Can someone please explain to me why the cost of living in the United States skyrocketed so much since my father was a kid in the 60s? What changed?
Thanks in advance.
Edit: Thank you for your responses. I’m still a bit unsure, but it makes more sense than it did before.
In: Economics
A lot changed, but the biggest things are that wages went flat starting in about the 80s and more people moved to cities.
Flat wages means that, thanks to inflation, people’s purchasing power has been slowing eroding for about 40 years. The same job doesn’t allow you to buy as much as it used to. This happened because the US restructured the tax code and corporate governance to much more strongly favour shareholders over employees, so the same amount of money coming into the company gets distributed differently than it used to.
Urbanization means a lot more people are living in cities than they did before; cities are more expensive than rural areas to live in, and increasing demand in cities has driven many costs up (notably rent). Thanks to COVID-19 and telecommuting you can see some reversal of this now. San Francisco and New York City have seen pretty significant rent drops in the past few months.
Short version: people are getting paid less (relatively) and living in more expensive locations.
How does one get out of a recession by inflating prices? How does that make sense?
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