After listening to her Congressional testimony I wanted to hear more, so I did some googling and checked out some youtube clips and found this UC Berkeley Graduate Council lecture called "The Coming Collapse of the Middle Collapse". It was eye-opening to say the least. It has always been my assumption that irresponsible consumption was a signficant cause of the current struggles of middle class Americans. While I still believe consumerism is a problem in America, after watching this, I'm beginning to rethink the extent to which over-consumption is to blame for the problems of the middle class.
Because the embeded video is 57 minutes, and some of you may not want to watch all of it, I've outlined some interesting facts from her presentation below.
The Commerce Department has tracked how Americans spend their money for more than a century. Warren used this data to compare the spending habits between two similar families: a mom and dad with two kids in the early 1970s and a mom and dad and two kids in 2003, and adjusted for inflation. Her findings:
- A family of four spends 32% less on clothes in 2003 than in the 1970s.
- A family of four spends 18% less on food in 2003 than in the 1970s.
- A family of four spends 52% less on appliances in 2003 than in the 1970s.
- A family of four spends 24% less per car in 2003 than in the 1970s.
- A family of four spends 76% more on a 3 bedroom one bathroom house in 2003 than in the 1970s. The average American family is about 50% more likely to be in a house more than 25 years old.
- A family of four spends 74% more on health care in 2003 than in the 1970s (assuming this family is fortunate enough to have employer sponsored health insurance).
- A family of four spends 52% more on cars in 2003 than in the 1970s because they now have more than one car in the family.
- A family of four spends 100% more on childcare in 2003 than in the 1970s because mom is now at work.
- A family of four pays 25% more in taxes in 2003 than in the 1970s because mom is now at work.
- Notice, these are all fixed expenses, whereas the earlier expenses are flexible.
Unfortunately, in her presentation Warren does not suggest solutions for this obvious problem, she just presents the data. My personal belief is that she is NOT suggesting that moms stay home. So, then what?
Thoughts? Reactions? Criticisms?
(Btw, I did not outline the last 20 minutes of her presentation. It was too difficult to summarize concisely in bullets.)