Why Our Grandparents Don’t “Get” the Modern Economy

In a time of comprehensive labor market disruption, no one needs to be reminded that jobs and their respective incomes are always changing in the modern economy.

In this series, we’re going to dive into how the occupations of yesterday have changed with each generation. By exploring this transformation, we may be able to uncover trends that will better prepare us for the unpredictable labor force of tomorrow.

Let’s kick things off with everyone’s favorite sender of $10 birthday cards, our magnificent grandparents of “The Greatest Generation.”

Nana didn’t use Snapface at the office

The booming economy of the ‘50s and ‘60s is attributed to several factors, among them: rapid population growth, the G.I. bill, stagnant global competition, and the rise of consumerism. On top of that, the brewing Cold War made for exorbitant military spending by the government, further heating up an economy on fire. It’s safe to say that jobs were abundant and wealth was growing.

However, many of the occupations held by grandparents have all-out disappeared or are hanging on by mere threads. There’s no way Nana, nor the leading economist of the 1950s, could have predicted there would be a “social media manager” position in virtually all major companies and organizations. This may explain why they have such a hard time of relating to the challenges we encounter with the new landscape of the labor force.

America ran the show

The economic upturn in which our grandparents flourished is largely attributed to America’s role in the global economy. After World War Two, the United States was in a position to establish long-term international arrangements that would lead to an increase in capital investments and a stronger faith in the domestic economy.

The Bretton Woods agreement led to stabilizing global exchange rates by pinning currencies to the gold standard, regulated by the United States. It also formed the International Monetary Fund that would help finance international trade, requiring the use of U.S. currency. Most importantly, this agreement liberated trade by removing a substantial amount of tariffs and barriers, further increasing confidence in the global economy.

This agreement generated a phase largely influenced by the United States’ increased stature and leverage in the global economy. However, this leverage needed global enforcement, which led to the United States establishing a global military grip. The United States aggressively sought to squash the Soviet Union’s attempt to push its own competing economic agenda. The Cold War turned particularly hot in Korea, and later Vietnam, seeing jobs spring up from the increased defense spending and further advancing the technological progress we see playing out in future generations.

Women join the force

World War Two caused a mass influx of women into the labor force as they replaced departed male soldiers. Thanks to continued military efforts and changing standards, women in the workforce became a permanent aspect of society.

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Not only did women take roles within factories as assemblers and other predominantly male-driven occupations, they also claimed roles as nurses, secretaries, teachers, and other clerical positions.  From 1950 to 1970, the participation rate for women shot up by close to 10 percent, creating a positive trend for women of future generations to build upon.

 

By contrast, the availability of pensions and social security funds created what I’ll call a “Grampexit,” where close to 20 percent of men around the early retirement age of 62 left the labor force altogether. The younger generations, and especially women, were able to easily take over the reins.

Technical change, but college wasn’t necessary

This period also experienced a technical change, where machines began playing an important role in production. Manufacturing jobs were opening left and right in order to accommodate the new motor vehicle and aircraft industries. These new industries led to a vast development of corresponding infrastructure like roads and bridges, creating new jobs in their wake.

A college degree was not necessary to make a decent living, but the technical change did lead to a slight increase college enrollment: from 1950 to 1960, enrollment increased from 7.4 to 10 percent for men and 5.2 to 6 percent for women. Trade schools like machinist schools, training camps offered by large companies, and apprenticeships would get you the skills necessary for many of the jobs offered by this second industrial revolution.

For most people, if you could consistently show up, do the same thing over and over again, and follow directions, you were good.

Paychecks

Our doting grandparents faced an entirely different world when it comes to compensation, as evidenced by typical jobs and respective wages in 1951. To give some context to these salaries and wages, minimum wage was at a mere 75 cents per hour. Hard to believe, but in general, our grandparents got to enjoy five-to-10 percent annual raises across most industries.

For Pappies working clerical, engineering, architectural, or pretty much any of the new white-collar gigs, they would expect around $70-to-$80 per week. Women in similar jobs would average around $42. Among the best paying female-dominated jobs, registered nurses would see fat paychecks at around $62 per week.

For more of what we would call “blue-collar jobs” today, workers could expect around $2 per hour depending on their experience and seniority. These type of jobs would include, carpenters, auto mechanics, electricians, machinists, and the like.

Although the gender wage gap was extremely pronounced those days, it seemed like wages were pretty level throughout most industries, except for the typical high-paying professions like physicians and top-level financial executives.

Life was cheaper

Wages doubled and tripled from the calamitous days of the Depression, but surprisingly, inflation did not; consumerism boomed because everything was relatively affordable. In 1950, the average household income was $3,300. If grandpa wanted to buy a car, it would cost around $1,500. He was also able to enjoy the median home prices of $7,354.1958-edsel-corsair

By 1960, household income had increased to over $5,000 and median home values were around $12,000. The cost of a home was roughly 2.2 times the household income. To provide some ammunition when they tell you to invest in a home, by 2015, a home was valued at close to four times the median annual income.

 

The affordability of these large purchases made everything else seem so much cheaper. Things like food, date nights at the drive-in, or a college education were much more doable — even with a mortgage!

Our take

This era was marked as a transitional period between blue-collar and white-collar jobs. Although much of the labor force was still very hands-on, the type of manual labor changed as machinery and assembly lines took productivity to new heights. Interestingly, wages for our grandparents shot through the roof, while the increased productivity pushed prices down, making life much more affordable.

Our grandparents’ economy, filled with opportunities and job security, paved a nice path for our parents to enter the labor force. In addition, it inspired an extremely creative generation that pushed the technological envelope forward. In the next piece, we’ll dive into that with a snapshot of the Jonesers’ economy.

Previously posted on GenFKD.

 

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