In the same category

Study: US Wages Peaked in Real Terms in 1942

IMG Auteur
Published : May 11th, 2017
722 words - Reading time : 1 - 2 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...
Category : Editorials

In a new study entitled “Lifetime Incomes in the United States over Six Decades,” economists from University of Minnesota, the University of Chicago and Princeton University took a look at the median lifetime earnings (from ages 25 – 55) of Americans over a multi-decade period starting in 1960.  And while we would typically recommend a healthy dose of skepticism when it comes to reviewing ‘economic’ studies, this one actually makes some sense… we know because we’ve been saying it for some time now.

The new paper includes some “astonishing numbers,” said Gary Burtless, an economist at the  Brookings Institution who was not involved in the research. “The stagnation of living standards began so much earlier than people think,” he said.

Using wage and salary data from the federal Social Security Administration, what the research finds is that real wages in the U.S. peaked with Baby Boomers born in 1942 and have been steadily declining ever since (with the exception of a modest, temporary uptick for those folks who happened to turn 25 in the year 2000, at the absolute peak of the dot com mania, when anyone with a pulse could land a six-figure contract for watching paint dry at the new corporate headquarters).

As the Washington Post points out, women have fared slightly better than men over the past 60 years through their wages are still stagnant, which is hardly a victory.

For instance, the typical 27-year-old man’s annual earnings in 2013 were 31 percent less than those of a typical 27-year-old man in 1969. The data suggest that today’s young men are unlikely to make up for that decline by earning more in the future.

Women have done much better than men. More women have entered the labor force and taken on more prestigious and remunerative careers. Still, women are making less than men over their working years, and women’s rising earnings have not made up for the decline in men’s incomes for the population as a whole.

Recently, women’s progress has stalled, in part due to the financial crisis. The typical female worker who was 27 in 2013 made no more than the typical woman of that age did in 1980.

“Overall, this is a pretty bleak picture,” said Fatih Guvenen, an economist at the University of Minnesota and one of the authors of the new paper.

Meanwhile, at the same time that median real wages in the U.S. have stalled/declined, real GDP has grown indicating that all that wealth creation is being consolidated into the hands of just a select few folks.

America is getting richer every year. The American worker is not.

Far from it: On average, workers born in 1942 earned as much or more over their careers than workers born in any year since, according to new research — and workers on the job today shouldn’t expect to catch up with their predecessors in their remaining years of employment.

Stagnant or falling earnings have put a squeeze on working- and middle-class households. The trend has also widened the gap between the rich and everyone else as, overall, the economy has continued to grow overall but the bulk of those gains have ended up in the pockets of the affluent.

24hGold - Study: US Wages Peak...

“This idea that we’re having this progression of increasing incomes over time — I think that might be true for the upper regions of the income distribution but not for the median,” said Nathaniel Hendren, a Harvard University economist who was not involved in the stud

Of course, the real issue isn’t whether median real wages have stagnated, but rather why they’ve stagnated.  Unfortunately, that question can’t be so easily answered by downloading some data and running it through an econometrics software tool.

That said, we’re going to go out on a limb and speculate that, like most pricing anomalies, declining real American wages has something to do with a massive supply/demand imbalance in the U.S. labor markets.  While supply (population) continues to grow at ~1% per year, demand for U.S. labor continues to be eroded by the ability to find cheaper human capital in lower cost countries and increasing financial returns on capital investments in technology.

But you just keep pushing for higher minimum wages, Bernie: we’re sure your effort to increase supply in an already oversupplied market will somehow work out just perfectly.

Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
<< Previous article
Rate : Average note :5 (1 vote)
>> Next article
Andrew W. Sutton, MBA received graduate honors in the field of Economics and is the Chief Market Strategist for Sutton & Associates, LLC, a Registered Investment Adviser in the Commonwealth of Pennsylvania
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
This is How You Can Dodge Facial Recognition Software
With such insight and wit; you should be able to parlay it w/ a gig at Buzzfeed or HuffPuff.
Federalism, Not Breakup
There are 50 states currently. There are currently 435 Congressman. There is nothing in the Constitution maxing Representatives at 435 or that st...
The Zeitgeist Wants What the Zeitgeist Wants
I just posted my latest bumperstick: "Trump Won", next to my other sticker: "Police State USA! USA! USA!" My next sticker will read: "Arrest Me"....
Signs and Wonders
15 JanJim C.
It is very late in the game for some deus ex machina to save our Republic, especially given yesterday’s Joint Chief of Staffs memo indicating inten...
Signs and Wonders
15 JanThemis
It is becoming increasingly clear that America is a nation under judgment (see Jonathan Cahn's "Harbinger II".
Insurrection Versus Insurrection
14 JanThemis1
As an outsider, I see America moving toward some form of civil war. This will accelerate once food inflation takes off and people are struggling f...
Insurrection Versus Insurrection
12 JanJ.
Interesting times. Trump may have the intel, and the authority, to take action, but does he have the political power? Who will act on his orders?
Insurrection Versus Insurrection
11 JanJim C.0
The game is afoot! If President Trump has the hard evidence that the Democrat Party stole the election - a treasonous act - and given, as Kunstler...
Most commented articlesFavoritesMore...
World PM Newsflow