2013 is ending as it began, with inequality at the top of the U.S. political agenda. The minimum wage and the end of extended unemployment benefits are high in the headlines.
Amid the debate about inequality, there’s an underplayed point about the current economy: average workers have not only been earning less than those at the top. Many have been earning less, full stop. Seen over a period of three or four decades, the trend is striking. Take a look at the chart below of the decline in real earnings for U.S. men in three age groups — 25-34, 35-44, and 45-54.
In inflation-adjusted dollars, a typical 35-44 year old man earned $54,163 back in 1972. Now a man of that age earns $45,224, or 17 percent less. For the 25-34 age bracket, the loss is even greater. You often hear of income having stayed “flat” for many years. On the household level, that’s true. Women’s incomes have increased (a good thing), and many more women have entered the workforce. That’s made up for the drop in men’s incomes, and the median household income has risen a little since 1972.
The bottom line is that as two-income families have replaced single-earner ones, the median family has barely moved forward. And the single-earner family has fallen behind. Political speechwriters like to pull out the trope of asking whether our children will do better than us. When it comes to the folks who reached adulthood forty years ago, it’s not really a question anymore. We have the answer: their sons (though, fortunately, not their daughters) are working just as hard or harder for less money.
To TMN it seems that the focus of the economic debate belongs less on rising incomes at the top than on falling incomes in the middle. The concern of Americans on the middle of the economic ladder is not really that their neighbors behind some high hedge are doing too well. It’s that they themselves are not earning anything like the incomes they expected. Judging by the data, that concern is well-founded.