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Archive for Sunday, June 25, 2006

Study: Americans enjoying highest standard of living in history

June 25, 2006

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— Americans have never had it so good.

Gas prices may be up. The stock market may be down. Job security may seem an illusion and there's not yet an iPod in every pocket. But, according to the government, American families have never earned more income, spent less on necessities or enjoyed a higher standard of living than they do right now.

That information comes from a new longitudinal study by the U.S. Bureau of Labor Statistics, which, for the first time, examines a century, instead of just a year, in its long-standing survey of consumer expenditure. The report, "100 Years of U.S. Consumer Spending: Data for the Nation, New York City, and Boston," paints a pursestrings portrait of American society from 1901 to 2002-03 by tracing the impact of significant events of the 20th century on consumer spending patterns.

If, indeed, Americans are what they spend, the survey vividly illustrates how much they have changed in 100 years. "In many ways, the only thread of commonality between U.S. households in 1901 and in 2002-03 is their geographic location," as the 70-page report puts it.

Three-fold income increase

In 1901, for example, the average household had $750 in annual income - with an average 9.5 percent of that earned by children - to support an average family of 4.9 people. Most of that money - 79.9 percent - went for food, clothing and housing.

By 2002-03, the average American family was earning $50,302 and statisticians no longer mentioned children as income producers. Moreover, the average household contained 2.5 people and only 50.1 percent of the income went for food, clothing and housing. The report stresses that this represents a real three-fold increase in income: the family would be earning $2,282 restated in 1901 dollars.

Clearly, the so-called good old days hardly were so good, said Michael Dolfman, the Bureau of Labor Statistics regional commissioner in New York, who co-authored the report with Denis McSweeney, his bureau counterpart in Boston. New York and Boston were broken out because they are two of the nation's oldest urban areas.

"I come from the generation that, when we look back at the turn of the century, we see it as a halcyon time, when the pace of life was different and it was a very civil, pleasant time. Looking at the results, we found that at the dawn of the 20th century, life in the United States, and particularly in New York, was very difficult," said Dolfman, 63.

Necessities get less expensive

Household expenditures on the necessities of food, clothing and housing provide windows into the changing lives of families. Shifts in what families spent on food, in particular, tell of major changes at the kitchen table over the century. In 1901, food was the single biggest expense for the average family, claiming 42.5 percent of its entire income. With most jobs paying less than 30 cents per hour, food was expensive: the average cost per pound was 13 cents for bacon, 27 cents for butter and 22 cents for a dozen eggs.

As mass production made food more plentiful and cheaper, the share of the family budget taken by food steadily declined, dropping to 13.1 percent in 2002-03. However, food remained the largest single expense until 1950, when housing, driven by a postwar boom in home ownership, supplanted it.

While home ownership rocketed from 19 percent at the start of the 20th century to 67 percent at the dawn of the 21st century, who lives in those homes has changed. The number of single-person households has risen from 16.8 percent in 1960 to 29.5 percent in 2002-03.

While many consumer categories, such as iPods, could hardly have been imagined even half a century ago, the need and willingness to spend for entertainment have not changed, particularly when it's needed the most. During the Depression years of 1934-36 the average U.S. household spent 5.4 percent of total expenditures on entertainment - more than the 5.1 percent the average family spent on the category in 2002-03.

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