In the US in 1982, the top of the first Forbes 400 list was Daniel Ludwig with nominal $2 billion. That was 85,000 times the then-median nominal family income of $23,430. In 2023, the top of the Forbes 400 was Elon Musk with nominal $251 billion. That was 2,500,000 times the now-median nominal family income of $98,705.
You hit the nail on the head Tom. 45 years of Republican “trickle down” bullshit have gutted the middle class. And just like the “two Santa theory” when republicans are in power and increase the national debt exponentially by cutting taxes for the wealthy, then blame the democrats when they are in power, for social safety net program spending. Then people get angry and blame the democrats for giving their tax money away. So where am I going with this? Biden and the democrats are getting the blame for unaffordable housing. Never mind wealthy investors have been buying up real estate everywhere for their own profit, and don’t have to worry much at all about taxes thanks to those 45 years of Republican trickle down bullshit.
Excellent post. I saw a discussion of the economic points on a couple blogs, Prof. DeLong’s for example, and Sec. Reich, with a very fine critique of the movement of wealth upward and questioning some new (and dubious) research claiming the wealth concentration wasn’t so bad. However, you, TC, have put it into human terms. It’s anecdotal perhaps but it replicates to varying degrees across the country. And you lay it squarely at the feet of the GOP (and impliedly in the convergence of neo-conservatives and neo-liberals).
This is the lived experience. A union house painter in San Diego could afford, barely, a 1250 sq.ft. house in the suburbs in 1958 (yes, the houses grew between 1949 and 1958 because the post war economy, driven by a broad distribution of wealth, was growing). That house now, if in good condition, will fetch well over $700,000. What house painter can afford that on a wage that hasn’t kept pace with inflation over the last 20 years? (Notice I didn’t say union painter because the union was driven out of town-literally out to Riverside-in the Reagan years after the air traffic controllers were fired.) The middle class is a dying breed indeed.
Great read, TC. Home ownership was so vital in building the post WWII middle class. Home ownership is out of reach for most people born after 1980. My generation of deputies could afford to buy a house after working a couple years. This generation cannot.
Even worse here in the "arts community" of Laguna Beach, where I live - more like Santa Monica. Median sale price last month: $3 million. So, take the numbers from TC's rundown, and double them. The older demographic of owners in town could not dream of buying a home now that is in the price range of what they are living in - not even close. The median household income for Orange County residents in 2022 was $108,755. Redfin says median price of homes sold in Mission Viejo (non-coastal community) was $1.15 million. Still far outprices the average household income. Result of tax breaks for the wealthy, decimation of unions, stagnant wages, dismantling of defined benefit pension plans, "right-to-work" legislation, assault on education, mass incarceration, etc., all part of the neoliberal, trickle-down (I always found this phrase so offensive) economics and libertarian social engineering designed to serve oligarchs and corporations.
I have long believed that this death spiral of the middle class began under the amoral ronnie reagan in the early 1980's. Things have gotten progressively worse to the point that the middle class is, indeed, dying. And the fools keep wanting the billionaires to be in power. It truly is mind-boggling. AND a mess, a really big mess.
Yes. So ... tax the ridiculously rich harder? Yes, good, please. And...require people who have managed somehow to own a house now to take a bath? Yes, on paper, but we'll still have a house. Okay, the mortgage is a problem -- we're talking enormous shifts, but it's the shifts leading to this state of things that have been outrageous. Billionaires need to give here, or their billions won't be fortified by honest middle-class striving. Hello Republicans, do you have any sense of this?
My husband and I grew up on the SF Bay Peninsula in the 50s, 60s, and early 70s. What's happened to real estate in LA is on steroids there. The very modest 1920s Spanish that my parents bought in the 50s for $17K, because Dad was doing very well in his encyclopedia sales job then. In today's dollars, that would be about $195,000. Today, Zillow says that property is worth about two and a quarter million. It's nuts.
In Florida, the big problems are two fold: 1) migration into our state. My county and the one to my north are the fastest-growing counties in Florida. Supply/demand. 2) Many of the homes are being bought by investors and are not being occupied; it's also happening with the high-rise condominiums that are going up like weeds in downtown Sarasota. At this point I feel very fortunate that the rent for my 1200 SF apartment is "only" 1,400.00 a month; most rents for an apartment the same size are almost double that.
We also have a property insurance crisis in this state that is being ignored by Gov. DEESantis and the R's, to increasing fury from homeowners looking at doubling or even tripling of premiums, and that's when they can find an underwriter at all. A number of them have pulled out.
The one small light in the end of the tunnel is that the high rents are starting to come down; I think a lot of landlords are finding them unsustainable. But we have the property insurance problem still.
Only you could have written this ultra clear explanation of what we are seeing in our neighborhoods with housing prices, and in our families where young relatives in their 20's who have college degrees and student loans, work in Starbucks while trying to find a "real" job, and share rent costs with at least 2 other people. This is why I go crazy when GDP is used to track how well the US economy is doing. People - especially young people - are struggling to remain hopeful that they will be able to make a decent living and enjoy their life. I've talked to 8YO's who believe they will never own their own home. It's penetrated that deep. I believe President Biden understands this problem in all its complexity, and his team is working to restore the middle class. I'm going to work hard to see that he is re-elected. But, NOW? Let's get real. We don't need stats about GDP, President Biden. We need some fireside chats!
Totally true about the 1% make real estate less affordable because of their special tax advantages because of the far right!
According to what the current supposed "middle income" is, I must have never climbed out of poverty!
It’s the same story everywhere in the U.S. - the horrible class divide with gazillionaires sucking up most of the wealth, and not enough housing, especially starter homes. Someone mentioned the flippers who not only upgrade homes, but who often take them off the market and turn them into rentals or AirBnB type places. Also, zoning has not worked in favor of the middle class. In most places, you can’t build an 800-square foot home - urban zoning after World War II became written to more suburban standards which couldn’t be met in towns. Also, builders need to build larger homes to make a profit - it’s nearly the same square footage costs whether the house is that 800 s.f., or if it’s 8,000. The solutions are complicated - rewriting zoning laws, government subsidies of affordable housing, and most of all, closing the wealth gap. It can be done, but not with Republicans in charge.
Stinks. And now we have corporations buying up houses so they can rent them out to their vassals. That should be illegal.
I lived in #2 Perry Lane in Menlo Park the summer of '57 in what I estimate was an 800 sq ft cottage. I was 4. I came back in the fall of '70, and was let in. It was a very pleasant house on a very pleasant street--where Ken Kesey moved in the year after I lived there.
In the mid-'00s, I was looking at houses I'd lived in on Zillow. #2 Perry had a value of 1.2 million, to my complete shock. I looked again, and saw that the house had been built in '02. I knew I'd never set foot on that street again. But it's not surprising, that house being a stone's throw from Sand Hill Road, an epicenter of capital.
TC, I can add my own version of the stories here. Our 1952, 1300 sqf Florida house is what people " downsize to" so it is perfect for us-- one level, solid strong block that has survived loads of hurricanes, great intergenerational, dog walking neighborhood. Our interest rate is so low that even if we wanted to sell it in this market, we could not find even a decent rental for what we pay in our monthly mortgage. ( The cosmetically revamped house next door sold for $250,000 3 years ago, just sold for half a million to a young couple-- maybe with parental help??)
Kathy is right-- this wonderful " free State of DeSantis" has a serious insurance problem(as in all of them leaving). DeSantis's sights are elsewhere so little is being done to address it and the hugely higher costs people are paying, especially on waterfront and in flood areas. But it is really, at base, an untenable situation.
We have a water issue, as in the whole State is slowly going under, starting with the daily high tide street flooding in Miami. I have lived in Florida most of my life and in first marriage lived right on the ocean in a house my then husband bought as a bungalow for $27,000, now a five level multi million dollar site---- except that I am sure the barrier reef it is built on will be underwater in the next 10 years when the ocean flows over it to rejoin the intercoastal waterway, only 200 feet away in some places. The last storm devastated parts of the beach north of it and only expensive rock reventments kept my former home from being washed away. Still, huge money is going into rebuilding those homes which hang over the beach. Millions of dollars are going to " sand renourishment" on said beaches-- sand that will wash out to sea the next northeaster.
Second marriage: and our current house is across from a lake. The homes on the lake are hovering in the million dollar range, twice us on the other side of the street. But in the recent hurricanes the lake rose dangerously high, covering docks and boats and lakeside porches, reaching back doors. If we had had another day of storm our house ( across the street) would have been lakefront!
So, Florida is the " perfect storm" -- where housing issues meet the climate crisis meet the absentee Governor meet the strangest combination of huge service economy( immigrants) with politically conservative wealthy retirees. We are a mess, without a leadership up to the challenges. Yet DeSantis boasts that thousands move into our State each week seeking his warped definition of " freedom".
( " They Thought They Were Free" is the name of a book by Milton Mayer about Germans in 1933!)
Here in Hawaii, the housing crunch is insane…rentals are totally unaffordable for most people, even those with two people working in good paying jobs and more so for those who don’t. Houses are ridiculously high priced and even condominiums are skyrocketing in value. The amount of homeless people is climbing, with children living rough in squatter’s camps and on the streets. The young professionals and higher educated are leaving the islands for the mainland, but even that won’t be a viable option much longer as the same things are happening stateside.
TC, please send your November 22 substack and its comments to the Library of Congress. The first person memories of that day are valuable historical primary sources.
I also think you may have hit upon a new "genre" here for your Substack. On the Ground reports.
You have a cadre of followers who have lived long enough ( not so much " old" as mature experience!!) that, prompted by your own thoughtsm they are able for reflective and informed first person accounting of what is happening in their lives and the lives around them. Gives real texture to the issues of our day.