I told you the story of how ESPN radio host Colin Cowherd made the insightful observation that Tiger Woods had little incentive to really push hard to make a comeback. What I really think in Woods’ own pride and competitiveness will induce him to work hard, so that’s not why I wrote about it. Nor was I trying to bash Woods for making too much money, though that is probably true. Instead, Cowherd’s comments were really making another important point about the state of the country.
This issue matters greatly to me because of my work with so many young people who are hoping to make something of their lives. They, like you, have dreams and hopes to achieve a lifetime of living well. I am trying to help them, but increasingly, it appears like the deck is completely stacked against them. And, since my eldest daughter will be taking her first college classes this fall, I am even more concerned.
Recent reports indicate that the average student debt has risen yet again, with most kids leaving college in excess of $20,000 in debt. Where are the jobs that these kids are supposedly going to get that will pay for their lives? Well, if they can get into the lucrative world of pro sports, they’ll do fine. We saw last time that Tiger Woods 2009 income was 1200 times more than the median income in the USA. When compared historically to Arnold Palmer, the great golfer of the 1960s, it is easy to see what has happened in the country.
Palmer was also rich in his day, with a great year in 1967 when he took in over $200,000 in earnings (and probably a bit more in endorsements, though the major money that people like Woods earns was not happening then). Palmer’s success in 1967 was only 25 times more than the normal family. But, when we look at the country and our economic picture, things become even more troubling.
The median income has certainly gone up over the years since 1967 as you can see below:
- 1967–$7,974
- 1975–$11,800
- 1980—$17,710
- 1985—$23,618
- 1990—$29,943
- 2000—$41,990
- 2009—$49,777
But, that chart isn’t the whole story because, if you have lived through it, then you know that inflation has crushed the value of the dollar over those years. So, thanks to the US Census Bureau, we can see what those historic numbers look like in 2009 dollars. Trust me, it’s not a pretty picture.
- 1975—2009 dollars–$42,773
- 1980—2009 dollars–$43,892
- 1985—2009 dollars–$44,898
- 1990—2009 dollars–$47,637
- 2000—2009 dollars–$52,301
- 2009—2009 dollars–$49,777
That’s right. In the 24 years since 1975 (1967 figures were not on the Bureau report that I pulled), we’ve seen an increase of only $7,000 dollars. OK, to be nice, it was $10,000 in 2000, but as you know, we’ve had a bit of a national issue over the past decade.
How does that compare to, say, Mr. Palmer? Well, the amount change from real numbers to 2009 numbers is about 5.6 times. So, Mr. Palmer made, in 2009 dollars, about $1,155, 660. Meaning, while the average American has seen a real dollar increase of about $10,000 in 25 years, our income increased about 22%. The superstar golf athlete however saw his income increase about 536%, over $60 million dollars.
Students often ask me what has happened when viewed in historical terms. I think that last paragraph basically lays it out easily. Somewhere in Clinton’s 90s, the country became drunk with excess. We lost all connection to our national values, and through inflation, greed and credit, costs for everything skyrocketed.
Not only did that begin to erode our economy, it destroyed businesses. It honestly did become cheaper and easier for most businesses to take their work out of the country. Those that stayed behind faced an increasingly angry work force using Unions to try and keep up with the rising costs. Everyone likes to blame the Unions, and I certainly am no fan nor a member of any union, but you can’t really blame them for wanting to get in on this explosion of dollars in the country.
So, back to my students, over the past twenty years, normal jobs that could sustain any family, and that did not really demand college, left by the thousands. The message from the country then became “well everyone should go to College because you’ll make good money.” So, they came, even though many young adults have no desire to really be in college. The trade and industry jobs disappeared and so we ended up with the reality of students getting a Bachelor’s degree that is often pointless.
What has been the next message for the past decade? Stay in school and get your Master’s degree. It’s as if people assume jobs are just going to magically appear once they have some degree. But jobs are always connected to a product or a service, and as those industries that make products continue to mostly head away from the USA, there simply aren’t enough jobs.
Our love of credit has made this worse, as I have discussed elsewhere. The use of credit, especially how we did it in the 1990s, had the effect of sending the wrong signals to the economy. Much like a greenhouse can send false signals to flowers, credit also tricked us. We came to actually believe that everyone had as much money as was being spent in the many stores of the country, typically far beyond the actual need of any family (seriously, do you really need 3 or 4 TVs, 3 or 4 game systems??). Once that credit dried up in the recent economic crisis, the reality of where we stand, a house on sand, has appeared.
It still seems as if no one really gets this point though. Look at the NFL—instead of admitting that the country is in trouble and ordering every franchise to cut all ticket prices by, let’s say 75%, everyone taking a 75% pay cut, especially the superrich top athletes and owners, cutting prices of their ridiculous $15 beers and $10 hot dogs, instead, these rich cry babies decide they aren’t going to play at all.
Places like Disney or Hollywood are no better, with their increasing prices for everything. Its as if each industry assumes that we Americans are sitting on hidden money and that we’ll be able to keep paying.
Of course in their defense, it seems like many American families haven’t gotten the signal either as they continue to stream into Universal to see the Harry Potter world or drop $50+ on tickets for one movie and another $30 for popcorn and drinks.
Heck, maybe I am the crazy one. Maybe the fact that we only make a tiny bit more than we used to make, yet prices are much higher, and the rich just keep on getting massively rich is only a big deal to me. Maybe. . . .but the scary reality is that regardless of how I or anyone else feels about it, we are potentially reaching a point where the collapse will just come, no matter what we think about it.
Will it take a serious economic disaster like we had in 1929 to really get our attention? Everyone thinks the last years, from 2007-2011 have been bad, but they’ve not. These years of ours have still seen people spending like crazy at Christmas, for movies, for sports, to buy cars, and so forth. We have not seen what it will be when its really bad. Go study your history—see the people on the bread lines, families living 10-15 to one place, people selling all of their possessions just for food.
Colin Cowherd is right that the average fan simply cannot comprehend the amounts of money that these super rich athletes make. Maybe one day they’ll actually get angry enough to quit paying. If the people actually get angry enough, though, the issue may not be just not paying crazy high prices, but rather the same kinds of mobs that stormed through every other previous revolution.