If you’ve been on TikTok recently—and perhaps even if you haven’t—you may have heard about the viral new concept of a ‘‘silent depression’’ that’s apparently overwhelming younger people in the U.S.
No, we’re not talking about the country’s mental health crisis. We’re talking about what a few TIkTokers are referring to as the dire economic reality facing ordinary people trying to make ends meet.
The term ‘‘silent’’ refers to the fact that, on the surface, the U.S. economy is doing well. We are not in a recession; unemployment rates are low. And yet, people struggle to afford the basics more than they did in the past.
The idea caused controversy pretty much as soon as it premiered on social media. Economists have responded to the TikTokers by saying that the current economic reality is nothing like the Great Depression. Essentially, to experts on the economy, the whole concept sounds like misinformed complaining.
Who’s right here? Is the ‘‘silent depression’’ concept simply a way for people who could be hustling a little harder to complain about their lot in life? Or is there hard data to support the claims that life has become more expensive than it was for people living through the 1930s economic catastrophe?
We’ll try to be impartial here and look at the claims made in the TikTok videos in more detail.
What Is the Crux of the Debate?
The TikTokers in question have struck a nerve with social media users by offering stark comparisons between typical expenses back in the 1930s and today. The basic argument is that core expenses like housing and transportation take up a far greater share of people’s wages than they did in what was presumably the worst economic slump in U.S. history.
One TIkToker called Freddie Smith presents figures from 1930 versus those from 2023. According to the TikTok video, an average house now costs eight times the average salary, while it costs only three times the average salary in 1930. Renting would have taken away 16% of your wage back in 1930, but it will eat up an extraordinary 42% of it now.
Another TikToker who calls himself Average Joe puts it even more strongly in his video: “The reason why it is called the silent depression is because we have smartphones, we have air conditioning, or people have a T.V. Because we have a credit card, and we can go into as much debt as we want. Essentially, for some reason, that makes us feel like things aren’t as bad as they are.”
The counterargument from economic experts has run as follows: We’re not in any kind of depression; you can always get a side hustle or unemployment assistance if you’re really struggling, and comparing wages and housing from back then with now is like comparing apples and oranges.
One argument is that the data pulled up by TikTokers is imperfect: Average wage figures are especially tricky because they’re skewed by the lowest and highest values in a data set. Houses may have been cheaper, but—and this has actually been argued by one of the economists—many didn’t have modern perks like indoor sanitation. In other words, your house may be unaffordable, but hey, it has a toilet, so be grateful.
We think that, frankly, the emotional responses on both sides are not worth discussing at length here. One side does sound somewhat dramatic with the comparison to the 1930s; the other side, though, isn’t exactly helping by telling people to rejoice in the fact that they have indoor plumbing and that they could always get a second (or third) job.
What did catch our attention was the true source of the controversy: the potentially incorrect use of historical data and not comparing like for like. We’re going to crunch some data ourselves to see whether it bears out the claim that the typical worker’s purchasing power in terms of housing is less now than it was during the Great Depression.
Ohio as a Case Study of the ‘‘Silent Depression’’ Concept
First, we’ll admit that figuring out how much people earned during the Great Depression is a minefield. There were huge regional disparities (they still exist today); wage records mainly took into account male labor; and there were different wage averages for white and nonwhite workers. In addition, IRS records are comparatively sparse because far fewer people regularly filed their tax returns back then.
So what we do have is an approximation of how much people earned, at best. Still, zooming in a little on a single region can at least give us a bit more accuracy than the average wage number the TikTokers included in their videos.
There are some fairly reliable state-by-state wage figures available from the Federal old-age insurance records from the 1930s. Let’s take Ohio as an example. The median wage in Ohio in 1937 was $923 per year. The median wage is exactly that: a figure taken from exactly down the middle of the reported values submitted that year.
Now, let’s take a look at home prices. Although we couldn’t locate the precise median home price for Ohio in 1937, we did find a few examples of what family homes would have cost then. A ‘‘Colonial Brick Home, six modern rooms and bath with open fireplace in living room’’ was advertised in Mansfield, Ohio, in 1937 for $6,000. A ‘‘71-acre farm with 6-room house, electricity and bath and large orchards’’ was going for $4,200 in 1938.
These are big properties, very likely priced above what was average in Ohio at the time. Still, a person on a median income in the state could buy a farm with orchards and a six-bedroom house (note the presence of electricity and indoor plumbing!) for just over four times their salary.
From 2018-2022, Ohio had a median household income of $66,990. The median sales price of a house was $275,000 in December 2022. And, guess what: We tracked down a six-bedroom house in Mansfield, Ohio. It was on sale for $349,900. It doesn’t have acres of land or orchards, but still. That’s just over five times the annual median salary. It’s actually not that different a financial commitment from what it was in 1937.
Does that mean that the ‘‘silent depression’’ thing is just a load of self-pity? Well, not quite. It’s clear that the term was chosen because it’s catchy and gets clicks. But the data would’ve been more convincing had the TikTokers chosen a different decade for their comparisons.
Let’s take the year 2000—in many ways, a symmetrical time to our own; the U.S. economy was doing well, even though there was a mild recession ahead in 2001. The median Ohio household income in 2000 was $56,111. The median home sale price in Ohio in 2000 was $103,700.
We couldn’t find exact home prices for six-bedroom Ohio properties at the time, but let’s assume that, as was the case in 2022, a six-bedroom home would’ve cost you 127% of the median home price. That would make it cost about $132,000. That means a typical 2000 Ohio household could purchase a large family home for just over twice the annual salary. Note that the median salary was lower both in real terms and in absolute terms in 2022. Now, that gives us some real food for thought.
Currently, purely in terms of real estate, an Ohio household on a median income has a purchasing power more comparable to a household during the Great Depression (with which the current times, we are told, have nothing in common) than with the economically prosperous year of 2000. That just isn’t right. They definitely had indoor toilets in 2000; they had Medicaid and unemployment benefits. What else did they have? Higher wages in terms of what people could actually buy.
Oh, and before anyone suggests that they earned more in 2000 because they all worked multiple jobs, the data doesn’t support that at all. The number of people holding more than one job has remained pretty stable—it’s currently 5.6% of U.S. workers, down from 5.8% in 2000.
The Bottom Line
So, no, at least in Ohio, things aren’t as bad as during the Great Depression. But in several crucial ways, they are almost as bad as they were back then for millions of people. The economy is not in a depression, but housing affordability should look very different than it does right now—as in more like 2000 and less like 1937.
At least in terms of accessibility of homeownership, the TikTokers have a point.
“Silent Depression” or Complete Delusion: How Bad IS The American Economy? w/Jessica Dickler
According to social media, a “silent depression” is widespread across the American economy, with high inflation, limited wage growth, and low homeownership for millennials and Gen Z. But is that really happening? Let’s hear what the economists have to say.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
