Who Cheated Us Out of Our Amazing Future?
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Philip Brewer At least as far back as the 1950s, people were talking about how automation would mean that in the future, we'd only have to work 20 hours a week to support ourselves — freeing up the rest of our time for recreational or creative pursuits.
The technology came through, but the lifestyle didn't. In any field that's been amenable to the application of technology, worker productivity has increased drastically, but I don't know two people who're working 20-hour weeks and devoting the rest of their time to their art.
So what happened?
Rising Standards of Living
In 1950, about 30% of the average household budget went to food. In 2009, only 14% went to food. So for that category of spending, the utopian future actually did materialize — a consumer only needed to work half as many hours to pay for food in 2009 as in 1950.
The same was true in one other large category: clothing. Households had to allocate 12% of their spending to apparel in 1950, but only 4% in 2009 — only one-third as many hours needed to be worked to cover the cost of clothing.
The other large spending categories don't show a similar pattern — except maybe they do, if you dig down a bit. Instead of choosing to work fewer hours, we've worked the extra hours in order to get more and better stuff.
Housing took 30% of a household's spending in 1950 and it took 42% in 2009 — but there was a huge difference in size and quality. In 1950 the average housing unit was much smaller — about half the size. It lacked many of the accouterments that virtually all houses and apartments have now. It wouldn't have had air conditioning and might well not have had central heating; many didn't even have indoor plumbing. Most households also lacked many of the small appliances that we take for granted nowadays — mixers and vacuum cleaners were rare; microwaves, blenders, and breadmakers unheard of.
Transportation took 13% versus 16% now, but improvements there have been at least as remarkable as those in housing — practically everyone owns a car now, and the cars run well for many years with minimal maintenance. In 1950 only about three-fifths of households had a car (only the wealthy had two cars), and those cars wore out in just a few years. Carpooling was ordinary, and many people still commuted by bus or rail.
In the 1950s, the average household had to allocate 85% of its spending to cover the basic necessities — food, clothing, shelter, transportation. If you can downscale your housing and transportation to what was typical for 1950, the same standard of living could be purchased now for about 40% of spending.
So we really did get our magical future where we only had to work half as many hours to live a comfortable, middle-class (1950s) lifestyle. Except we chose to live a luxurious twenty-first century lifestyle instead.
But there's more to it than that, because most people didn't really get a choice. Yes, they could have cut their spending to get by on just half their income, but the option to work half as many hours for half the pay was largely not available.
Greed and Laziness
Instead of the future the utopians hoped for, as technology has made it possible to do more work with fewer people, employers have let workers go. (And, as technology has made it possible to do work overseas where workers are cheaper, they've moved production overseas and cut their domestic workforce even more.)
At one level, you might say the answer is simply greed — since the 1970s, the gains due to automation have gone all to the providers of the capital that financed it, and none to the workers whose work has been automated. Still, one man's greed is another man's ordinary good business practice, so that's not a completely satisfying answer.
I think there are two other aspects.
Part of the answer is that managers are lazy. (Or, if you prefer, clever.) They could hire twice as many half-time workers, but that turns out to be a lot of extra work for them.
There's the overhead of running a payroll, of keeping track of (and following) the ever-changing laws and regulations on employment, managing them on a day-to-day basis, doing performance appraisals, dealing with turnover, etc. Some of that overhead is fixed as soon as you add employee #1, but a lot of it ends up being multiplied by the number of employees you've got.
The upshot is that employers prefer having the smallest number of employees possible (and working them as hard as possible), as opposed to having a larger number of employees who work part-time.
The employees themselves, of course, have diverse perspectives on this. Some are perfectly happy working very long hours — especially those who get paid by the hour, but also those who are trying to build careers. Others would much rather work fewer hours for less pay.
Under the influence of big companies, government has also weighed in on the side of "full-time" employment in the sense that many rules to protect workers rights to pensions and other benefits only apply (or apply more strongly) to full-time workers.
The upshot is that common practices, together with the incentives that businesses face, largely close off the opportunity for the happy futuristic utopia that we were promised.
Take Back Your Future!
The productivity gains are real. If you want to live a 1950s lifestyle, you can do it for about half the cost a household would have had to pay in 1950.
Jobs that support such a lifestyle are more limited, but that doesn't mean that there are none. And if living the 1950s fantasy of techno-utopia appeals to you, it doesn't matter if there are a lot of such jobs. You just need to find one.
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i am concerned that household energy wasnt mentioned. in addition to spending 30% on food, many had gardens, compostors, etc. I'd like to give press to R.O.W.E., Dan Pink for there work on disconnecting from the labor market as BB & GOV have created it for us, work less make more do well. Be engaged in your community if you want a sense of usefulness outside of work, work has been commoditized & the less available work the more they HAVE to pay for those who are, this is aside of the PLANNED economy the GOV pushes & the money it prints that deflates our assets & savings in cash. I use the measure dollar per idle hour to measure across generations.
All good points.
I've written a couple of times about Dan Pink, including this book review:
http://www.wisebread.com/book-review-the-adventures-of-johnny-bunko
And this video about the ideas he presents in his book Drive:
http://www.wisebread.com/motivating-yourself-and-others
He's done a lot of interesting work.
Wait, what are we supposed to do? This post presents a huge structural problem, and then offers very little in terms of solution. "Our society screwed up! It's all stacked against you! There are almost no part-time jobs to be had. But don't worry, you can just go out and find one."
I'm guessing you read 'The Overworked American' (http://www.amazon.com/Overworked-American-Unexpected-Decline-Leisure/dp/... ). But you don't have any helpful suggestions for those of us who would actually like to do this?
Well, as I said, the cost savings are available. Move into a small house or a cheap apartment, arrange your life so you can get by without a car (or with one cheap car), and refrain from spending money on gadgets that the like, and you could bring your expenses down to about half of what the average person spends.
The employment options are more problematic. Most managers will not want you to go to half-time work. But that's only true of most of them. There are a lot of managers in the country; you only need to find one that's willing to let you work half-time at half the pay. That's an extra obstacle in your job search, but not an insurmountable one. Keep looking and I've no doubt you can find an appropriate job.
You can have your amazing 1950s utopian future if you want it. It's just a matter of arranging you life that way, and then looking for the right job.
I think the difficult thing is trying to live in this world like you are in the 1950's. I almost feel like you have to be a hermit in order to live frugally.
If your friends are all the sort who don't know how to socialize without spending money—if it's all meals out, drinks at the bar, coffee at the coffee shop, movies at the theater—then it can really feel like you've got to choose between frugality and sociability. But there are alternatives.
You can gradually educate your friends on the attractions of frugal entertainments—meals, drinks, or coffee at one another's homes, for example. Instead of going to a theater, you could watch a DVD or play a board game or go to a free event at the library.
Another option is to start socializing among a broader group of people. There are plenty of other frugal folks out there. You don't have to drop your old friends; just make new ones who appreciate getting together for the company more than for spending money.
Thanks Philip! That's great advice!!!
Wow, you've so captured my thoughts and situation.
I left the workforce (computer networking for big companies) 5 years ago at 48 to resolve a health issue. I had expected to be able to work part time as some point in the future. But you've listed many reasons why skilled part time work is so hard to find. At the time I left, my company would consider allowing "job-sharing" but I'm reading that even telecommuting is being restricted so I think flexibility is on the decline
I can only hope that part time work will open up in the future, if only because many Americans will need to do something in their old age due to lack of financial preparation.
I had hoped that health care reform would shift that cost away from companies and make it more like other societies where health care is more of a basic right. That shift would help part time work, but I doubt it will really happen.
I find frugal living pretty easy as many hobbies can replace costly habits (for example, roast your own coffee rather than funding starbucks), but a part-time job
would be 4 or so hours a day that you aren't spending money.
One thing that people can do is voice to their representatives that they want (and probably need) the ability to work part-time as they get older. A public health option would move that cost away from employers. Employers could also get tax breaks for part-time worker (that is, if we ever get past our current high unemployment).
Yes, health insurance is a huge issue—at least for people in the US, because of the way we've structured health insurance as an employee benefit that usually only goes to full-time workers. I've written a couple of posts about that:
http://www.wisebread.com/not-free-to-be-poor
http://www.wisebread.com/health-care-reform-good-for-people-like-me
Phillip, thanks for the quick reply. I just skimmed through your referenced posts. You hit the talking points on health care reform, but my experience is that the devil is in the details, those details are being manipulated by "big-insurance", and the media isn't doing their traditional job of exposing the manipulation.
Take the PCIP (pre-existing condition insurance plan) that was implemented this past summer. Supposed to make insurance available to people that couldn't get full insurance due to a pre-existing condition. Nope - it was modified so that if you had partial insurance with exclusions (which is all you could get privately) you had to DROP that for six months before applying for the PCIP. Nice way to protect insurance companies profits, and it goes against all principles of getting everyone to have insurance.
If you had no partial insurance, chances are you couldn't afford the PCIP, but the insurance companies really didn't care as you weren't paying them. If you do play "medical roulette" for 6 months so you can apply, you don't know if the republicans will be successful in their vow to starve funding from these type of heath reform bills.
I read comments from the Health editor at Consumer Reports where she saw this loophole coming but didn't call it to mainstream attention. So much for whistle-blowing journalism that seemed to exist in the 50's.
You can also work the full time job for awhile, save the surplus, and take a "sabbatical" i.e. quit and live off your savings or take a lesser paying part time job, ideally one more fun than your old job.
I actually have fallen into half time work situation after getting laid off from full time employment. A former employer contacted me and asked if I could work temporarily for them. Now I work for them whenever they are busy and stay home when they are slow. Because I have kept my living expenses low, I am able to get by just fine.
Sure. That's more or less what I did. It's not quite as good as was promised—you have to do all that planning and saving—but it's a way to get there, and it doesn't depend on reorganizing society around the way you want to live your life.
I've written a couple of posts that are on-topic:
http://www.wisebread.com/retirement-on-the-installment-plan
http://www.wisebread.com/fund-your-own-sabbatical
Great article! Living 1950's style is do-able if you keep looking and trying to find the right fit. My house is small, built in 1904, no air conditioning, but perfectly fine for 1-3 people. My car is from 1987 with over 250,000 miles (odometer stopped working) and my mechanic says it will last another 10 years or so. I chose to live in a place with great public transportation to cut down on driving costs. I do work full-time, but have the option of working at home if I want or need to, so there is a good work/family balance. More and more people are deciding that having the biggest, latest, greatest isn't worth it. It did take quite a while and a lot of work to get to this situation, but it is a wonderful life.
The photo: ?Is that a broken rollercoaster meant to be symbolic? Or something else??? Love your photos!
Thanks!
The photo is of a sculpture in Chicago, in the loop, north of the Art Institute. I just thought it looked futuristic. (I really wanted to go with a 1950s poster of a retro future, with flying cars or jet packs, but couldn't quickly find a public domain (or creative commons licensed) image that I liked.)
I really appreciate your blog but I am more of glass half empty person.
My wife and I have been self-employed for 20 and years and try to live very frugally. Eventually you run up against non-negotiable expenses. We paid our house off but property taxes, heating fuel, and repairs/services that we can't do ourselves are going up all the time. We saved cash (quite a bit of it) but now interest rates are zero so it's not working for us. Health insurance goes up 17-20% a year like clockwork--even though we have a high deductible insurance, are healthy, and have never cost the insurance company a cent. We have disability insurance as well and that is costly. We also need to have plenty of cash set aside to cover the deductibles of these insurances because unlike what Sharon Angle suggested, I don't know of any doctors that barter their services for a chicken.
On and on it goes. Once you reach a certain level of frugality, you realize that you really can't live cheaply in the US and be middle class. To live cheaply, you must live on or close to the edge and have no assets. You may be the exception but don't assume that everyone can do it. I have an acquaintance that reminds me of you (lives more frugally than my wife and I). But I have to say, he is extremely talented in this respect and he managed to get some benefits such as healthcare and a small pension from previous jobs along the way, so I think it's a false picture (at least as far as he is concerned). Of all the other people I know, I am the most frugal by far and still, it can only accomplish so much. Now, if you have no assets to protect, you can go without insurance because at least they'll stabilize you at the hospital before flinging you out on the street. But if you have assets, you may lose all of your meager savings that you've worked for your whole life due to some accident or illness. So insurance is a must.
I realized long ago that most pensions were under-funded scams and that's one of the reasons my wife and I left the working world. There was no point in giving your life to a company to end up with nothing. My mother did piecework in textiles and her union notified her that there was no money in the kitty for the health benefits they promised her. And that was back in the 80s! I now have friends who are professors at a state university in IL and are worried that they may never receive their public pensions. What a situation for the greatest country in the world to be in! So now I realize something I did not understand in the 80s and early 90s. Namely that wealth accumulation (for the purpose of financial security) is also a scam for most Americans. What good is it to save money for retirement or for living well when it is so precariously hanging by a thread? What fool likes those odds? I certainly don't.
After seeing what Obama (who I voted for and donated to) came up with for healthcare...the way he tossed the ball over that crook Baucus...I knew the gig for this country's middle class was up 100%. Previously, I held a very slim glimmer of hope but now I know better. My advice to young Americans is, unless you are pretty sure you are going to make a lot of money, move out of the country. Forget voting because the system is rigged and all possible winners are vetted. They will serve their masters. Bank on it! Seek out opportunities elsewhere, where the society has some cohesiveness and there is some security. If you can't find a suitable match, at least find an interesting country to live in that appeals to you, where you can possibly make a future for yourself. I say this to my own detriment because without young workers, my SS and medicare prospects look grim. But still, save yourselves if you can. I am 52 and have very old and dependent parents and will make my grave here because I have no choice. First the corpotacracy will suck out all my blood, and I mean every drop, and then they will toss me into a shallow grave. Now those are sure-fire odds if ever I have seen any.
Sorry for the rant, BTW. I am actually more upbeat in person but these thoughts are still 100% me and I believe them with complete certainty. I just try not to bring everybody around me down, so we talk about the weather instead.
Peace and good tidings for the new year!
Awesome post. I hadn't really thought about the promised future from this angle before. Really made me think about how we all live and how affluenza has taken hold of most of us.
I am struggling with how to live at the moment and while myself and my girlfriend are planning to move to a smaller town, grow our own food (as much as we can) and slow down, I struggle with how far to go with the change.
Thanks for the article - it has really got me thinking.
Manage your finances well, and retire early--maybe at 45 or so.
Excellant article! I´ve always lived the 1950s lifestyle. I took a couple of years off for traveling in the 1970´s; then retired at the age of 44 in 1989...still traveling, enjoying life....
I disagree with much of this. In my experience, the cities have gotten bigger and the cost of real estate in areas with jobs worth having has gone though the roof.
Bigger houses? Most people I know feel forced to downsize, or can only afford to buy a small apartment, a house being way out of reach, even on double income, no kids.
Answer: don't live in a city.
There were plenty of big cities in the 1950s, and some of them have gotten a lot smaller since then. (Detroit being only the most obvious example.)
But I think you're just unaware of how people lived in those days. It was true that a man with a good job could afford to support a family—but not in the manner that people would expect to live today. The kids didn't go to private school. Traveling overseas was a once-in-a-lifetime vacation. Nobody flew anywhere.
Most particularly, people weren't so often forced to downsize because they'd never upsized in the first place. In those days, instead of getting their own place at the first opportunity, and then having to move back home when the economy turned down, people lived at home even after they got jobs so they could save up enough money to get married. Starting their married life with a little capital, they were in a much better position to weather economic downturns.
"But I think you're just unaware of how people lived in those days. It was true that a man with a good job could afford to support a family—but not in the manner that people would expect to live today. The kids didn't go to private school. Traveling overseas was a once-in-a-lifetime vacation. Nobody flew anywhere."
I grew up in Western Canada, my parents were penniless and uneducated when they immigrated here. They could not speak or read any English. My father eventually became a mechanic. It was easy for them to buy a house when they got here, even before his apprenticeship. I went to private school, and we traveled by air or train to go on various trips several times per year.
Our Family went all over the US, Canada, to Mexico, Hawaii, Europe, and Asia. We had several vehicles, and every other year purchased brand new ones, cars, trucks, campers, and motorcycles. We had boats too. My mothers kitchen had all kinds of gadgets. I raced motorcycles, and we always went camping, boating, skiing, snowmobiling and otherwise having a blast was an every weekend event.
The first small house was easily paid of in a few years, then it was sold and we moved into a bigger house on a larger piece of property. All this on a mechanics salary. Other people we knew, so long as they had a single breadwinner with a steady income was able to live the same as we did. Some of them owned planes.
Today the cost of new vehicles and real estate is incredibly high compared to peoples salaries here. Food, clothing, the internet, and electronic gadgets are very inexpensive though. When I was with my ex-wife, I worked two jobs plus overtime, and she worked and in the same city our parents prospered in it was impossible for us to buy a house with only our own resources.
Many hard working educated people with good salaries have given up on buying property in Canada. They choose instead to rent, and save and invest. When I grew up some of our neighbours that purchased houses were uneducated immigrants that drove taxis or worked as factory labourers, or construction labourers. Today most of the people that purchase homes have inheritances or they immigrate here already with much cash on hand. Taxi drivers sure are not buying homes here anymore, and most of the factories have gone overseas. Living accommodations continue to shrink in size and become more and more expensive.
Many of the old timers I talk to tell me that the house they bought back in the 50's and 60's the mortgage was a reasonable percentage of their wage. Today they point out that if they had the same job, it would cost them much more than double their entire wage to make the mortgage. They could not get into the market today.
I also see that back then, around 40% of the jobs were in manufacturing, today it is below 9%. those jobs have gone overseas. Today many people have to take on low paying service and retail industry employment because the factories are gone. The high paying jobs I used to do no longer exist. There are other new opportunities thanks to inexpensive computers, smart phones, and the internet. This makes investing and setting up certain businesses easier than that used to be.
Back then a single income was all that was necessary to be able to live well. Today people seem to work longer hours and so does the wife, and just to be able to make the mortgage and living expenses. Meanwhile, the kids generally are plopped in front of their computers and video games getting flabby and being neglected.
Whenever I travel to the US, I am amazed at how inexpensive the real estate is, and how expensive medical overage is. To buy new vehicles and other consumer goods is also far cheaper. In Canada, medical coverage is pretty much free. I know the US and Canada have different economic situations. I don't think it was as meagre an existence in the US as you describe back then.
I had friends in the 1960s and early 1970s whose families had the things you mention—campers, boats, motorcycles, etc. But they were accumulated gradually by people who lived as I described—lived at home to save up some money, lived in a small apartment, saved some more money, didn't buy a house until the second kid was born, etc.
Upon reflection, I think the biggest difference may be student loans. In the 1950s, people were broke when they graduated from school. Now they graduate from school with $10,000 to $100,000 of debt. That produces a hole that simply can't be dug out of, no matter what lifestyle you choose.
I've talked about that issue before:
http://www.wisebread.com/wage-slave-debt-slave
I'm way behind on my google reader, but just wanted to say that I loved this article! In particular I think having a small house in a bikeable location is an awesome way to go. Sorry to say that I no longer consider an apartment a long-term option. Other people are just way too noisy for quiet me.