to be able 4 kids in the backseat. now, if a child can touch the other, need a bigger car. Sports used to be pickup games, or play on the school team. now it's soccer leagues that are on top of that, and parents have to go to every game and drive them to every practice. Used to be you got your own baseball glove, and shared all other balls, bats, etc. nowadays, every kid HAS to have his own cell phone, computer, tv, ipad, game system, etc. Toys for Christmas? I got one. nowadays anyone I talk to buys little Johnny this, that, and the other thing. So what if you're paying off that credit card til September? Used to be it was an accomplishment to go to the local college. Now, let's send Johnny across the country and pay transportation as well as expensive room/board. Bottom line, consumerism as increased mega since the 60's.
Post war (2) prosperity started us off on the wave of owning a home, having a refridgerator, and a tv, and a car, and every generation has accepted this as the norm and then amped it up a little bit til we're at the point now where we expect the consumerism and leisure time to enjoy it.
So, yeah, it costs more to raise a kid today, but it's rarely a direct comparison.
fkap, good post. I have no idea about the nuances of the data on the actual changes, but I know at least where and when I grew up, I didn't find things to be all that much different from today (although I would classify my upbringing as more of an upper-middle class than middle class lifestyle). The major differences would be the internet and cellphones. Other than that, I think my kids are growing up pretty much the same way I did (but in a smaller house with no summers off because their mother works). Kids didn't share rooms in any of the neighborhoods I lived in. We all had our own rooms. I got tons of stuff for Christmas (more than my kids get from me - LOL). Cars? My father always kept them until they died and I do the same exact thing now (it's much better now because they can last for 200,000 miles). I don't know about the 1960s, that's too far back for me.
In other words, having a lot of money makes it LESS likely, not MORE likely, that you'll have kids.
Perhaps, but I mean, we chose to only have one kid specifically because of ever rising expenses and the economic fallout from the 2008 recession. Unfortunately, at this point we're too old to have a second, but even today the middle to upper middle class is dying a slow, painful death.
wow my kids are missing out. i definitely failed the fkap "kid affluence" survey on this thread :-)
The Japanese government is functionally bankrupt and they're only keeping it going by devaluing the yen. At some point, the cost of imports will kill them. I don't envy the senior citizens in Japan because they're looking at a bleak future.
When reality meets an unsustainable trend...
kinda ironic (not sure if in a true sense, or a Alanis Morrisette sense). Not that long ago, Japan was held up as the ultimate example of honoring/respecting/taking care of society's senior citizens.
Japan scares me a bit because if a national leader ever comes along who can channel that pent-up aggression, we'll be in for a wild ride.