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In 1971 before the United States left the gold standard, the median home price was approximately $24,000. Now, the median home price is approximately $180,000.

For people who were alive then and remember the zeitgeist, what was considered "a lot of money" then, like my generation tends to think about one million dollars being "a lot of money"?

Or, more precisely - what would have put a person in the top 10% of incomes a year in those days?

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    All the data someone would need to figure this out is available at census.org. – Ben Miller Oct 7 '16 at 16:44
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    The term "A Lot of Money" is very subjective... – Ranma344 Oct 7 '16 at 16:47
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    Google inflation calculator. Should be the bls.gov site. $24k back in 1971 has the same buying power of $142k in today's money. $142k is a lot so I'd say $24k back in 1971 is "a lot". – NuWin Oct 7 '16 at 17:02
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    @NuWin - subjective is right, just as I finished answering that $1M is no longer a lot, you commented that $140K is a lot. I suppose if income data has the 90% level OP wants, that would help. – JoeTaxpayer Oct 7 '16 at 17:09
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    One meeeeelion dollars! – Mason Wheeler Oct 7 '16 at 19:03
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To answer your specific question about income, the answer is: about $20,000 (or a little less) in yearly income put you in the top 10% of income earners in the United States in 1970. This information is provided by this US Census Document (PDF page 13, labeled as page 11, table 1, document entitled "Household Money Income in 1975 and Selected Social and Economic Characteristics of Households").

The census data also has a breakdown by race of head of household, and note that this is household income and not individual income (so 2 income households are included in this data, though 2-income families were more rare then than today). Median income was around $9,000 per year at this time, so a little more than double the average family would put you in the top 10%. There was also much less inequality in both income and wealth during this time period as compared to now.

To compare this to the 2014 census, and you'll need a household income over $150,000 to get into the top 10%. Note that this link also shows 1970 information, but everything is inflation adjusted to make it more easily comparable dollar-for-dollar - sort of.

What Was "One Million Dollars" In 1970? About $100,000 (by income -sort of)

If you are a top-10% earner with a yearly income of $150,000 now, 1 million bucks is a little less than 7 years of income. If we apply this multiple to 1970s income of $20,000 per year, that means that 7 years of income is $140,000.

So I suppose in a very rough estimate sort of way, you could say that $100,000 in 1970 is kind of like $1,000,000 today - about 7 years of income if you are just barely making enough to be in the top 10% of wage earners.

Why Not Use Inflation?

The problem with inflation is it is generally defined in terms of a specific "market basket" of consumer goods, to try to compare general buying power over time. The problem is that this is a really rough, problematic estimate, because things change in price relative to each other over time. JoeTaxpayer makes a very good point about interest rates and houses, and another example is consumer electronics. Not only are today's electronics actually cheaper than they use to be, but they are difficult to compare at all because they are more powerful and useful than ever before. Similarly, cars are safer, have less emissions, and are more fuel efficient - so a simple inflation calculation based on macroeconomic changes can provide a very distorted and inaccurate picture.

It's up to you if you think an income-based estimate is more helpful to you in actual 1970s dollar amounts, or if you'd prefer to think costs and use measures of inflation as your guide.

Side Note: Income Inequality Has Changed a Lot Since 1970

In 1970, half of households made more than $10,000 a year and only 4% made over $25,000 (more than 2.5X as much as the median). In 2014 about half of households make over $50,000 a year, while 5% make over $200,000 a year (more than 4X as much as the median). These numbers are all rounded to convenient numbers, but the reason I mention this is that the difference in the top 10% of wage earners now compared to the "average" American is far greater (in absolute dollar terms) than it was during the 1970s. There is also a greater proportion of the population now that earns more than 2.5X as much as the median - about 11% of households in 2014 - which suggests perceptions of what is "a lot of money" will vary more now than it would have in 1970.

In 1970 our top-10% family needed around 7 years to make $100,000, while the median family needed 14 years to make that much. In 2014 the top-10% family needs around 7 years to earn a million, yet the median family needs more than 20 years to earn the same amount.

  • It looks to me that the numbers say the opposite of the point you're trying to make. A larger portion of the population has 4X the median now compared to a smaller portion that have only 2.5X the median. That means that the wealth is more spread out, especially since it means that a much larger proportion would have 2.5X the median. – Jaquez Oct 7 '16 at 21:17
  • @Jaquez That's an interesting observation that wasn't what I intended to point out, but it's a good point - I updated my answer correspondingly to clarify. Since 1970 a larger proportion of the population make much more than the median, which is sufficient to point out that there is likely to be a bigger difference in perception of "a lot" now than back then. The greater spread is an indication of greater inequality by some measures ("haves" vs "havenots"), but is also indicates the upper class may have grown. That's definitely more analysis than is on topic here, so I tried to limit more. – BrianH Oct 7 '16 at 21:33
  • Great answer minus all the inequality propaganda. What you're not saying about inequality is that one person can be a part of multiple categories throughout their life. At 17, I was in the bottom 20%; at 25 I'm in the top 30%, and in the next five years, things may change. I expect media to lie about this because they are mathematically clueless, but not people at this site. Also, you ended up refuting some of your point by actually showing more people above median. Things are actually getting much better than in the past; that's just a reality. – wpquestionz Oct 8 '16 at 9:07
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    @wpquestionz Description of data and reality is distinct from value judgements, like whether we think a change is good or bad. If you relook you'll see I make no judgement if the change over time is good or bad, merely that things are different. Income inequality can be viewed as good (growing upper class), or bad (disproportionate power held by few), or ambivalent. Income and wealth distribution change in the last 40 years is a fact of reliable data - but values are needed to decide if it's good or bad, and I intentionally left that up to the reader in my answer. – BrianH Oct 8 '16 at 19:06
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    @wpquestionz As a further aside, "intragenerational socioeconomic mobility" you refer to is quite distinct as an issue, and requires different data to examine - especially valuations of wealth and longitudinal data the census does not provide and which isn't very relevant to the question, thus why I didn't mention it. Its a great topic though, and the situation there may not be as good as you might think. But it would probably be more on topic as Economics as this point. – BrianH Oct 8 '16 at 19:25
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First, from The Inflation Calculator -

What cost $24,000 in 1971 would cost $141,898.11 in 2015.

But. In 1970, mortgage rates were 8.5% vs 3.5% today. The payment on $24K (let me just do the math on 100% of price) was $185, which 'inflates' to $1141, but $180K at 3.5% is just $808.

This is my simple way of saying that of all the items we buy, nearly all can be viewed in terms of 'hours worked' to normalize inflation over the decades. But. A house isn't bought with cash, typically. The analysis needs to happen on the payment.

Back to the general question -

What cost $1,000,000 in 1971 would cost $5,912,421.29 in 2015

To flip this, if we still believe that $1M today is wealthy, this would have been $166K in 1970. I was a kid back then, and even though I knew my math, we used the word "millionaire" to describe the rich. As did a television show that ran from 1955-60.

The 'millionaire' from the early 70's needs $6M to feel as wealthy. I'm sorry to say, today, a million dollars isn't wealthy. It's enough to add $40K/yr to one's retirement income and sustain a middle class couple. As others have noted, it's very subjective, as there are parts of the country that $40K goes very far, and others where an apartment takes half of that.

And there are parts of the world where $40K can change a life. Not to appear flip-flopping, but I wrote an article, I got rich on credit card points, in which I describe a windfall of $40K as helping someone feel rich.

Edit - to respond to @enderland's comment. This question mixes 2 issues. The price of homes due to inflation, which is a matter of fact, right? I can offer absolute price, price as a function of hours needed to pay for a mortgage, or price inflation adjusted. Either way, we look at numbers that are facts.

The second bit is about a lot of money. This is definitely opinion and it's why the question had multiple close flags. There are too many variables to answer with a number. Until rates on guaranteed investments (i.e. short term gov bills) dropped to zero, we had a 4% rule. A $40K earner would need $1M to replace his income. I have no issue with that math for this discussion. But. The $40K earner didn't feel rich, he was getting by. So the $1M we just gave him was surely a lot, if not huge, but he's not rich, and he's probably not retiring tomorrow. In 2015, median family income was $56,516. "A lot" is any amount that brings a smile to that couple's face. $1.4M replaces that income at exactly that level. Presumably, some higher number has them feeling rich, that they now afford things they couldn't afford before. By the way, I never wrote $40k a year is "not much," only "not rich." So you'd be right to say "OP never asked about wealthy or rich, just about a lot."

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    A million dollars certainly is wealthy... it's not obscenely wealthy, but it's still TWENTY YEARS of pre-tax income for the median US household. – BlueRaja - Danny Pflughoeft Oct 8 '16 at 5:34
  • Excellent point on interest rates today vs. then. That does skew the numbers some. – wpquestionz Oct 8 '16 at 9:09
  • This is somewhat a "upper middle class" bubble answer. Writing off 40k a year as "not much?" $40k/year is more than a very large percentage of family incomes in the United States every year. Maybe not your income but more than well over a third of households. – enderland Oct 8 '16 at 23:07
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I found a report online from 1971 titled Money Income in 1971 of Families and Persons in the United States (PDF). Table A on page 1 shows that 2.8 million families out of 53.3 million families in 1971 had a family income of $25,000 or more. This works out to about the 95th percentile.

In 2014, the 95th percentile for household income is at roughly $210,000. (Source: CNN)

To compare these two numbers, we need to adjust for inflation. $25,000 in 1971 is equal to about $146,000 in 2014. And if you had a household income of $146,000 in 2014, you were at about the 88th percentile.

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I was a high school junior in 1971 (17 y.o.). At that time, a worker could support a family of 6 on a $3.50 - $4.00 per hour wage (~ $7-8K per year). A family would be considered "well off" if earning $10K -$20K per year and some might consider wealthy if earning more than $20K per year.
"A lot of money" to me then was when I read that an airline pilot could earn up to $50K per year. A mind-blowing fortune to me and many others at the time.

  • Wow, so it sounds like airline pilots in those days were in the top of the income ladder, since another poster mentioned that $25K a year put someone in the top 95% of incomes. – wpquestionz Oct 8 '16 at 9:01

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