Stagnating median income in the US

We\’re often told that median income in the US has stagnated. That all the growth of the past decades has been sucked up by the super rich, that Joe Six Pack just hasn\’t gained at all.

If we actually looked at the figures, we\’d see this, plain as the nose on our face:

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Yeah, me neither.

22 comments on “Stagnating median income in the US

  1. oh no! scratch that, they’re both annual, I was looking at wrong graph in report and thinking it was the one you’d posted here.

    Tim adds: Two things: “wages” in the US aren’t a good guide, as a substantial portion of compensation comes in kind (health care obviously) and doesn’t include any redistribution through the tax system.

    Secondly, when you look at household incomes, you need to adjust (as here) for the falling size of the household.

    It’s a general truth that US statistics are crap and you shouldn’t take the usual numbers trotted out without a shovel of salt. The poverty numbers are even worse…..

  2. ok – so has that median worker who has experience a flat real wage enjoyed an increase in the real value of “compensation comes in kind”? Or has the price of healthcare just risen?

    tim adds: Well, I personally think that health care has got better over the past 50 years as well as more expnesive….

  3. We’ve been through all this before.The argument ,as posited by Prof Rick Wolff, is that American wages have n’t kept up with increased productivity.There’s vidoes on the Net of him expounding this argument.It would be more impressive if you took him on,rather than making flip comments based on one graph.

    Tim adds: why would I want to take him on? The point is irrelevant.

    Wages haven’t increased as much as productivity? So what?

  4. Surely the problem is not at the household level – income per household member has increased as households have a) got smaller and b) as female employment has risen; the problem is that the income of the median worker no longer permits the ‘American Dream’ set-up of a married man supporting a stay at home wife + children (e.g. Leave it to Beaver, The Simpsons etc.).

    Tim adds: Not this tired old one again. You can easily live on one income. Piece of piss.

    It’s just that, to do it like they did in the 50s, you have to live a lifestyle like they did in the 50s. No eating out, heating was something for the front room only, holidays are anywhere you can drive to with a tent in the back of the car etc etc etc.

  5. The prpblem there is the large number of ordinary dual income families who can’t afford to eat out, struggle with heating bills, can’t afford a holiday…

    Considering that the average worker’s productive output is now much, much higher than in the 1950s, and likewise increased efficiency in food production, fuel production, travel etc, something Does Not Compute.

    If output is constantly growing, the costs of “the basics” ought to be falling to an eventually trivial level as a proportion of income. They clearly are not. Something is wrong somewhere.

  6. IanB: good point. If an economy gets more productive and the money supply stays constant (try not to guffaw at the back, Carruthers), then greater efficiencies should mean things get cheaper. You should get more stuff, more services, for every pound you earn.

  7. Your observation about being able to live a 50s lifestyle on a 21st century income seems rather facile, too. Would you not expect it to be possible to live better on a modern income? The interesting question would be why it is difficult to live a 21st century lifestyle on a (single) 21st century income.

  8. In the 50s the American worker in manufacturing didn’t have much competition. Japan and Germany had been bombed flat, Britain was bankrupt and much of the world was submerged in socialism.

    Nor did he need to compete with immigrant labour very much.

  9. They clearly are not. Something is wrong somewhere.

    Taxes are rising, with more and more being paid on social benefits, including pensions to the elderly. And healthcare which is government funded keeps rising in costs (around the world, this is not just a US story). The wording is specific, there’s this fascinating graph showing the costs of cosmetic surgery, which people pay for out of their own pockets, rising slower than CPI, while other medical services are rising faster.
    Plus zoning and other housing regulations have been holding back the supply of housing, increasing those costs.

  10. “Wages have n’t increased as much as productivity So what?What me worry?”
    (Alfred E. Newman of Mad magazine responsible for last bit only).
    I would have thought that its a trifle concerning if aggregate demand distributed by wages is not sufficient to buy the stuff produced.But then I can point to Social Credit on the subject while TW evidently can’t,and can’t actually see the problem.

  11. Johnathan Pearce-

    Hence my suspicion that the first derivative of real economic production (as opposed to the Keynesian measure) of goods and services consumed by individuals is much lower than we think. This current recession may be a situation where it turns permanently negative. The problem is, the Office of Keynesian Statistics don’t measure it, and indeed it would be a very hard thing to measure, even by a spending proxy.

    This was (sort of) the point I was trying to make in that Samizdata “vive la revolution” thread; that the State has turned the economy pseudo-Ricardian, or as I put it “Hyper Ricardian” and the proportion of income[1] being transferred to State supported “rentier” classes (most obviously via the property system) is now increasing faster than income is.

    From that perspective we’ve reached a stage in which it is worse than useless for a worker to increase his output, since the entire increment, plus some, will just get consumed by housing costs, indirect taxes, etc etc. We can’t even keep up with the Red Queen.

    [1] Ye Gods I hate this Keynesian lingo, sorry.

  12. But not in Somerset.

    Council chiefs pocket £1.2m total in redundancy deals

    Golden handshakes worth more than £1.2m were handed out to three South Somerset District Council chiefs last year, latest accounts statements reveal.

    Former chief executive Philip Dolan was handed £569,000 when he opted for redundancy in March.

    The decision came after a merger of the chief executive roles at SSDC and East Devon District Council.

    Two other corporate directors at SSDC received payouts worth a total of £688,000 during a period of restructuring when they opted for voluntary redundancy.

    Corporate director of health and wellbeing David Stapleton received a remuneration package worth £308,000.

    The payout to the head of economic vitality Mark Pollock totalled £380,000 – around seven times his salary.

    Mr Dolan’s package included £157,000 in a final salary payment, £167,000 for loss of office and £239,000 for pension contributions.

  13. Stopping in 2007 is a bit misleading as well. Still the statistics suggest annual growth of 1% (but slowing slightly over time). I don’t think this is any better than in Europe though.

  14. I’m surprised that Johnathan Pearce has n’t pointed to the Land Value Tax as a way of stopping the economy from turning Hyper Ricardian as Ian B puts it.JP will not leave LVT alone.

  15. “The interesting question would be why it is difficult to live a 21st century lifestyle on a (single) 21st century income.”

    If a large proportion of 21st century lifestyles are funded by dual incomes, surely your question becomes:

    Why can’t my family live on one income the same way my neighbours can live on two?

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