In Friday's post, "How Is TOP Doing?", I talked, in the Featured Comments, a little about the relative nature of money. Money is a subject I know relatively little about. Still, I was surprised by Dave Millier's comment. It doesn't jibe with what I know of housing prices in the UK; I remember that when I bought my house, my British friends were flabbergasted by how much house I was able to buy in Wisconsin for $260k. One sent me some links to properties available for the same price in her area (Brighton), and the comparisons were risible. Let's just say the equivalent in pounds didn't buy much. So if British people are earning so little, how are they buying houses to live in?
Furthermore, the "standard" I chose for a good salary (my last corporate salary, $55k in 2000), was in no way high-end for the U.S. It was approximately the median family income for the Chicago suburb where I lived (Forest Park, Illinois), and that suburb was not as prosperous as several of the others around it (Oak Park, River Forest).
I do recall that I was proud when I first earned $60k for a year, because that's what my father earned at his high- but not top-level corporate job when I first learned what he earned. (At the time, he worked for Congoleum Corp. and was charged with returning the Bath Iron Works, a shipyard in Maine, to profitability.) Little problem with that: he was earning that salary in about 1970, as near as I can place it. Adjusted for inflation, that was about $240,000 when I earned the same nominal dollar amount. Today it's a whopping $477,500! So I never matched him, not by a long shot. I guess I knew that at the time.
My father dropped out of Harvard Business School after his first year because he couldn't pay for the second year. He then joined his two brothers in founding a company. When they sold the company—the closest estimate I can come up with for that would be about 1961, when Dad was 32—his stock was worth more than $1 million. Adjusted, that's about $10 million today. So when he went back to finish Harvard Business School in 1963 he was a minor celebrity among his classmates—someone who had already done what they aspired to do. Yet we were far from the richest family at the prep school I attended. We considered ourselves "upper middle class," and lived well but not ostentatiously.
He did like to travel, and I'm sure we spent a lot of money on trips. I got to travel a whole lot as a kid. By the time I was 20 I had been to Ireland, England, Scotland, Italy, the Bahamas on a cabin cruiser with a crew, a dude ranch in Wyoming, the Florida Keys, Switzerland, Austria, and Monaco—and France, my father's favorite destination, many times. We crossed the Atlantic on a then-new ocean liner, the S.S. France. My brothers have ventured farther afield, to places like Istanbul and Singapore, but I've only been to North America and Europe. That early travel sort of scratched that itch for me—I haven't done much traveling as an adult. I would love to take a guided tour of Europe again before I shuffle off to Buffalo, but I'm not organized enough to plan such an undertaking on my own, even if I could afford it, and I guess it wouldn't be much fun to do by myself.
The S.S. France, the longest and fastest ocean liner ever built when she was launched in 1956, pictured in 1962, the year before I sailed on her to France with my family when I was six. The prow is now preserved at the Paris Yacht Marina at Port de Grenelle in Paris.
The old ship, much modified, awaiting scrapping at the Alang ship-breaking yard in India in 2007. The prow is ceremoniously cut off to mark the commencement of scrapping.
Going back further, my grandfather once told me that in 1950, he was earning $350,000 a year in stock dividends alone. That's nearly $4.5 million today. And they were unabashedly rich, with two large houses and a number of servants, and a beautiful 29-foot sloop my great-grandfather bought from General Lew Wallace, who wrote Ben-Hur. (I sometimes characterize their lifestyle as "Downton Abbey at 1/8th scale.") I have lots of relatives who are in a different social class than I am.
I'm unclear about the difference between "mean" and "median," but, "according to the U.S. Bureau of Labor Statistics (BLS), the median weekly income (including overtime, commission and tips) for full-time workers (excluding those who are self-employed) in America was $1,041 as of the second quarter of 2022. If that rate persists for the entire year, that would equal $54,132 a year. The mean American income in 2020, according to Statista, was $71,456" (quote from firstrepublic.com). That's below my benchmark of 2000, of course, but it does indicate that my benchmark isn't crazy high. In any case, I'm not earning as much as my benchmark any more.
However, I'm still good to go to keep TOP hoppin' for "the foreseeable," thanks to all of you. Next up, my final thoughts about "process vs. project." And I'm going to get back on topic for a while! I have my strength and balance class on Monday and Friday mornings now, and didn't have time to write a real post this morning. I set the alarm early, but still don't have time to get my work done and get out of the house by 10.
As ever, more anon.
Mike
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Featured Comments from:
Lee R: "'Mean' and 'average' are the same.
"Median is as follows: if you line up everything low-to-high, the median is the exact middle. This is especially helpful to know when talking about average/median incomes. Let's say we have 11 households. The first earns $1 per year, the second $2, so on until the 10th person makes $10 per year. The 11th person makes $1 million per year. The median income of that group is the household in the exact middle: the household earning $6. There are 5 earning less, 5 earning more. The mean (average), however, is the sum of all the households ($1,000,055) divided by the number of households (11). The mean income for this group is $90,914 and some change. But if you ask 10 out of 11 of the group, that number isn't representative of their income. These are ridiculous numbers, but they illustrate why mean household income and median household income differ: a small number of extremely high-earning households (say the top 1% of earners) will increase the average disproportionately. My takeaway is when you're looking at incomes it helps to know both averages and medians, but the median is probably more representative of what the 'middle' looks like."
Mike replies: A great explanation. Thanks.
Richard Parkin: "How do people in UK afford houses? They can’t currently. I’m no expert on this but it happens I know the three bedroom flat I bought new in 1970 cost £6,250 to build (land, profit, everything by a large very company). According to the Bank of England inflation calculator, that would be about £80k today; but I’ve just checked and see a neighbouring identical flat sold for £300k a year ago. This is in a not very fashionable area of south London."
Steve Rosenblum (partial comment): " In the medical field, these sorts of numbers [mean and median —Ed.] have caused a lot of pain. People who have a cancer, or other serious diagnosis are frequently quoted a 'median five year survival' and that's the number they hear and hold on to in terms of how long they will live. However, what it really means is that of 100 people with that diagnosis at that stage, 50 people won't live that long, but 50 people will live longer—sometimes way longer. It's usually a bell-shaped curve and there are people who define the far edges of that curve on both sides. When patients used to tell me that they had read online that they only had two years to live, I would review all this with them and tell them there was no reason to assume that they wouldn't be in the group that defined the better end of the curve and that we would hope for that. I had patients that I thought wouldn't live three months still coming to see me 20 years later, and other patients I thought were doing well drop dead the following week. After that I gave up on the illusion that I could accurately prognosticate. Every person is, after all, an 'n of 1.'"
Steve C (partial comment): "I'm in Australia and also remember being shocked at how cheap housing is (was?) in the 'States. Prices here are particularly inflated because home ownership is as much about wealth generation as it is about housing, maybe more so, which drives money into homes, which in turn drives the price (and around it goes). Obviously, there's a lot more to the economy and to general wellbeing than property prices, though. In relative terms we pay little for health care and education, fresh food is cheap, cities are accessible, the average worker gets four to five weeks of paid leave a year, and permanent employees have a degree of job security (no-fault dismissal of permanent employees is illegal up to around the $160k wage mark)."
Dan Khong: "You have left us with many questions and one of them would be, 'What happened to the family wealth acquired by your grandfather?'"
Mike replies: You'll have to wait for my memoir to come out, if it ever does.
John Camp: "I can give you one example of median and mean that really startled me—I think I saw it in the Wall Street Journal. The numbers I give are not exact, because I can't find the article, but they're close. The average (mean) American has a net worth of $750,000. The median American has a net worth of $170,000. If you lined up up all Americans from richest to poorest, the middle guy, the median, would be worth ~$170,000 (that's including his or her house.) If you counted all Americans and added up their wealth, then divided by the number of Americans, you'd get the $750,000 number (the average.) That's because the richest Americans have so much money that it wildly skews the average (the mean.)
"The third commonly used statistical descriptor, the mode, would be the most frequent amount that Americans are worth, but that wasn't mentioned in the article. But the discrepancy between the mean and the median sort of skizzes me out."