1955 vs 2025, who actually had it better?

– [Jay Gatsby] Can’t repeat the past? Why, of course, you can. – Okay, so I’m traveling
back towards the 1950s. As we move through time, I’m going to be keeping
an eye on this main graph. This graph is kind of our anchor. It will be showing how the
economy has grown over time. And again, it’s adjusted for
prices and population growth. When this graph goes up, it means that there’s more
economic prosperity to go around. We’re gonna see how it gets divided up. And for each decade, I’m gonna be looking at these
four economic indicators. Am I making more money? Can I afford a house? Is this economic growth being
shared equally by everyone? And how likely am I to be
making more than my parents? Oh, look, we’re arriving to the 1950s. (groovy jazz music) So it’s the 1950s here in America, and I, the middle-income
earner, have just returned from fighting in the most
devastating war of human history. But we Americans came out on top, and our economy is booming. I work in this car factory. It’s one of the many factories that was converted from making weapons to now making valuable stuff that we’re shipping around the world. Our country is getting rich. I am making an average income. So my income right now is $4,400. In today’s money, that’s
more like $41,000. We’re gonna adjust everything
for modern dollars. In this case, 2023 dollars. Prices are higher these days, so our money’s more valuable
to make it all make sense. Okay, wait, pause. I’m not gonna do that every single time, like, talk about the inflation. I’m just gonna say everything
from now on in modern dollars. It’ll allow us to compare a
lot easier between the decades. Okay, with that, let’s get
all the magic going again. Pretty cool, right? Let’s meet my family. So my wife doesn’t work. Only a 1/3 of women did back then, and really she doesn’t need to. My factory job supports the whole family. And look, I own that home. I paid $84,000 for this thing,
again in modern dollars. That’s actually not that much
more than my yearly salary. This is considered very affordable. And a major reason why
is because the government is helping me pay for a lot of this. And they’ve got the cash to do it. I mean, look at the top
tax rate for the rich. (bright upbeat music) So a booming economy
and all this tax revenue means that the government is helping build all of these suburban homes
and is giving us veterans good deals on mortgages so that we can get in on
the prospering U.S. economy, start building wealth by owning a home. – [Narrator] Our returning serviceman, who was starting his own business, would get a financial
boost from the government. Our money would be advanced
to buy property or a home. – We’re coming out of World War II. There are absolutely
lots of public programs. Policymakers today and back
then had a lot to do with how typical workers and
their families were doing. – Okay, so the economy is booming. Let’s see how all of this
prosperity is being shared. And for that, I’m going to
show you this amazing graph. I love this graph. We’re gonna see it over the decades, and it tells a very useful story. This is my income, the median earner. Here’s the income of the top earners. And this line is the
low income in America. And down here is, like, years. Okay, watch what happens. Ready? Go. (light thoughtful music)
(chart clicking) Look at this. Look what’s happening. All three of these income brackets are increasing their
income at the same rate. We are all getting in on this prosperity. We are sharing the spoils
of a booming economy. Nice. – In the roughly two, three
decades after World War II, we saw what I would consider
broadly shared prosperity. As the economy grew, as
workers became more productive, workers across the board were actually seeing gains
in their living standards. – This is a great indicator
that income equality in the United States is good and healthy. Okay, last thing for the 1950s. Let’s check in on the American dream. Can I move up the ladder? There’s a really nice data set for this that says that I am nearly 100% likely to earn more than my parents. There is upward motion in the economy. The American dream is alive, at least for me, which is
an important caveat here. Women were mostly left out of this economic version
of the American dream. And so were people who weren’t white, like Black Americans,
10% of the population. Over a million of whom fought in the war, but upon returning, were
met with these custom maps that were drawn to
determine where they could and could not buy homes. They were largely left out of
all of this government help that allowed me to get education and buy a home and build wealth. But if you’re just looking at the numbers, the 1950s was a really good time for the median-income earner. You could have a family,
work in a factory, and be loaded with opportunities to move up the economic ladder
thanks to a booming economy and a bunch of government programs. So now let’s move forward
in time to the 1970s. ♪ Let’s do the Time Warp again ♪ (horn blaring) (groovy upbeat music) – Welcome to the 1970s. A lot has changed. The economy is producing a lot
more prosperity to go around, as you can see by this graph. And we’ll see how that’s all
being distributed in a second. But first, let’s check in on my pay. I’m still working in a factory. I now earn about $66,000. That’s an improvement from the ’50s. Or should I say “we?” Like millions of other women, my wife has entered the workforce. They still only earn 60% of what men do. But look, they’re breaking
into the workforce. Nearly half of all women are gonna be working by
the end of the decade. Partly as a push for freedom
and economic autonomy, but partly as a necessity. It’s becoming harder for
a family to be supported by a single earner. The result is that our
income is better off than it was in the ’50s. But things are also kind
of expensive right now. Inflation is up, partly because there’s
war in the Middle East and they’re cutting us off oil. So there’s long lines
at these gas stations, and everything is more expensive. Anyway, check out my house. I had to pay $230,000 for this house. Housing is getting more expensive, and the government is
raising the interest rate to slow down inflation, which is making my monthly
payment a little more expensive. Home purchasing is becoming a little less accessible to the median, but
I still have this cool house. Okay, let’s go back to
this super useful graph that tells us how the economic
spoils are being shared. Remember, that’s me, the
median income earner. (lively electronic music) And look, my income continues to grow at the same rate as the high-income and low-income earners in our country. The growing economy is being shared by these different income groups. It’s actually pretty impressive how, like, tight everything is moving
together as the economy grows. Oh, and look, they’ve
started collecting data on how much more CEOs are making
than the typical employee. Looks like by the middle of the decade, it’s about 26 times more. Wait, are CEOs making too much? Is that bad? What do you think? I dunno, let’s keep an eye on
this chart as time continues, and we can assess if we
think this is unfair. Okay, but what about the American dream? How easy it is to make
more than your parents? Well, if I’m an adult in the 1970s, it means I was born in the 1950s, which, according to this data set, means I’m 80% likely to
earn more than my parents. I mean, pretty good. The American dream seems
to be doing pretty well. So, I would say that
economic life in the 1970s is better for the median
earner than it was in the ’50s. And something that
we’re not covering here, ‘cause we’re looking
at the cold hard data, is that there’s also
a revolution happening that’s making it more equal and more fair for minority
groups in the United States. So these are good trends. Let’s see how they continue
as we move on to the 1990s. – [Marty McFly] I guess you
guys aren’t ready for that yet. But your kids are gonna love it. (groovy upbeat music) – [Johnny] To the ’90s, we
have to go through the ’80s and look at all of this economic growth. The president has been
very busy slashing taxes, getting rid of regulation
and social programs, and rejiggering the economy
to benefit businesses, making it harder for
workers to, like, gather and get leverage over their employers. – Ronald Reagan, the actor? And look, we are arriving to the 1990s. What a great decade. – [Dr. Emmett Brown] Great Scott! (car horn blares) The big standoff between the United States and the Soviet Union is
over, and people are stoked. We entered the 1990s with
this little recession. We’re getting ready for a
big surge of more growth thanks to the rise of the internet. Remember, I am still playing the role of the middle-income earner, okay? So it’s not like I was,
like, born back in the ’50s and I’ve been growing up. I am a young adult who is
the middle-income earner. How am I doing? So I still work at a factory. America is still a
manufacturing powerhouse here in the ’90s, though that is literally
right about to change. I wish I could warn myself. My household brings in $76,000 a year, which is definitely better
than the ’50s and ’60s, but you can kind of see that
things are flattening out. And in fact, I’m not making that much more than I was in the late ’70s. Check out my cool ’90s house. Cost me $273,000. That’s almost four
times our yearly income. Way more expensive than in the ’50s. Housing is getting a
little less affordable. Okay, the economy’s doing well. How are we sharing all of
this economic prosperity? Remember we started back in the ’50s, and we saw how the
high-income, the low-income, and me, the middle-income, we all saw similar growth
in our income gains. We all got in on economic growth equally. That continued through the ’70s. But wait, look what happens right here. (groovy upbeat music) Whoa. They’re diverging. It’s around the 1980s when
you see the top earners start to pull away from the rest of us. Their income is going up faster than mine, and my income is going up a little faster than the low-income population. Okay, that’s unsettling. I liked it more when they
were all kind of, like, on top of each other,
growing at the same rate. We’ll keep an eye on this graph, but there’s a bunch of other
graphs starting to come out. Another divergence happening on how productive the economy
is versus how much I get paid. They’re both going up at the same time. I’m more productive,
I get paid more, cool. But around the same time,
the same split happens. My pay starts to flatline even as productivity continues to go up. – So then there’s this period
that starts around 1979 in the early ’80s, where we see this pulling
apart between economic growth and what typical workers
and their families receive from that economic growth. – So, who’s getting in on
all this extra productivity? This growth that’s happening
in our economy, if not me? Well, let’s check in on those CEOs. So remember back in the ’70s, CEOs were making, like, 25 times more than the typical worker. Kind of seems like a lot. Let’s see what happens here. Oh, my God! Look at this. Okay, whoa. By the end of the ’90s, CEOs are making almost 400
times the typical worker. And I thought 20 times was a lot. – Those at the top are
receiving much larger shares of that growing economy
than those at the middle or at the bottom of the wage distribution. So that pulling apart, that
increasing economic inequality, is apparent, no matter how you look at it; that high is going
increasingly to the very top. – Okay, okay. But isn’t inequality often seen as a byproduct of rapid economic growth? Could this be a good
thing for our economy? Yes, people are getting
really rich really fast, but it’s because they’re innovating and making our economy more productive. And plus, everything I’ve shown
you is before taxes, guys. So, like, the rich pay a lot of taxes. Okay, so let’s see what happens to the income of the
rich people after taxes. Here we go. Oh, okay. Well, um…. The… The taxes didn’t do that much. (light electronic music) There’s something going on here. The rich are getting
really rich really fast. I mean, what these lines
all show is that 1980 was kind of this inflection
point in our economy where the top earners
kind of started to get in on most of the prosperity. And yes, there are economists
who argue that inequality isn’t bad for an economy. It actually spurs growth and
investment into the economy. And eventually, that raises all boats. It trickles down. And advocates for this way of thinking say that we shouldn’t focus on inequality, but instead on poverty reduction. Okay, poverty reduction, how we doing? Poverty plummeted after World War II. But you can see that at
this time in, like, 1980, when inequality starts to get really bad, poverty basically stays the same, goes up for big series of years. So this is concerning, and this is my interpretation of the data. I’m sure some of you have very
different interpretations, and I would love to see
you down in the comments. Anyway, let’s check in
on the American dream. America’s all about big risk, big rewards. So yeah, inequality’s happening, but, like, if you can
go from rags to riches, maybe that’s very American and okay. If I was born in the 1970s,
I’m now an adult in the 1990s, and the data says that 59% of
us born to the middle income will outearn our parents. So that means that 40% of my
peers here in the middle income will earn the same or
less than their parents, even as we are seeing all
of this economic growth. I mean, you can see this trend here. The American dream of being
able to move up the ladder is becoming less and less a reality for a bigger and bigger
portion of the population. Okay, so that was a big
change from all the trends. Let’s see what happens
next. (clicks fingers) – [Doctor Who] People assume that time is a strict
progression of cause to effect, but actually, it’s more like a big ball of wibbly, wobbly, timey, wimy stuff. – Okay, we’re moving
into the new millennium. America’s fighting a couple of wars. The economy’s actually doing pretty well until, whoops, whoa. The bankers got a little
loosey-goosey for a couple years, making obscene amounts of money and crashing the entire world economy. But okay, let’s move on from the biggest recession of our time. We’re arriving to the 2010s. This is a world that most
of us are familiar with. Let’s see how the median
income earner fares. I don’t work in a factory anymore. All of those have dried up
and been shipped to Asia. So I now work as a middle
manager at an insurance company, and my household income is $81,000 a year. Which is, wait a minute, same as 1997? But wait, during this same
13-year period from 1997 to 2010, the economy grew by this much. I mean, that line’s going up, the economy’s making more
stuff, there’s more prosperity. Even when you adjust for
inflation per capita, the economy grew. There should be more to go around. But my household pay is the same as it was 13 years previous. Why? Well, we’ll see in a second. But first, let’s talk about my house. I always love talking about my house. Look at this beauty. I can still afford a house. In fact, here in, like,
post-recession America, housing prices are actually pretty low. The bubble burst, interest rates had to go down
to stimulate the economy. And so home purchasing was
actually pretty accessible for a few years. But don’t worry, housing prices will be back
on the rise in a second. And in fact, they’ll start
rising faster than my income, making housing less and less affordable. And home ownership still
seems to be available mostly for certain groups
and not as much for others. In fact, that hasn’t changed much since the segregation days. Meanwhile, I think I know what’s
gonna happen to this graph. Yep, the richer just getting richer faster than my income is going up, and my income’s kind of stagnating. Okay, what about the CEOs? Do they pay a price for
the big bubble burst? Nope. They didn’t pay. I mean, they kind of did up and down, but they’re still, by
the end of the decade, getting paid hundreds
of times more than me. Maybe they think they are
hundreds of times more productive and they deserve it. (groovy contemporary jazz music) I mean, you get the point
on the inequality stuff. This is what we’ve been
hearing about for a long time. All of these graphs have the same shape, this great divergence
that happens in the ’80s, where the economy is growing, but the wages for the average
person just kind of flatten while the top earners just sort of get in on all of that prosperity. Okay, but the American dream. You can climb the ladder, right? So if you’re born in the 1980s, which I was, you’re now
an adult in the 2010s, and it looks like for the median earner, the majority of us will earn the same or less than our parents. Yeah, this is a problem and probably doesn’t seem
fair to a lot of people. But wait, there’s hope. – [James Rhodes] “Star Trek,”
“Terminator,” “Timecop,” “Time After Time,” “Quantum
Leap,” “A Wrinkle in Time,” “Somewhere in Time.” – “Hot Tub Time Machine.”
– “Hot Tub Time Machine.” – Okay, I’m back. 2025, that’s when I’m making this video. So that’s modern-day for me. We went through a pandemic. The economy kind of got
freaked out for a little bit. And the median income earner
actually started to see some gains after years
and years of flatlining. So you do see some potential
movement here, some hope. But let’s get back to
the original question that we started this video with. Is the average American better now than they were back in the ’50s, and over these decades
that we talked about? In a lot of ways, the answer is yes. Especially if you are
a woman or not white, then the answer is yes, at least in terms of economic opportunity. But what we’ve seen on this journey is that the American economy has produced an incredible
amount of prosperity and growth over these last seven decades. And that was shared broadly
by all of us for a time. But in the last 30, 40
years, the data is very clear that the fruits of the
economic growth these days have not been broadly shared. One group is collecting
most of the growth. And I didn’t even talk about wealth, like the stuff you just own
and how that makes money. We were talking just about income on this. Now, this isn’t the first time that we’ve been in this situation. The top 10% collected almost
half of all the income way back in the early
1900s before World War II. But we changed that. Look. (light thoughtful music)
(chart clicking) And the income starts to be
distributed more equally. But this graph tells the same story. Look, 1980, boom, here it goes. We’re back. We’re back to where we were. Now, does this mean that
our economy is broken? No, actually, our economy is not broken. It is working exactly how
it was designed to work. And this, and this, and this, and this, it’s the result of changes to the rules, policies that end up
determining who gets the money and who doesn’t. These policies are made
by people that we elect, and if we don’t think that this is fair, we have the power to pressure them to design a system that is fair. Now, the median income earner doesn’t have nearly as
much power these days. The top income earners
and the corporations have really gotten their foot in the door for the people who have
the power to set the rules. So it’s harder than ever. But this still is a democracy, and if we don’t think a system is fair, we still have the power to pressure our politicians to change it. And it’s not actually just
about income inequality. Yes, that has risen. The rich get richer much faster. It’s also about the American dream, this idea of being able to move up if you get educated, if you work hard. As inequality has gone up, the
American dream has gone down. These graphs are built on robust data, and this is the story that it tells. The rungs of the economic ladder have gotten wider and wider apart. And that American dream, ironically, a term coined
by a rich investment banker born into a rich family in New York City, that dream is looking
more and more like a myth. (light thoughtful electronic music)