The graph below depicting various changes in the US from 1966 to today catalyzes our nine points. Some of the changes and comparisons were not very new, while others were quite surprising. First, the not so surprising comparisons – in 1966 there were 197 million Americans, the median age was 29, the percentage of women in the work force was 39%, the percentage of the population 65 and older was 9% and the estimated life expectancy was 70. Today there are 314 million Americans, the median age is 37, the percentage of women in the work force is now 57%, the percentage of the population 65 and older is now 15% and the estimated life expectancy has risen to 78.
The more surprising statistics are alarming – in 1966 the per capita spending for drugs in 2011 dollars was $136 and today it is $864, the average health care cost per capita was $1,541 and today it is $8,665, the out of pocket cost rose from $640 to $977 per capita, the number of people living in poverty in 1966 was 29 million and today it is 46 million, the maximum Social Security benefit in 2011 dollars was $737 and today it is $1,845, education spending was $4,267 and today it is $12,303, gasoline price per gallon was $2.22 and today it is $3.61, the minimum wage was $8.86 and today it is $7.25 and most surprising the GDP per capita was $22,531 and now it is $47,819.
The not so surprising statistics seem to say: US population growth of 46% in better than 46 years was not a surprise. With demographics a continual hot topic, the jump in the median age from 29 to 37 seemed younger than expected but not by much. The workforce is still comparatively young and vibrant which is good news for productivity and flexibility in addressing our current economic problems. The percentage of women in the workforce, only 57%, seemed low having jumped from 39%. But the number of stay at home women or mothers easily explains the moderate increase. The elderly accounts for only 13% of our population; once again, this seems right once calculating the aged grew by 44% in almost 50 years. Most of the increase can be explained by expanding longevity and a declining birthrate. Adding the discussion about obesity, the rise in longevity 8 years from 70 to 78 seemed reasonable, though lower than expected. More surprises came with the second set of statistics.
Health Care
Spending on drugs grew by more than 635% using 2011 dollars. That increase, coupled with the rise in per capita health care cost (jumping from $1,541 to $8,665, a 562% rise in overall health care costs), meant that drug costs alone grew faster than amounts paid doctors, hospitals and other health care providers combined. The next statistic was even more surprising. Out of pocket costs for all this medical care climbed a mere $337 in 2011 dollars or only 52%. The result means that the government and employers picked up the vast majority of health care costs rather than individuals. The major funding shift in in health care costs occurred during those years from individuals to the US government and businesses. The statistics do not show, but we are willing to wager that the vast majority of these increase costs were satisfied by our government, which may explain our record deficits and the near insolvency facing both Medicare and Medicaid.
Education
Education spending in the United States grew by 288% during that period but the quality of educated children and their preparedness for entering the workforce, according to all statistics, has measurably declined. Adding insult to a somber situation is the mounting debt for student loans. A lack of money does not address the issue. But how money has been allocated and will be allocated may be more important.
Poverty Level
When using 2011 dollars, and adjusting for inflation, minimum wages declined in the United States over the past 46 years going from $8.86 in 2011 dollars to $7.25. Yet poverty, despite the worst recession since the Great Depression of the 1930s, has remained constant. Any argument about increasing the minimum wage and its effect on poverty is out of alignment with reality. The statistics indicate it has little real effect.
Gasoline Prices and Currency Deflation
Gasoline prices in 1966 were 32 cents per gallon; this amount reflected in 2011 dollars was the equivalent to $2.22 and today gasoline is about $3.61, which represents about a 63% rise in costs. This rise is much lower than expected. However, during the same period the decline of the dollar was tremendous. Accounting for inflation, the current dollar is worth a little better than 14 cents, an astounding 86% decline. Deflation of the dollar reflects more of the difference gasoline prices than actual after inflation rise of the cost of oil. The devaluation of the dollar is likely the greatest harm to low and middle class Americans. Food and energy costs won’t decline as much as manufactured products. The struggling economic groups spend more of their disposable income on food and energy than the wealthy. All currency wars that the various US administrations have fostered since the Nixon Administration, have harmed the middle and lower classes in this country the most. It is simply harder to see directly.
Social Security
Social Security benefits rose 250% during that period; combined with Medicare, actual assistance to senior citizens has been very generous compared to the rest of the American population. The elderly have received more than any other generation in America. This statistic has been true over the past 46 years. And for the record, since Baby Boomers have only been eligible for Social Security for the past few years, they neither caused nor were the problem! Funding for Social Security did not keep up with the problem; as a result, the solution must include increasing the contributing wage base to Social Security. This issue has been evident since 1990 and no president, Democrat or Republican has been willing to face it even though those affected are in the top 5% of American wage earners, currently earning more than $113,700 (the 2013 threshold where Social Security tax is no longer assessed). Since the greatest burden of Social Security is on the working poor, we created a situation where wealthy seniors are being supported by the working poor. AARP and politicians are reluctant to tell the truth. The fact is that one of the unintended consequences of our current system is that we are shifting wealth from the working poor to the retired wealthy!
Innovation, Productivity and Infrastructure
US workers generate $47,819 in products now compared to only $22,531 in 1966; our production levels explain why the US has not fallen to third world country status. Despite all the negative issues outlined earlier, per capita output has grown by more than 200% while the productive age of the overall population has shrunk. Increase in productivity arises from the following areas: 1) innovation, 2) technology proficiency, 3) longer work days, 4) working harder and 5) greater capacity by the American worker. In some ways, innovative and hardworking Americans have concealed a whole host of arising problems from the past 46 years. It also lends credence to the argument that government should spend more on to improve infrastructure which is contrary to many reports that indicate infrastructure spending is harming US productivity and competitiveness. Entrepreneurs, like Bill Gates, Steve Jobs, Robert Noyce, Gordon Moore, Marc Andreessen, and the venture capitalists that funded them, are viable resources for the evolution of our country.
From all of the statistics, we draw the following conclusions for US survival:
1) The US worker has provided great benefits to all Americans and needs to be celebrated.
2) Without entrepreneurs our country would be like Greece today.
3) Spending on infrastructure would help all generations and that includes the internet and power lines, not just tunnels, bridges and roads.
4) Social Security has not been properly funded and benefits have been more generous than inflation; this means that the poor working class is supporting the wealthy elderly.
5) The drop in the US currency, causing food, energy and clothing to be more expensive, disproportionately harms the poor.
6) Any discussion about the minimum wage is a waste of energy and does not help the economy or the worker.
7) Health care spending is out of control and most of that spending has shifted from individuals to the government. The average American does not really see the true cost of health care.
8) Extra health care spending has not created either healthier Americans or an increase in healthy longevity for Americans. The US ranks low compared to most other countries despite out spending 3 to 5 times more on health care than the rest of the world.
9) The problem with education in America is not stinginess. We are either allocating money on administrators (or other requirements) that have little effect on our students or we just are not teaching as well as other countries, maybe both. The statistics do not show we are harming our students by not spending enough.
