[11thEarlOfMar]

A couple of factors that play into this over the last 100 years: The prevalence of credit cards that increase the amount of depreciating goods young people can buy, and the long-term power of 401(k) investing.

Expanded consumer credit, and it's appurtenant high interest rate cost, would tend to keep young people less wealthy towards the last half of last century. As credit card debt skyrocketed, savings rates plummeted from almost 11% in 1982, to 1.5% in 2007 [0].

Similarly, the power of 401(k) investing is really only coming into it's own in the last decade or so, since 401(k) accounts have had 30 years to mature, total retirement assets now total well over $3 Trillion nationally.[1]

[0] http://www.americanhistoryusa.com/give-me-liberty-or-give-me...

[1] http://www.nber.org/bah/fall02/changingCharacter.html

[toomuchtodo]

Don't forget wage stagnation over the last 40 years and the increased cost in college education (funded, yet again, by cheap credit backed by the federal government).

[TheOtherHobbes]

This. There's been a massive shift of wealth away from the middle classes.

And college loans are just taxation by the back door - with the difference that instead of a graduate tax paid to the government, you pay a loan "tax" to the shareholders of the loan fund.

In fact, taxation is increasingly privatised. Instead of paying taxes to government you pay a profit-surcharge on almost everything. This goes to corporate shareholders but provides little or no returned value.

The result is that trillions of dollars are rotting uselessly in offshore tax havens, when they could have been invested in future economic development. And spending power has been suppressed, when it could have been driving the economy from the other end.

[plonh]

Dollars are illusory so they cannot rot. The government can always stimulate actual productivity by printing dollars to pass around.

[refurb]

Wage stagnation is only true if you ignore non-monetary compensation. Add that in and total compensation has grown.

[toomuchtodo]

What would you define as non-monetary compensation besides health care benefits (which increase so quickly you could consider those benefits to stagnate as well).

[refurb]

Pension, 401k match, stock options, disability insurance, tuition reimbursement, etc.

If you look at median income levels, they have grown substantially over the last 30 years.

[dragonwriter]

> If you look at median income levels, they have grown substantially over the last 30 years.

You have mean and median reversed. Mean inflation adjusted income has increased substantially, median inflation-adjusted income has declined. That's because the distribution of income has become more concentrated.

[plonh]

Stock options are not part of the median income. Tuition reimbursement is far less than govt subsidized education and even regular private education cost in the past. Higher benefitd mean nothing if they are directly routed to massively inflated prices that offset the benefits for the same value delivered.

[refurb]

Stock options are not part of the median income.

I agree. What I'm saying is that average income might not have risen, but median income has. To suggest wages in general have stagnated isn't true.

[gorena]

As a young person, not sure I follow the credit card thing - I guess I can see how it extends my spending power by N% per dollar spent (where N is your rewards percent), but other than that, and it makes spending more convenient, but it's just a debit card with better protections and a longer interval before the money is withdrawn from my account. N is fairly small and it only applies to money spent, not money earned.

[11thEarlOfMar]

For disciplined spenders who use the credit card for convenience, spend carefully and pay it off every month, you are correct. But for people who tend to maintain a balance and who spend with less care and discretion, it enables them to spend more than they would if they had to spend cash, and, the things they buy effectively cost more due to interest expenses.

Either or both of those behaviors reduces the amount available to save and invest, which goes directly against growing wealth. It is really important to start saving and investing early, and that is when this behavior can cause the most harm. Averaging over the population, credit card debt is a drag on savings and reduces wealth. Since credit card debt has expanded into such a large number over the last 40 years or so, it has a more pronounced effect on younger persons.