I wrote this a while back. While the article's author believes that obescity is directly related to increased consumption, a decrease in savings, and eating out, there are other reasons for that occurring. I will discuss obesity in an addendum post to this one.

More women have joined the work force starting in 1970. Women that were unlikely to leave a 16 year old alone in 1970, now will leave a 6 month old at daycare in 2008. We have gone from a 1 paycheck family to a 2 paycheck family from 1970 into the 2000s. With the wave of women joining the workforce (Participation Rate increased 10% from 1970 to 1980 and another 10% from 1980 to 2005), one would have expected are increased savings, wealthier families, more vacations, families living closer to work, etc. It did not quite turn out that way.

Changes in the employment makeup have taken place over the last 30 years having no parallel in the history of the US work force. From 1970 onwards, millions of mothers joined the full time work force and families went from being a one income household to two income households. While the attitude of women with preteen children in 1970 was to stay at home and care for the family, this fifties attitude changed to where women in 2000 were returning to the work force full time and leaving a six month old child in daycare. Also occurring during this time period, women would go on to get better education and increase their salaries beyond what their mothers or grandmothers made. The expected logical outcome of this income increase should have been wealthier families, increased savings, more vacations, and families living closer to work or in cities; but, it did not quite turn out that way.

What really took place during this time period was quite the opposite. Income for married couples and families went up and income for males and married males remained stagnant. Fully employed males make less in 2005 than what their fathers made a generation ago when comparing median incomes adjusted for inflation. Total family income went up only because women entered the work force. During the same time period, changes in savings and debt were also experienced. Savings, which was at 11% of annual income in 1970 for families, dropped to a negative 8 tenths of 1% by 2005 and debt which was 1.4% of annual income in 1970 increased to 15% in 2005. In the end, every bit of mom’s additional family income was spent, plus the savings and the family unit of mom, dad and two kids dropped into debt by 15%.

One could ask where did the income go or what was the money spent on?

The Commerce Department tracks expenditures by person and family (and you think FISA tapping phones was nosey?). A comparison can be made on family expenditures for a family of four in 1970 and then again in 2005. It can be determined where, or on what, did families spend their incomes. It has been suggested clothing may be one of those commodities that increased costs for a family of 4 from 1970 to 2005. The studies showed that Americans spend 32% less on clothing in inflation adjusted dollars in 2005 as compared to 1970 even with the $200 sneakers and $100 Jeans. The expenditures decreased as more people shop big-box stores, wears flip-flops and sandals, as opposed to leather shoes. Food and eating out was also believed to be a much higher expenditure. While it is a big expenditure, food was 18% less in 2005 when compared to 1970 in inflation adjusted dollars. Appliances have become more exotic and accommodating, giving the appearance of higher cost today as opposed to 1970. When a comparison was made to 1970 prices in inflation adjusted dollars, appliances were 52% less. Autos or SUVs definitely have increased in price when compared to that Pontiac in 1970; but when compared to that 1970 price, automobiles are down 24% in inflation adjusted dollars even with all of the additional accessories such as leather interiors, stereos, captain chairs, etc. Besides, Americans now keep their autos 2 years longer now. While electronics were up ~$300 in 2005 as well as dog food and liquor; baby food, cigarettes and dry cleaning were down in cost.

The way of life for many Americans has improved since 1970 giving much credence to the premise that maybe it was wasteful spending on the part of families causing them financial difficulties and eventually bankruptcy. So, where is a family of 4 in 2005 spending the money earned from two incomes? Families are spending money, more money in 2005 as compared to 1970, in 5 key areas.

• Housing: Between 1970 and 2005 mortgage payments increased by 76% even with lower interest rates. The majority of Americans were not buying into the much–publicized-Mc Mansions. Commerce Department data revealed that the majority of homes owned by Americans were 25 years old and also grew from 5.8 rooms in 1970 to 6.1 rooms in 2005 or the equivalent of 1 bathroom or small bedroom. An average income family in 2005, or roughly 70% of Americans, is likely to be living in a modest home in need of repairs and energy efficiency improvements. Much of the new housing construction has shifted away from entry level housing to provide for those seeking a 2nd or 3rd new house to be purchased by the top 20% of Americans in income.
• Health Insurance: In 1970, employers picked up most of the cost or all of the cost of healthcare insurance with no deductibles or low deductibles. Employer sponsored health insurance from 1970 to 2005 is 74% more in inflation adjusted dollars with increased deductibles, shorter hospital stays, and defined lifetime coverage.
• Autos: While the individual automobile purchase has not increased in cost when inflation adjusted dollars are taken into consideration; today’s family, with 2 people in work force, now has 2 cars as compared to 1970. Both cars are necessary for work as families have taken up residence in the suburbs much further from their places of employment. Stores are not close in the suburbs and even if at home, a spouse needs a car to get the children to school.
• Child Care: 100% increase from 1970. It was rarely needed in 1970 and this is a newer cost in 2005. Moms with young children need child care if they are to go to work.
• Taxes: Under a progressive tax system the first dollar of the 2nd earner is taxed at the rate of the last dollar of the 1st tax earner. 25% increase since 1970 for a family of 4.

In general and after adjusting for inflation, all small and flexible purchases (clothing, etc) are down in price when compared to 1970 prices. What has gone up are all fixed and major expenditures. When compared to an income that has grown from $32,000 in 1970, with one bread winner, to $73,000 in 2005, with two bread winners; expenditures on the basics such as housing, transportation, health insurance, child care and taxes has taken up much of that increase in income. Comparing income to expenses, 50% of a family’s total annual income in 1970 went for these expenditures as compared to 75% of a family’s annual income in 2005. As a result, families are more at risk in 2005 with two incomes than in 1970 with one income because of the increased outlay for expenses on the five basics. By the time they pay 5 basic expenses in 2005, they have fewer remaining dollars than a family in 1970 for emergencies or just fun. This increases the chances of bankruptcy in 2005 because of the increased ratio debt to income and a lack of flexibility.

Two incomes are needed today to have the basics or a total of 104 pay checks to make the mortgage payment when compared to 1970. This is assuming the same risk of keeping a job, if it had remained the same for the family in 2005 as it was in 1970. However, a family in 2005 has twice the risk of not making the mortgage payment as it did not take 104 checks to make the mortgage payment in 1970 with 52 checks. If one adult loses their job, a mortgage stands a higher risk of not being paid due to other increased prices. If dad lost his job in 1970 and collected unemployment, the family had the additional advantage of mom going to work even if it was for less money. Mom’s lower paying job + dad’s unemployment could make ends meet in the short term. Mom going to work has disappeared in 2005 as mom is already at working and the money is used up for expenses. Furthermore, the risk of job loss did not stay stagnant from 1970 and in 2005 and a family faces an 11% increase of losing 20% of their income in 2005 (Jacob Hacker, “The Great Risk Shift”) through job loss or cuts in salary. Employment insecurity in the 2000s has increased stress on today’s family economic well-being.

Risk to health has increased as has the odds of not having health insurance. In 1970, a mom and new born spend 5 days in the hospital for a normal delivery and all of it was paid for by insurance. In 2005; the time allowed and paid for by insurance decreased to 24 hours and then it is back to the rice paddies with the wailing kid strapped to her back. Hospitals send patients home quicker and sicker expecting families to provide the nursing care for them to recoup. Family and patients are expected to help care for the patient by cleaning tubes, changing bandages, injecting the patient or themselves, etc. at home. As contrasted against someone being home in 1970, typically what results from less hospitalization is someone taking off of work to care for a patient and the family bears the cost of lost wages which has shifted to “out of pocket” costs rather than insurance. The lesser hospital stay is reported as hospital and insurance efficiency gains. Hospital stays for births would have been lessened even further if legislation had not stopped hospitals and insurance from do so. In 1970 there was someone at home to help as compared to 2005. Health Insurance has also changed as to what it pays and what many believe is covered, is not covered, or reduced substantially. Sec of Health, Education, and Welfare claims coverage for everyone in Utah except his plan does not cover hospitalization, specialists, etc. (his boast).

Income risks for Families with Children is higher in 2005 than in 1970. Single adult families with children have it even more difficult and they can not compete against 2 income families in achieving the basics in the same neighborhoods. For that particular group there has been a 40+% increase in income volatility while singles have experienced a 30+%. Married without kids has 70% income volatility while married with Children has increased to 95%. Much of the volatility has to do with housing and but it also takes into account schools. Better schools translate into higher housing costs as parents seek out better schools, increasing the competition for those homes regardless of the condition of the house. While childless couples looking for housing without regard of school competency have experienced an increased cost of 50%, couples with children have been hit with 100% increases since 1970. Many parents would rather pick a house next to the Love Canal if the schooling was better as they see this as necessary for a child’s success. Any increase in school scores translates into increases by the $thousands in housing costs.

The personal safety Net has all but disappeared for the middle class with people having less savings, little or with no healthcare insurance, and increased debt due to higher expenses. The typical uninsured modal person in 1970 was an unmarried 23 year old male with no children. In 2005, the modal for uninsured is a married 35 year old person with two children. 1.4 million people lost their health insurance in 2001. Among the 1.4 million people who lost their healthcare were 800,000 who made >$70,000 and were classified as middle class. Healthcare insurance is changing from a defined benefit plan to defined contribution plan. In other words there is a shift in how insurance is granted in such a way as to whether the contributions to it last long enough to cover your health and life. The person now bears the risk of running out of coverage before they die.

While the personal safety net has all but disappeared, the public safety net has also shrunk over the last 30 years. Unemployment Benefits are no longer a sizeable portion of income when compared to 1970. The impact of K-12 education, as paid for with tax dollars, has eroded sharply also. In 1970, 12 years of K-12 was all that was necessary to secure a spot in the middle class. It was thought that a K-12 education coupled with a good work ethic was sufficient by many parents for children. In 2002 twice as many people thought the moon shot landing was faked and filmed in Burbank California then believed you could make it into the middle class without a college diploma. Today, there is a strong belief in a college education as the ticket into the middle class. The amount of education needed to secure a spot in the middle class has increased and the cost of it has shifted away from the tax dollar to the families. In the 21st century, parents or students pay for the additional education past high school to secure that same spot in the middle class. In 1970, few children went to preschool and it is rare today that children do not attend some type of preschool as it is also looked upon as being a necessary prelude to K-12 education. In the end, 2+ years of preschool + 4 years of college have been added to the cost of education and paid for by families. Combine the same thoughts with any vocational training also.

How have families reacted to a lessened income and higher debt? Families have responded with higher rates of bankruptcy. In 2005; married couples have experienced a rate of 7.4/1000; unmarried women and no children have experienced a bankruptcy rate of 7.2/1000; married couples with children have experienced a rate of ~15/1000; and unmarried women with children have filed for bankruptcy at a rate of ~23/1000. With unmarried men, the statistic is too small to be considered significant. Giving way to the causes of bankruptcy, the top four reasons for 90% of the people to file for bankruptcy are job loss, family breakup due to death, family breakup due to divorce, or health expenses. > than 50% of those who file, experience 2 of the cited reasons and 20% have 3 reasons. There is an enormous stress on families with children due to higher debt to income ratios not of their own planned making. More children live in homes with parent(s) that will file for bankruptcy than will file for divorce. People know more about divorced people than know who went through bankruptcy and potentially know more people who have experienced bankruptcy than divorced couples. The reason being is the stigma attached to bankruptcy. 85% hid it from parents, siblings, best friends, and children.

In 2004 and before, I and many others had written about the failing economy for most of the citizenry of the US and especially its impact upon the middle class. The economy was ignored for a trumped-up Iraqui war, terrorism, and homeland security in 2004. Most people were happy with their $50 increases in paycheck due to income tax reductions that came from the refunded social security withholding taxes put in place by Greenspin and Moynihan in 1983 under Reagan. They were happy without a reason to believe the very ground they stood upon was eroding from under them economically as policy favored an elite few in the US. In 2008, we are faced with a far worst economy. We again are in an election with a field of candidates who are vague of the economic issues. It is time to disavow the popularity of vagarious rhetoric in favor of solid solutions.

readings: "The Coming Collapse of The Middle Class" Elizabeth Warren <link>

Much has been said of the decline of the middle class and how quickly “we” are headed towards a two class society made up of the haves and the have-nots, a split of those who have not hit the bumps in the road of life and of those who have slipped downward in economic status. There is a greater chance for those living at the median household income range to slip downward than there is to advance upward in income regardless of race. While at the lower end of the middle class, this is the door way to a better life and future.

Pundits and critics have suggested the accessibility to easy credit due to equity financing or just plain bad attitudes have led to the demise of the middle class as also suggested with the reasons for the passage of the Consumer Protection and Bankruptcy Act of 2005. While some of these types of failures may exist, there have been other changes afoot impacting the middle class to a greater extreme than haphazard spending. What is threatened are the basics leading to the successful growth of the middle class . . . the primary determinants in transitioning from one income bracket to another, or to the upper 5%, of the populace namely income, education, health, and employment security.

Another poster in an earlier thread suggested that by interchanging the word Black, Hispanic, or African-American with obesity, the true intent of the article would come out. The poster is partially correct as the impact of obesity is felt more intensely by those with lower incomes. As I have mentioned in the above thread, the costs of eating out has indeed decreased when taking inflation into account. If for all intents and purposes, the income level of the Middle Class just kept up with inflation while savings decreased, what happened to those living in poverty or are poor?

For a Black family born into the lowest quintile of income, there is a 1 in 3 chance of advancing to the next level of income. For those born into the median Household income, there is a greater chance of slipping backwards then moving upwards (Thomas Hertz, "Mobility in America"). Given that income for the lowest levels of income have remained stagnant, is it any wonder that they may be eating the cheaper processed foods as a result? Another caveat, unemployment for Black Americans has been twice that of White Americans since WWII (Gilligan, Bulhan, Fannon). The end results for the lowest levels of income is having to make do with what they can afford which may be processed foods.

The article (as I see it) is flawed in that it attempts to correlate obesity with decreased savings when no such correlation exists. I definitely believe there is a strong correlation to being poor and eating processed foods.

unsurprising statistic: a record number of poverty stricken people did not lose weight while they were on welfare.

Since 1970, the average American house has almost doubled in size despite an overall decrease in family size. Why? Well, since women have entered the workforce and their mates haven't started doing anywhere near 50% of the housework, a lot of women have made the understandable choice of letting the housework and cooking go. A messy house will seem more cramped than an orderly house so there is more of a need to upgrade. Plus, if you can't find anything, you end up buying the same thing over and over which means having more stuff. These bigger houses cost more than small houses, making it harder to save. Cooking from scratch will keep you off the couch and is less expensive and healthier than eating processed food.

I have bad allergies and am hypoglycemic, so living in filth and eating processed junk would result land me in the hospital. But I still managed to keep body and soul together on a $20/week grocery budget when I was working and studying 60-80 hours a week in grad school in the late 1990's--so don't tell me that being poor forces you to eat junk.

CMS:

Guess you did not read the top post. The average home increased in size by ~1 room from 5 to 6 rooms. Go back and read the top post "completely" and then maybe we can have a discussion.

As far as living on processed food, I will stand by my statements that it is cheaper and more readily obtainable. Your poverty was an acquired one such as found in artisits and authors. Many do not have the luxury you had to live in poverty while they pursued a degree. It is you who must be told what "true" poverty is like.

Be really choosey with your words when discussing mobility between the quantiles since they must, by definition, always contain a fixed 1/5 of the population each. It might be more informative to discuss how the distribution of wealth between those quintiles changes as a function of time.

Phil:

Another assignment? What do you think I have here, the department of commerce at my beck and call? I'll look into it. The data I pulled from was 2006 info,

Run:

I'm James Ledbetter, editor of this story, and editor of The Big Money, a soon-to-be-launched site on business, economics, and finance spinning off of Slate. I'm impressed with your level of research; can we talk about future contributions? How can I reach you?

Hi James:

Thank you for your kind words.

I have been on Moneybox and Slate's The Fray for approximately 6 years now as a regular and a twice starred contributor. As a poster, it has been easy to write contibutions to articles written by Gross and people of a similar caliber, like yourself. I am not sure how I would do as a target for others.

If you take my handle and write me at "hotmail," we can talk there or at least exchange a few words.

Again, thank you for your kindness. I have sometimes wondered if taking the time to explain something makes a difference in today's environment where everyone wants the "Cliff Note" version.

James:

to get to me is to ask Fray Editor Geoff to pass along my email addy. Geoff I have met, sat with and drank a few beers with in Chicago, besides exchanging words and messages. He can give you an alternate email addy besides the run75441 at hotmail.

Looking forward to talking with you. Again, thank you for your kind words.