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 Census.gov 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.