life between the pages

“I spent my life folded between the pages of books.
In the absence of human relationships I formed bonds with paper characters. I lived love and loss through stories threaded in history; I experienced adolescence by association. My world is one interwoven web of words, stringing limb to limb, bone to sinew, thoughts and images all together. I am a being comprised of letters, a character created by sentences, a figment of imagination formed through fiction.”
Tahereh Mafi, Shatter Me

Friday, February 14, 2014

Happy Valentine's Day!

Here's a coupon worth 25% off the purchase of Lucky Southern Women - Click on the image and enter the coupon code to redeem your discount! Enjoy!

Tuesday, February 11, 2014

How Far We've Come, To Fall So Far

There is simply no excuse for the fact that well into middle age, with advanced degrees, a respectable middle-class income, and a credit history over 20 years long, that my husband and I are still patently unable to purchase a house, and each month we struggle to meet the bills for basic needs such as food, fuel, shelter, clothing, and education.

Consider this: My parents, who were young professionals with no credit background to speak of and a two-year old, in 1963 purchased the home that my mother still lives in. At the time they were both teaching school, with advanced degrees and a respectable middle class income. This home was about five years old and cost $17,000.00 (slightly less than the average price of a new home in the US at the time as recorded by the US Census), and was paid off at the tidy sum of $103.00 per month, principal and interest, well before the time of my father's death in 1988. The property is valued at around $125,000 today; it is a 2/3-acre lot with a 4 BR/1.5 bath home in excellent condition and still located in a respectable neighborhood. My mother also has excellent health insurance and pension benefits and will never have to worry about how she will pay for basic needs such as food, shelter, clothing, eyeglasses, and medical care. She never has and she never will. She's a classic example of someone who worked hard, paid her bills and was able to put something away each month for the future. She pays cash for a brand new vehicle about once every eight years or so because she has an abhorrence of paying interest that can not be deducted from one's tax bill. She has lived a tidy, respectable life, and has earned her comfortable retirement.

The Bureau of Labor Statistics has this handy-dandy little table that details teachers' salaries for the period 1959-2006, with comparable 2006 constant dollars that make it simple to see these salaries' equivalents in 2006 dollars. You will see, for instance, that though my parents jointly earned about $12,000 (my mother taught elementary and my father taught high school), the equivalent salary in 2006 dollars was about $80,000. This was because the cost of housing, fuel, automobiles, education, groceries, clothing, etc. - i.e., the cost of living - was considerably lower then than today.

It's quite shocking, in fact, to look over the chart and see how the value of middle-class salaries fell into the toilet during the ensuing years.

To be perfectly sure we're comparing apples to apples, my mother & father paid about $900 annually for taxes, insurance, and social security, making their effective joint disposable income about $11,100 (including obligations of 3.625% for FICA/SSec, 22.6% less exemptions & deductions for federal taxes, and 2% for Virginia state income tax). Their employers actually contributed to Virginia's retirement system and paid for their health insurance. Employees did not have to contribute at all until shortly before my mother retired in the 1990s. A pension and health insurance were considered part of one's compensation package - those were the days! However, during this period, all of the amounts deducted for FICA and Social Security came from an employee's paycheck; employers did not contribute to those programs at that time. There is a nice table at the Social Security administration's website that details federally mandated deductions for taxes and FICA starting in 1937. Historic federal tax rates are here, and you can peruse the actual 1040 and 1040a forms and instructions used to file back in 1963 at the IRS website. Historical state tax rates are contained within tables in this report.

So - let's compare: my husband and I just happen to jointly earn about $80,000 annually as professionals working in the non-profit and government sectors, from which about $20,000 is deducted in order to pay for medical insurance, withdrawals for retirement and deferred compensation of which our employers pay minuscule matches of less than 15%, and taxes, effectively making our joint disposable income in the neighborhood of $60,000. (Bankrate has a nice calculator to help you determine if adjusting payroll deductions might be a good idea in case you'd like to compare your own).

The problem begins to become apparent.

Take a look at my parents' joint disposable income of $11,100.00 in 1963 transferred to today's dollars in this handy-dandy little table:

[Note: Current data from this source is only available till 2012.] In 2012, the relative worth of $11,100.00 US from 1963 is:

  • $83,200.00 using the Consumer Price Index
  • $64,300.00 using the GDP deflator
  • $93,500.00 using the value of consumer bundle
  • $90,500.00 using the unskilled wage
  • $106,000.00 using the Production Worker Compensation
  • $170,000.00 using the nominal GDP per capita
  • $282,000.00 using the relative share of GDP
  • Put another way, if you want to compare the value of $11,100.00 worth of disposable income in 1963 with what it's worth in 2012 the relative:
    ...historic standard of living value of that income or wealth is $83,200.00
    ...contemporary standard of living value of that income or wealth is $93,500.00
    ...economic status value of that income or wealth is $170,000.00
    ...economic power value of that income or wealth is $282,000.00
    By any measure, our parents were wealthier by far than we can even hope to be, given today's economic realities. Thank you, banks, insurance companies, corporate welfare queens, and politicians. You've made it such a pleasure to be living and working today, working just as hard but making a fraction of what our parents did. Good show.

    See also US Census Historical Income Tables

    Measuring Worth

    1963 Enterprise Statistics

    Taxfoundation.org

    Bankrate.com

    SSA.GOV

    IRS.GOV

    University of North Texas Library

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