In 1976 when I graduated from high school, the federal minimum wage was $2.30 per hour. I remember the beer I would buy costing $2.25 for a six pack. Today, in 2017 the federal minimum wage is $7.25 per hour, but many states have a higher minimum wage; for example, the State of Colorado's minimum wage is now $9.30 per hour. A six pack of beer typically can be purchased for somewhere around an hour's worth of labor anywhere in the country.
To determine whether costs have remained fair over time it is useful to make comparisons like this. Throughout much of the eighties, I worked for a supermarket chain that was known to pay a good wage. A journeyman checker, stocker, meat wrapper, or other department clerk would typically be able to purchase a house with the wages they earned working full time. Any employee who worked a minimum of 16 hours per week received a full health and dental benefits package. Today, someone working the same positions would likely have to live with parents or share a place with roommates. Depending on their family situation such an employee may receive food stamps and qualify for Medicaid.
In 1986 and 1987 I worked full time at the supermarket and attended community college. I was able to pay for 15 or more semester hours with one week's salary. In 2017 it could take as many as ten weeks of salary working at the same grocery store to pay for a semester of community college.
Have salaries lagged or have education costs and home prices increase exorbitantly? To me, both of these have happened. Salaries have lagged across many fields. Traditional grocery stores faced competition from retailers such as Walmart making inroads into the grocery market that pay minimum salaries and almost no benefits. Grocery giants were happy to play the competition card and lower salaries to match. Over a period of 30 years, the cost of community college education has increased almost tenfold (not adjusted for inflation), while a journeyman grocery clerk salary is in effect half of what it was in the mid-eighties. The house I live in could have been purchased in the mid-eighties for around $50,000, a price that would have been within reach of that grocery clerk. If I were to put the house on the market right now, it would bring half a million dollars. Monthly payments on this three bedroom would require every dollar that clerk makes every month, with no money for food, clothing, health care, child care, transportation, savings for their child's education, not even a hard-earned six pack. I don't believe in a minimum wage, but something is wrong when huge international corporations expect the rest of us to subsidize their employees' compensation package by paying for their food stamps and medicaid.
Real estate and colleges have something in common. Their products are largely purchased with borrowed money. Realtors can help people get the most for their properties because banks are happy to loan whatever amount a buyer qualifies for. If these two entities weren't involved in the housing market, most homebuyers would probably be able to save for a house and buy it outright; the price of homes wouldn't increase exponentially like the do now. The real estate racket is effectively a pyramid scheme; the housing bubble is the equivalent of a pyramid scheme that runs out of innocent people to dupe. People might point to me and say, "look, you're house has increased $200k in value in the past three years; be happy." What's sad is that I've paid over $300k in interest so far and still owe more than half the value of my house.
Colleges know that students will be able to borrow whatever they need for their education and that the government will provide more funds based on rising college costs so they continue to increase tuition and fees every year. If a student has to borrow the money to attend college, and most do these days, many of the jobs that can be garnered with such an education are not worth it anymore. Engineering, Finance, and Pharmacology may be good bets, but no one should borrow money for their education to work as a teacher, social worker, or architect. I'm waiting for the day when an entity like www.khanacademy.com is able to acredit someone's knowledge and skill regardless of how they acquired it and for a nominal fee award a legitimate college degree; that would turn the money grabbing brick and mortar university system upside down.
I don't believe the traditional college should be free as Bernie Sanders had proposed, but it is unconscionable that it costs over $100,000. If that's loan money, it ends up being as much as $200,000 once it's paid back. I think if the government and banks didn't loan money for college or it were limited, we would see the cost be reduced by at least half. A free education wouldn't be appreciated; I see it every day in high school.
I don't really have an answer here, but I think we need to think about how much we want to allow banks to earn from our basic needs of education and housing. If a wage or a cost doesn't pass the six pack pricing test, some entity is taking advantage of someone.
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