Because most philosophies that frown on reproduction don't survive.

Tuesday, February 21, 2012

Income Inequality: 1945 Edition

I guess it's a sign that I'm a hopeless econ wonk that one of the things that I came away thinking about after watching The Best Years of Our Lives with MrsDarwin the other night (a good movie, which I'd strongly recommend) was how the income situations of the major characters would translate into modern terms.

Released in 1946, when it won the Academy Award for Best Picture, The Best Years of Our Lives follows the return to civilian life of three service men who all came from Boon City (a fictional Midwestern city) but didn't meet each other until they were hitching a ride on a B-17 back to their home town after the war.

Sailor Homer Parrish went straight into the Navy from high school, in which he had been an athlete, but he lost both his hands in a fire when his aircraft carrier was hit, and he now has a set of hooked metal prosthetics instead of hands and forearms. Before leaving he got engaged to his high school sweetheart, but he doesn't know how she'll react to his disability.

Capt. Fred Derry is slightly older. He comes from a fairly poor family and worked as a soda jerk before the war, but during the war he was the bombardier on a B-17. During training, he got married, but he and his wife had only a month together before he shipped out and he hasn't seen her since.

Sgt. Al Stephenson is in his 40s. Before the war he was a loan officer at a bank in town, and during the war he served as an infantry platoon sergeant in the Pacific. He's been married 20 years and has two children: a son just finishing high school and a daughter who graduated and has been working in a hospital for the last two years.

Much of the drama stems from the efforts of these three characters to integrate back into normal, civilian lives. However, a good portion of this conflict also relates to jobs and what place these characters will take in the post war economy.

Al comes back to a promotion: his bank puts him in charge of the small loan department, tasked with dealing with GI loans. He's given a salary of $12,000/yr. I wanted to get a feel for how large an income that was. Running it through a basic inflation calculator, 12,000 in 1945 translates to $143,792 in 2010 dollars. That's very good money now. Compared to how most people were doing, it was even better money then. I discovered that although many of the more detailed historical income tables on the website only go back to 1967 (or in some cases even just 1991) it's possible to access scanned copies of the original Current Population Surveys dealing with income back to 1946. According to the 1946 report, the median income for a man engaged in full time civilian work in 1946 was $2600, which translates to $28,714 in 2010. By comparison, the median income for a full time, year round male worker in 2010 was $50,063. According to that 1946 report (page 15) only 2% of city-dwelling families in 1946 had incomes over $10,000 ($110,440 in 2010 dollars) putting Al very close to being in "the 1%" despite working for a very small bank by modern standards. Clearly, material want is not going to be among Al's problems. The conflict he deals with centers around the different experiences he's had over the last three years compared to the other managers at the bank -- and the personal difficulties of integrating back into family life.

If Al comes back to a cushy job, job woes are very much center stage for Fred. During the war, Fred was making $400/mo as a Air Corps bombardier. That's $57,517 in 2010 dollars. It also would have put him in the top 20% of incomes according to the 1946 income distribution tables. (By comparison, the threshold for the top 20% of incomes now is right around $100k.) Returning to civilian life, Fred is determined to find a good job, but in the post-war labor glut he finds that his status and pay from the Air Corps don't translate to many advantages in civilian life. At one point we see him in a job interview:
Manager: Did you do any work with supply or logistics in the Air Corps?
Fred: No.
Manager: Did you do any staff work? Did you lead men?
Fred: No.
Manager: Just what did you do, Captain?
Fred: My job was to sit behind the Norton Bomb Sight and get the bombs onto the target every time no matter what happened.
Manager: Well, we don't have much call for that here.
In the end, Fred finds himself back at the store where he had been a soda jerk, now working as an "assistant floor manager", a position more galling because the floor manager he is assistant to used to be his assistant at the soda fountain. This job pays $32/wk, which in turn works out to $1,664/yr. Run that through the inflation calculator and Fred is now making $19,939 in 2010 dollars. This now puts him in the bottom 33% of incomes in 1946. If we assume that the $32/wk rate is for the equivalent of 40 hours, Fred is making an hourly rate of $0.80, which makes an inflation adjusted $9.59/hr. I'm struck by the inflation adjusted hourly rate for Fred, since it's probably moderately close to what you'd make in retail now, though with his "assistant floor manager" title, perhaps he'd make closer to $12-$13/hr now (as compared to the $8-$9 which is common for basic retail). I was curious how other major expenses compared then to now. Table 7 of the 1946 census report shows median rents paid by income. For families making $1,500 to $1,999 per year, the median monthly rent was $25. That works out to $299/mo, a good deal less than you'd be able to find even a very cheap apartment for in most Midwestern cities now. Fred is making a little bit below the median for a man in Retail Trade, according to Table 17 of the 1946 census report, which gives the distribution of income by employment sector and lists the median income in retail at $1,927. I think it's probably arguable, at least from those few facts, that living on a retail job was significantly more possible then than now.

Homer, meanwhile, is trying to adjust to ordinary civilian life with his prosthetic hands (the actor playing Homer was a real veteran who had lost both hands in an explosives accident, he was one of only two non-professional actors ever to win an Oscar.) Income is not an immediate issue for him as he receives a disability payment from the government for his war injuries: $200/mo (which translates to $28,758/yr in 2010 dollars.) This actually puts Homer pretty much right at the median income for full time civilian workers. Given the sacrifices he'd made for his country, it's good to see that set of worries being taken care of.


Jenny said...

I love this post!

I sometimes compare my father's income after graduate school to my current post-graduate income and it makes me sad. After working over five years, I still don't make what my father made straight after college. (Both technical fields and inflation adjusted)

EMS said...

Missing in your analysis were the tax rates they'd be paying. Tax has all the tax rates from the beginning of income taxes, both normal and adjusted for inflation. Al's tax rate adjusted for inflation would have been 43%; the lowest tax rate was 20% for adjusted income up to $23,000. Mitt Romney would have been paying a tax rate of 90%. Pre-war, his rate would have been 70%. During the Depression, Romney would have been paying rates @ 60%. During WWI, he would have been in the 70+% brackets. Corporate tax rates were in the 40% brackets, and there was an excess profits tax as well. One of the biggest changes from those eras to today is that back then it was believed that wars should be paid for during the time they're being fought. I venture that another common belief was that those who benefited the most by living in this country should pay the most in taxes on their income

Darwin said...


For what it's worth, I wrote a post using the Tax Foundation data to look at the taxes back in the "good old days" a while back:

Yeah, basically: All of the characters would have paid more in taxes then than they would now. (Fred most of all, since in this day and age he might well not owe any taxes and get the EITC instead.

Arguably, taxes now are unsustainably low, unless we went back to a 1945 size government. but I do think that the current system is better in being more progressive than the 1945 version.

Darwin said...

Glad you liked it, Jenny. I'm a sucker for this kind of thing.

Zanshin said...

Fascinating post. Thanks!

It left me with one unresolved question, though. How much would a veteran receive nowadays as a disability payment for the loss of hands due to war injuries?

Donald R. McClarey said...

My father as a factory worker was bringing home about sixty bucks a week circa 1967. Life was rather close to the bone for us, although bills were always paid, food on the table, roof over our heads, clothes on our back, etc, however, there were quite a few earning far less in our town of Paris, Illinois. I think we forget how people in the past managed to get by on less money, adjusted for inflation, than most people do today.

Darwin said...


You know: I have no idea. That's a really interesting question.


Yeah. Especially on rent being cheaper I wanted to get into what a typical apartment was like then vs. now (smaller and with much less in the way of amenities) but while I know about it in terms of generalities (and things not invented yet) I wasn't sure where to lay my hands on solid info.

BTW, just for kicks, I had to put Fred's $32/wk in 1945 into the inflation calculator, and it looks like he was making $59.39 to your dad's $60 -- but with no dependents.

Of course, in the movie, Fred's problem is not so much serious poverty as that his wife, in particular, is used to his army pay and unwilling to adjust.