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The 1950s
The 1950s
The 1950s marked “the golden age of Capitalism” in America. The war was over, the economy was thriving, and the United States held fast as the world’s strongest military power. Rates of unemployment and inflation were low, and wages were high, leading to an expanded middle-class with more hope for the future and more money to spend than ever before. Driven by a sense of prosperity and promise, people spent their money on the wide variety of ever-expanding consumer goods that were being produced and advertised on a mass scale.
After the war, young people were also having more children than previous generations, and many of these newly established middle-class families settled in new houses on the outskirts of the cities, effectively creating what we now call “the suburbs.” These houses were built using mass production techniques that allowed them to be developed quickly and cheaply. In addition, The G.I. Bill subsidized low-cost mortgages for many returning soldiers, which meant that it was often cheaper to buy one of these suburban houses than it was to rent an apartment in the city. During this time, the suburbs grew by approximately 47%. You can read more about the suburbs under "Expansion of the Suburbs."
Because of this migration to the suburbs, the baby boom, and a general desire for normalcy after the instability and hardship of World War II, much of the consumerism of the time revolved around improving home and family life. People sought machines and innovations that would improve their lives, such as televisions, cars, washing machines, refrigerators, toasters, and vacuum cleaners. Read more about the rise of consumerism under "I Put a Spell on You."
In general, the 1950s were marked by much larger investments in public amenities. However, that public was narrowly defined as white, middle class, heteronormative families. Heather McGhee discusses this in her book The Sum of Us, noting how desegregation during the Civil Rights Era led to disinvestment from the public due to a zero-sum understanding of race and racial equality.
Income Gains in the 1950s
Income Gains in the 1950s
In the United States, the years following WWII up until the 1970s featured substantial economic growth that was quite evenly shared among all income levels. Incomes effectively doubled during those years, while the income gap remained largely stable. Starting in the 1970s, economic growth slowed, while the income gap widened.
More recent data demonstrate the massive economic gains made by the top 1% since the 1970s. While their earning appear to be a bit more volatile - with higher peaks and drops - this likely represents temporary fluctuations due to changes in the tax policy as well as the Great Recession and the Dot Com burst. Overall, the top 1% sees continued gains at a faster rate than all other income classes.
Today we see income concentration at rates akin to the Gilded Age of the 1920s. The top 1% has amassed incredible wealth - nearly 40% of the total wealth of the nation. Broadening the scope, the top 10% controls nearly 75% of wealth, with the bottom 90% holds only 23% of wealth today.
Higher Taxes
Higher Taxes
One key reason why the income gap remained low in the mid-century is that taxes on the wealthy were much higher. In 1955, those making incomes of over $200,000 ($1.9 million today) paid a 91% tax rate on all earning above that $200,000 threshold. Of course, there were loopholes to exploit, including the oil depletion allowance, which encouraged oil drilling. It is likely that the mega-wealthy did not often pay the full 91%. Corporate tax rates were also higher in the 1950s, at over 50%. Some economists argue that a higher corporate tax rate would both provide more funds to the government and also spur economic growth.
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