I’m sharing a viewpoint that might make you uncomfortable.
Despite all the talk about cost of living, Australians today have roughly double the purchasing power we had 60 years ago.
So if that’s true, why is everyone struggling to get ahead?
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Thanks for sharing, it’s definitely worth keeping in mind that while life IS getting more expensive, our standards of living are the highest they’ve ever been.
Yes – that’s the balance and seemingly opposite ideas people struggle to hold in their mind at the same time.
Thanks for this Dave. A couple of thoughts:
1. Can you share the data you’re referring to? Would love to see the raw figures myself.
2. Household income is an interesting concept compared to 50/100 years ago when it wasn’t normal for both partners to work. Keen to see how the data you’re referring to includes (or doesn’t) that.
3. The part you’re right on is the standard of living. If you look at the style of life (not including property) of let’s say the 20th percentile and the 80th percentile of wealthiest people today- you’d struggle to tell which is which (hence the lower income earners living similar lifestyles at a higher % of their paycheck). This wasn’t the case 100, 50 or even 30 years ago- it was very obvious which was which. Personally I think social media and being hyper aware of what/how other people (particularly those you know, but aren’t your absolute closest friends) are living has made this far worse- think “keeping up with the Jones’ mentality” but with easier access to all of the same products.
Hey Graham.
1- Not sure if you’re referring to wage data or the change in household spending. The original article that this podcast was based on has mentions of where the data came from. More links posted below.
2- I’m not talking about household income here – but you’re right to point it out. Household income would’ve grown much faster than just ‘wages growth’ which has had an effect overall on what we can afford and it’s been a big driver of house prices.
3- I agree – social media has made people fill like they’re infinitely missing out, and we get bombarded with the most sensationalist news stories, giving us a wildly inaccurate and pessimistic view of the world. SO much so that 90% of people would listen to this podcast and dismiss it without bothering to consider if it might be true, since it doesn’t fit with the media and their own self-soothing narrative.
We only need logic to determine this is true in any case, by realising all of the things we can afford now that were only for the rich many decades ago. If an average full-tiem income had only grown at the rate of inflation (to literally just stay afloat and buy the same things), then that wouldn’t be the case. And the point I’m making with it all is that the fact we have so much optional buying power means there is an opportunity to save/invest/build freedom more than in the past.
Here’s a list of the sources used in my book (hopefully they’re mostly still accessible):
US household spending study – https://www.theatlantic.com/business/archive/2012/04/how-america-spends-money-100-years-in-the-life-of-the-family-budget/255475/
Australian wages in 1966 – https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/199FD6E4B83FFEC1CA2575160011AA66/$File/63020_SEP1967.pdf
Australian wages in 2016 – https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6302.0Main+Features1May%202016?OpenDocument=
Wages growth since 1900 – https://stanfordbrown.com.au/wp-content/uploads/2021/10/SB-Monthly-Investment-Markets-Report-5-Oct-2021.pdf
Average full-time wage in 2021 – https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/average-weekly-earnings-australia/may-2021
Median full-time wage in 2021 – https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/characteristics-employment-australia/aug-2021/
RBA Paper on inflation and the cost of living – https://www.rba.gov.au/publications/bulletin/2014/mar/pdf/bu-0314-4.pdf