After my recent piece that put student debt cancellation into an economic context going back to 1970, an email from a reader arrived. This person found the use of experience in the 1970s “disheartening” and “not relevant.” That looking at the period from 2000 to 2022 would be better reflective of how “debt is distributed” and its impact on those who hold it.
The big questions: was a 70s baseline nothing more than an attempt “to silence critics?”
A good question. The answer is both yes and no.
As the previous piece mentioned, “What was once possible—’Oh, I put myself through college working for $100 a week during the summer when gas-powered streetlights lit the sidewalks, so why can’t kids today?’—no longer is for many, if not most. To pretend that it is becomes a different form of gaslighting.”
There is absolutely a flood of commentary and finger-wagging about kids these days. And, as I previously mentioned, it’s not as though either side has drifted completely over the road’s shoulder and left the world of reality for a fantasy. Yes, there are those who want to pretend that what was possible before still is, even though they are far removed from daily economic life of younger people, although perhaps their grandchildren are struggling with the issue.
And there are also young people who left with student loans and have managed them, even without starting salaries so high that they invite nosebleed. Then again, there are people who can run a four-minute mile (let along a three-minute one), feed 30 people dinner in a timely fashion, or memorize the first hundred digits of pi.
Society does not live on the edge, but in the expansive middle. Today, that largely has become an experience of salaries not increasing enough to maintain a solid life even as corporate profits balloon upwards, the very wealthy becoming unimaginably more so, and the world burning for lack of action. Things have become progressively worse in so many ways, it is almost tempting to use the cliched “frog in a pot of water that is then set to boil,” except according to biologists the frog will always jump out. They’re not tolerant of conditions that threaten their lives, unlike people often are.
That was the yes, and the problems of that approach. Now for the no, because looking at the 1970s is a way to remind people, especially younger ones, what they have lost. Looking at a stretch of time since 1970 is critical because that is when the country began to change. It was the end of an era where a bigger portion of corporate profits went to growing salaries. Milton Friedman and others pushed an ideological argument that companies had only an obligation to increasing shareholder value and no other responsibility to employees, society, or the world. This is the type of nonsense you get when people with no practical experience in business hold forth on how major stakeholders were unimportant. Greedy investors and feckless executives lapped it up by the pitcher.
So far as higher education goes—because when the discussion is limited to cancelling student debt, it’s easy to forget how outrageously expensive college has become—in 1970, even lower household incomes were frequently larger than the annual average cost of tuition, fees, room, and board at a four-year institution. That is no longer the case.
The issue goes far beyond education. Look at houses. Yes, they’ve exploded in price and there aren’t enough to go around and keep prices more reasonable. But compare the median prices of homes at the beginning of a year to the median annual salaries by economic segment and the same pattern comes about. Here’s a graph to show it:
(As a reminder, rather than a single median income, the graphs show quintiles of socioeconomic status. The first quartile is the 20% with the lowest income, the second is the 20% with the next highest income, and so on. The income for each in any given year is the highest number a household could have and remain in that quintile. The very top value is actually the cap for the top 15%, not 20%. It not only marks the top of that group, but the bottom of the wealthiest 5% of households, all of which make at least that.)
And these prices are without the huge jump house values took during the pandemic. Is it any wonder why so many people are left renting instead of buying?
Again, something changed in the 1970s. What had been a more or less sustainable pattern, with some people making much more, but the country still maintaining a type of availability of the American dream that has since slipped from the grasps of most.
If people don’t understand how different things were, they look at more recent results rather than see the past as a blueprint of what should be possible now. If you’re younger and this framework makes you angry, it should. You’re getting the ever-shortened end of the stick.