From 1950 to today, quite a bit has changed! It's hard to imagine a day when the minimum wage was $0.75 an hour, or when an average house only cost around $8,000. Arguably, things have gotten better with all the technologies available making our lives easier and becoming more and more affordable. But is it really easier to live today?
Cars and houses are viewed as primarily middle-class commodities, so the prices of these items will tell a lot about the purchasing power then compared to now. It is important to keep in mind that in the 1950s, households were primarily single income, with only the head of the household working. Of course, now most of us need 2 incomes to support a household.
In 1950, the cost of buying a car was 46% of a family's annual income, and the cost of a house was 2.2 times their income.
In 2014, the cost of buying a car was 58% of a family's annual income, and the cost of a house was 5.6 times their income.
In theory, if income was rising in proportion to the house prices, then the housing to income ratio (house/income) would be roughly the same now as it was then, somewhere around 2.2. However, it has more than doubled, showing that house prices have risen far higher than our incomes did. This doesn't even take into account interest on a mortgage, which leads me to the conclusion that paying for a house today is much harder to do than in was in the 1950s.
Another factor to consider is all the extra expenses we have to think about now as opposed to then. Energy costs have risen no doubt, and we have more things to power than ever (TVs, air conditioners, etc), not to mention cell phone and internet bills which are fundamental tools in the digital era. If the overall cost of living was to remain proportional to that of the 1950s, the housing to income ratio would actually need to decrease to make up for the rise in other expenses we have today. Based on the "magic 2.2" ratio of the 1950s and the average family income in 2014, the median house price would need to be around $100,000 for us to live like the booming middle class of back then.
Perhaps this is one reason tiny houses are becoming more popular: they are the re-emergence of the middle class.
Sources: Comparing the inflated cost of living today from 1950 to 2014: How declining purchasing power has hurt the middle class since 1950. http://www.mybudget360.com/cost-of-living-2014-inflation-1950-vs-2014-data-housing-cars-college/
US Household Income http://www.deptofnumbers.com/income/us/
