Chart: You're Working More But Earning Less?!!

We'll be posting a new chart on the current state of income inequality every day for the next couple of weeks. Yesterday's chart looked at the history of the 1 percent, from ancient Rome to today.

Today, another look at how middle-class incomes have been stuck in neutral while the rest of the economy has grown. In 2012, the median household income (adjusted for inflation) was the same as it was in 1996.

By Dave Gilson

 

A couple of issues with this chart:

- Maybe drawing a line from 1996 to 2012 is okay, but this seems very fishy to me (there is risk of cherry picking when you pick single years). What we would need to look at are the evolution over time - 60s vs 70s vs 80s vs 90s vs 00s, etc.

Several things are going to push down the median income:
- Household sizes have fallen slightly since 1996
- Labor force participation rate has fallen since 1996
- Larger share of income consists of non-cash benefits: government transfers, employer health premiums, etc.

All of these adjustments probably bump the growth rate of 9% up quite a bit - I would hazard a guess at 50%.

Also why is this chart called "working more, earning less?" They are earning 9% more - not much but more. Also, declining LFPR means people are working less.

 

A majority of US workers work the same number of hours per week and have the same job performance as they have had for years. In hourly positions, for every minute they work over 40 hours they get paid for that work. And good luck finding huge quantities of workers today who are working harder and better than in years past?

This is just more political BS!

If people desire more, then get your butts off the Barcalounger and do something to earn more! IMO anyone who has stagnant wages deserve exactly what they are getting. Every company I have ever been associated with rewards hard working and contributing employees!

And yes...it's not easy in today's job market...but so what...

 

Wrong again. Average hours worked has increased for employees exempt from overtime pay and exempt employee wages have declined even though worker productivity has increased significantly.
To put it bluntly, people are working harder for less because the bosses are keeping all the gains from the workers increased productivity.

 

This gross disparity in how the growth of the nation's income is distributed hasn't always been that way. In the 26 years from 1957 to 1979, real median family in come grew 80%, versus 8% in the 33 years following 1979.

The middle class used to share in America's prosperity.

Since the Reagan "trickle down" revolution, it really has not.

 

There he goes again, Old Man pushing the 1% line like he does every post -- the lower 90% of Americans have stagnated because their lazy and not hard working.

You see, in the 1% apologist's view, the Reagan "trickle down" revolution designed to make the rich richer had nothing to do with the massive growth in inequality that started in 1981. It's just a massive coincidence.



What really happened is that in 1981, the bottom 90% just got lazy and stopped working hard.

1% apologists make sense. If you ignore reality.

 

In bold above there is not a single fact you can find to support this nonsense...

 

Can you point to a time in history where it wasn't better to be a boss and than a worker?

 

Worker productivity



Income distribution



There are plenty of facts supporting it explicitly. What is "nonsense" about it? Other than you 1% apologists don't want to admit facts as to how income and wealth has been redistributed from the middle classes to the richest since the Reagan "trickle down" revolution.

 

So you actually believe a 'bus driver' today works much harder than one 20 years ago and earns less?

Then replace 'bus driver' with any job description you wish and you will get the same answer.

Like I said...there are no facts to support your position...

 

I have no idea what bus drivers make. But if it is any comparison to the middle class as a whole, he is more productive and getting a smaller share of the nation's income that 30 years ago.

Could be.

To the contrary, I proved in unequivocally.

 

No one is working harder and earning less than they did in the past? This is more political nonsense...

 

Thanks for sharing your unsupported, opinionated, biased blather. I prefer to rely on evidence. Others can decide for themselves.

 

That chart tells the story. We went from the gilded age, into a period where the middle class expanded, back into another gilded age. This is the result of the repubs coming back into power in 1981. They took a safe but less profitable banking system, and turned it into a casino that crashed and then bailed out. This is proof of the rise of the oligarchy thanks to the republicans and the dems who joined them.

We see who the repubs represent, which is the top 1 percent. So why do so many average americans continue to vote them back in? Delusional? Stupidity? Ingorance? All of the above?

 

Around 1971, as seen from the chart, real wages took a sharp turn away from productivity. The biggest change in U.S. economic policy at this time (and arguable the biggest change in the late 20th century, dwarfing anything Republicans or Democrats did elsewhere) was the end of the remaining gold standard in the United States. A massive policy change.

Now rather than focus on what happened, most people in this thread are trying to point their partisan fingers at Republicans and Democrats. Let's actually look at the data and see who was in control of government between 1971-2014:

Senate
Democrats 63.6%
Republicans 36.3%

House
Democrats 63.6%
Republicans 36.3%

Party in Control of Both Houses
Democrats 50%
Republicans 27.3%
Divided 22.7%

President
Democrats 46%
Republicans 54%

Party controls President and both houses of Congress
Democrats 16.7%
Republicans 12.5%
Divided 70.8%

Also, under Reagan, not once was the House controlled by Republicans. So lets stop this partisan nonsense about "its all the Republicans fault" or "its all the Democrats fault."

 

Before you look to a party to blame, capitalism at fault, rich as evil, you must first look at the words of those who came before. They warned of the exact problem we've had for over a century. The one major fault they foresaw, yet thought the public would dissuade. And it is precisely this fear that is to blame for our entire problem. The two party system.

John Adams said:

There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.

George Washington agreed, saying in his farewell presidential speech:

The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries, which result, gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of Public Liberty

Without looking forward to an extremity of this kind, (which nevertheless ought not to be entirely out of sight,) the common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it.

It serves always to distract the Public Councils, and enfeeble the Public Administration. It agitates the Community with ill-founded jealousies and false alarms; kindles the animosity of one part against another, foments occasionally riot and insurrection. It opens the door to foreign influence and corruption, which find a facilitated access to the government itself through the channels of party passions. Thus the policy and the will of one country are subjected to the policy and will of another.

There is an opinion, that parties in free countries are useful checks upon the administration of the Government, and serve to keep alive the spirit of Liberty. This within certain limits is probably true; and in Governments of a Monarchical cast, Patriotism may look with indulgence, if not with favor, upon the spirit of party. But in those of the popular character, in Governments purely elective, it is a spirit not to be encouraged. From their natural tendency, it is certain there will always be enough of that spirit for every salutary purpose. And, there being constant danger of excess, the effort ought to be, by force of public opinion, to mitigate and assuage it. A fire not to be quenched, it demands a uniform vigilance to prevent its bursting into a flame, lest, instead of warming, it should consume.

 

I think my autosignature sums up our problem; All of our problems and the solutions can be found by looking in OUR mirrors...

 

And these charts show why:





Virtually all the productivity gains went to the 1% and virtually none to the bottom 90%. That's why wages haven't kept up with productivity.

But it didn't start in 1971. It started in 1981, and not coincidentally IMO with the Reagan "trickle down" revolution that was designed to make the richest richer. And worked fabulously well on that score.

 

The income share of the top 10% is not the best measurement. How about we look at the actual incomes of different percentiles over time.

The graph shows gains in income as a percentage. It was during the 1970s that the rich began to get richer while the lower percentiles remained stagnant.

Looking at the wealthy's share of income rather than comparing actual incomes is a rather flawed methodology. The rich may have larger share of income, but everyone may be richer. The larger share of income may also be a result not of the richer getting richer, but only the poor getting poorer. If you look at actual income data, like I have provided, you will see neither of those is the case. Incomes of lower percentiles stagnated, while higher percentiles continued to grow. And that trend began not under Reagan, but during the early 1970s.

 

Income inequality in the United States. Again, it appears to change during the 70s, not the 80s.

Also the Great Compression period you mentioned corresponds almost exactly with the length of the Bretton Woods Gold Standard

 

Why not? It clearly shows how the nations' income has been redistributed from the middle classes to the top 10%, and the top 1%.

To the contrary. Your chart shows how all income groups shared in the nation's growth and prosperity until about 1981 and the Reagan trickle down revolution, which adopted policies to make the richest richer.

It dovetails perfectly with the data from my charts.

Right at the same time the of the Reagan "trickle down" revolution designed to let the rich get more. And it succeeded fabulously at that.

But everyone is not. Median family income rose 80% from 1957 to 1979, and has risen 8% since then. Meanwhile incomes of the richest have skyrocketed.

Since the Reagan "trickle down" revolution we've seen most of the nation's income and wealth go to the richest and very little to the middle classes.

 

That chart contradicts the various charts I've posted which show that income inequality remained stable in the US until the early 1980s.

Here's another



and another:



and another:



So we'd need to see why your chart contradicts so many others. It may be measuring something different. How exactly is it determining income inequality?

 

No it doesn't. You cannot draw that conclusion from the data you have shown. Your chart shows that the rich have a larger percentage of total income. That says nothing about whether or not the incomes of everyone else grew or shrunk, nor does it even say that the income of the rich grew. You have to look at other data for that information, which I provided.

I am not sure why it is difficult for you to read the chart. It clearly does not show what you think it does.

Here is another graph showing real hourly wages.

I agree that the rich have gotten richer while those of lower incomes have had income stagnate. But you are wrong on when this began.

 

The upward trend in those charts began in the 1970s. Until the end of the gold standard, productivity growth and wage growth were linked. Real wages saw a decline beginning shortly after. All of this began before Reagan. What is see is a partisan attempt to find any data possible to blame Republicans for something, rather than objectively looking at the data.

 

But we know median incomes barely grew while the incomes of the richest skyrocketed. So your point may be interesting academically, but is irrelevant.

Your own chart shows that incomes as a percent of GDP in various income groups stayed very close together until the early 1980s.

Proving my point. Median income have been stagnant while incomes of the richest have skyrocketed since the Reagan trickle down revolution.

I've produced 5 different charts from different sources proving it began in earnest with the Reagan "trickle down" revolution. Do you want me to post some more?

I don't know why conservatives/libertarians or whatever you want to call yourself have such a hard to acknowledging that the Reagan "trickle down" revolution did exactly what it was designed to do: Make the richest richer.