If by "that" you mean the ability to buy a decent house for yourself then the answer is that it would be an extremely poor proxy ... almost uncorrelated. It's possible to live without buying a house or even renting by yourself (you can live with parents or rent a shared house with other young people). People in that situation would still have (and be recorded as having) a disposable income even though accomodation is an essential expense because owning your own personal house is not technically an essential expense.
Therefore, if wages are decent but housing is extremely expensive (which I believe is the case here in the UK, especially city suburbs) then median disposable income would continue to increase while the ability of young people to buy their own homes would continue to decrease.
I'll explain why I was wondering about disposable income in a little more detail:
In some dense cities in particular, renting (typical for young people prior to property purchase) can be very expensive.
My sense is that this creates a large transfer of wealth from professionals to property owners on a monthly basis.
Across San Francisco or New York, for example, what percentage of the paycheck sums paid by employers is redirected to their landlords?
If that percentage were to rise it would become more difficult for young people to become property owners since it'd be challenging for them to put savings aside.
With that context provided: disposable income is an attempt to quantify how effectively people could save towards property purchase - regardless of whether they decide to take that route.
(and to some extent it's also a 'guard metric' to detect communities that rent-seek to unsustainable levels)
Edit: 'tech companies' -> 'employers' in third para, and remove assumption of high salary. This doesn't just affect tech..
>if by "that" you mean the ability to buy a decent house for yourself then the answer is that it would be an extremely poor proxy ... almost uncorrelated.
Um, what?
If you want to buy a house "disposable income" directly translates into ability to save up for down-payment.
The ability of more people to get housing earlier in their lives is only correlated with the growth in housing stock. If the housing stock is growing more slowly than the population then it's irrelevant if people manage to save more money towards it; that just increases the house prices for everyone. Conversely, if the housing stock is growing faster than the population growth then even a decreasing amount of disposable income wouldn't stop people moving into the vacant properties... the prices would all come down to match.
Of course this sounds ridiculous because in a normal market the supply of a good or service would increase if prices go up (positive price elasticity of supply, as the economists would say). But housing markets are often not like that, and they're certainly not like that in the UK suburbs (as I said, that's partly because of the green belt).
The income has been adjusted for inflation and inflation includes housing.
I think the difference between now and 50 years ago is that everyone wants to live in a few select dense cities where back then most of the middle class didn’t want to live in cities (especially true in the US).
(Edit: I'm not an economist by training and I've realised Im not really sure about any of this, so maybe ignore everything after this paragraph. But certainly, here in the UK, house prices have more than doubled in the last 30 years after adjusting their prices for inflation, so inflation is nowhere near the whole picture.)
It is included but at a very different proportion from its actual impact on consumers. For example, the UK standard inflation index, CPI, includes the following items in its measure (as of 2017 [1]):
04.1 Actual rentals for housing: 5.6%
04.2 Owner occupiers' housing costs: 17.4%
(Also, I'm not sure whether "Owner occupiers' housing costs" only includes mortgage repayments, but that's the closest thing I could see on the list. And the way it's phrased in that list, with the word "actual rentals", makes it sound like price increases won't necessarily be reflected in the index so long as everyone were to downsize correspondingly - but I'm not clear about that one.)
It's like that because inflation is meant to reflect a very different concept than we're talking about here. We're talking about something becoming intrinsically more valuable (in this case, because of scarcity). Inflation is meant to judge when a currency has less intrisic value. So if a house price goes up by 100% but that's because it's twice as valuable, then in some sense the inflation there is 0%.
I'm not sure whether "Owner occupiers' housing costs" only includes mortgage repayments
If it's similar to the situation in NL, those housing costs includes things like municipal taxes and local services (water, sewage, electricity), parts of which are billable to the registered owner of the property, not the inhabitant. And since the central government has been outsourcing more and more responsibilities to local government, these local taxes have increased massively to pay for things that were hereto paid out of the national tax budget.
So if a house price goes up by 100% but that's because it's twice as valuable
Not likely. Many studies have shown that in scarcity, house prices don't follow the value of the property, but the budget of the buyers. The increase in housing prices is more due to the ease of access to mortgages (low interest rates, tax bonuses, etc) than due to value increases of the property.
For you. Culturally, land ownership in the US is a big deal. Yeah, some cultures are broken - I don't know if the security provided by having somewhere to call your own until the day you die is one of them.
And I really mean that - I don't know. Some cultures thrive on women being subjugated to men. Some cultures thrive on authoritarian levels of control that are inconceivable in the west.
By comparison, a desire for land ownership seems pretty mundane.
Therefore, if wages are decent but housing is extremely expensive (which I believe is the case here in the UK, especially city suburbs) then median disposable income would continue to increase while the ability of young people to buy their own homes would continue to decrease.