Real Wages: 30 Years of Stagnation and Decline

[Mk]

Chomsky says in this video that "Real wages have either stagnated or declined for about 30 years."

A commenter says: "Real wages for working people stagnated in the late 70's, started a steady decline around 1980, and they continued to decline right through the "so-called Clinton Recovery. There are now 19 percent more families in poverty, than eight years ago (before Bush). Real median household income is down, but Corporate Profits are up 68 percent."

Where can I read more about these statistics or discussion on them?

 

[CRGreathouse]

I showed a marked increase in real (2006$) income from 1979 to 2009:
http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/

I don't have good numbers on poverty, but I suspect he's literally correct. More people were employed in the hight of the dot-com boom than in the current recession. Is that a surprise?

 

[russ_watters]

Chomsky says in this video that "Real wages have either stagnated or declined for about 30 years."

A commenter says: "Real wages for working people stagnated in the late 70's, started a steady decline around 1980, and they continued to decline right through the "so-called Clinton Recovery. There are now 19 percent more families in poverty, than eight years ago (before Bush). Real median household income is down, but Corporate Profits are up 68 percent."

In typical fashion, he's mixing and matching statistics to paint an inaccurate picture, with a few misleading statements and flat-out lies mixed-in for good measure. He's a classic crackpot.

The first statement is tough to justify at best, but perhaps he can manipulate the definition of "working people" some way to make it true, but I doubt it (data later). Certainly during a recession - and a bad one - income is going to drop and poverty is going to rise. But he's being intentionally deceptive trying to connect the current cycle to a long term trend. He does that.

And corporate profits. Profits can be expected to vary widely from one year to the next, decade to the next. People like to connect corporate profit to personal income in a way that shows a disparity in numbers, but it is important to realize that one number is profit and the other is income. Corporate profit is income minus expenses. Personal income is just income. The numbers are not discussing the same thing.

Where can I read more about these statistics or discussion on them?

Most of the numbers come from here: http://www.census.gov/hhes/www/income/histinc/inchhtoc.html

"Real median household income" isn't exactly on here, but if you take the mean of the middle fifth, you're approximately at the median. So that's this table (second one on the page): http://www.census.gov/hhes/www/income/histinc/h03AR.html

The data says that in 2000, the mean of the middle fifth was $50,850 and in 2007 it was $49,968, or a little less than 2% lower. 2008 data should be out shortly, and is likely to be about the same or slightly below 2007. So how 'bout 1970 and 1980? It was $41,405 in 1970 and $42,407 in 1980. So by 2007, incomes near the median had risen 23%.

Now, how relevant is "household income" to questions about progress? There are a few important things to note:
1. More families (not households) have two wage earners than decades ago, but...
2. The average household size has dropped from decades ago.

Now, for poverty. Poverty is more difficult because the definitions constantly change to reflect what people consider an acceptable standard of living. As a result, the poverty rate has essentially been adjusted to keep the poverty rate constant while the standard of living of those in poverty continues to rise. I'm personally against that concept for the most part, but to some extent understand it. Ie, the average life expectancy of people in the US is about double what it was 100 years ago - that idea is incorporated into our definition of what is acceptable.

Here is the wiki on poverty in the US, with some graphs: http://en.wikipedia.org/wiki/Poverty_in_the_United_States
The first graph shows poverty has been bouncing between 10 and 15% since the mid-1960s. As you can see from that, a 19% increase (or decrease) is not surprising in the middle of an economic cycle. The rate is certainly going to go much higher during this cycle - it may even top 15% again, which would be an increase of about 40% from the low in 2000.

So on the title claim, he's essentially flat-out lying. For his overall message, though, he's like a clock that stopped, he's right for a year every 8 years or so when we go into a recession. For the other 7 years, he's wrong.

 

[russ_watters]

"For most people in the US, the last 30 years have been pretty grim." That's just laughably silly.

 

[russ_watters]

MK, sorry, I missed that that one quote was from a commentator. The quote from Chomsky doesn't include the words "working people". But the full quote from Chomsky, starting at :56 is "For the majority of the population, real wages have either stagnated or declined for about 30 years."

That's a tough one to pin down exactly because these surveys track overall numbers, not individuals, but you should be able to see in the numbers in the table I discussed that all 5 segments of the population have increased their incomes since 1970 and 1980. I'll still chalk that up to being a lie, as I see no possible way that the data could support such a conclusion.

 

[russ_watters]

Sorry for so many posts...

Houshold size is an important caveat to the income numbers. The fact that household size is shrinking, combined with the higher incomes, means that typical households have more money to spread over less people than they used to. That's a big part of the reason why the American standard of living continues to increase.

Currently, the average household is 2.6 people. In 1967, it was "just over three". http://www.msnbc.msn.com/id/14942047/

 

[mheslep]

Russ is exactly right on the income statistics and the misdirections. If and when someone begins a discussion on incomes with 'household' or 'family', check your wallet and just keep walking.

Another part of the story not told about poverty measurements are the various 'non-income' transfer payments - welfare, what have you. They're not counted as income in those statistics. That, and the retail distribution system in the US relentlessly reduces the cost of items that used to be the province of the middle class and up. Consequently the asset wealth of those below the income defined poverty level has been increasing over time, i.e. more chance of having a car, TV, etc.

 

[Emreth]

I find it hard to talk about poverty,wealth etc on absolute quantitities which are susceptible to corrections. What matters more is the distribution of total wealth in percentages. As such, government statitistics show that the income percentage of the bottom 4/5 decreased while the top 1/5 increased, although the absolute corrected wages increased for everybody. The mismatch between the percentage change and the absolute values are due to the corrections to income levels, which are based more on common items,etc. However, US corporations have been acquiring goods at much less prices from abroad (compared to their possible local cost),or producing them cheap locally (by using tainted materials,processes, like soaps shampoos, veggies, meat), the disparity distorts the corrections. The reason why a bar of soap is cheap is not because we all got rich but because it has toxic chemicals in it.
So i think its safe to say real wages for most people did indeed stagnate or decline. However, for the same reasons, it cannot be said that the last 30 years has been grim, because the local poverty levels do not compare anything outside US. You can be poor here but its way better than most other places.

 

[russ_watters]

I find it hard to talk about poverty,wealth etc on absolute quantitities which are susceptible to corrections. What matters more is the distribution of total wealth in percentages.

There are plenty of examples around the world that show that income inequality is corellated with economic health. China is a great example: though their poverty rate has been halved in the past couple of decades, their income inequality has increased substantially.

Why would you consider wealth equality a good thing if it means all people are equally poor?

However, US corporations have been acquiring goods at much less prices from abroad (compared to their possible local cost),or producing them cheap locally (by using tainted materials,processes, like soaps shampoos, veggies, meat), the disparity distorts the corrections. The reason why a bar of soap is cheap is not because we all got rich but because it has toxic chemicals in it.

It would be a pretty tall order for you to prove your claim that the quality/safety of the products we buy has dropped substantially over the past few decades. Particularly when at face value, it would appear that the quality has gotten vastly better.

For example:
-Our houses are bigger.
-Our cars are bigger, faster, safer, and have more features.
-We own more and better household appliances.
-Due to the proliferation of lawyers, product safety regulations have gotten tighter and the consequences of a product safety failure more extreme.

And at the same time, if soap was so toxic, we'd hear about people getting sick from it all the time. It would be a big problem. But the fact of the matter is that in the rare cases where we get a bad batch (and there have been a few in the past few years) of toothpaste or cat food from China, it makes big news, even though few are actually harmed.

So i think its safe to say real wages for most people did indeed stagnate or decline.

I think it is safe to say that that is purely a figment of your imagination.

 

[Emreth]

I did not say inequality is bad or anything. Inequality is natural, not everyone's born equal so they shouldn't earn the same. I'm not promoting everyone should have same wealth. What I said is most of the population is getting less percent from the overall wealth from government figures. So in fact, inequality is deepening. If somebody tells you that's healthy, well, i'll leave that to your judgment. I would prefer if it was perpetuated at current levels. Why this did not cause upheaval (most getting relatively poorer) is because poor can still live on cheap imported goods manufactured elsewhere (which is of course bought on credit). Hence, last 30 years was grim is an exaggeration.
About quality of products. do not mix up techno advances with cheap replacement chemicals. If you tell me veggies taste better and are healthier now then the past, i have to disagree, they are not ripe when picked and are filled with pesticides. Likewise meat or other food products. House cleaning stuff is full of toxic chemicals. Soaps toothpastes also. All this stuff, and we get more cancer ridden people. You'll say ah we live longer that's why. Well that's not why, we live longer because we can revive people close to death better now, not because we live healthier.
Do a google search to see what's in stuff before talking about fringe china examples. here's one www.cosmeticsdatabase.com .Although it says cosmetics, it has other things like soap, toothpaste,suntan lotions etc.

 

[daveg360]

I find it hard to talk about poverty,wealth etc on absolute quantitities which are susceptible to corrections. What matters more is the distribution of total wealth in percentages. As such, government statitistics show that the income percentage of the bottom 4/5 decreased while the top 1/5 increased, although the absolute corrected wages increased for everybody. The mismatch between the percentage change and the absolute values are due to the corrections to income levels, which are based more on common items,etc. However, US corporations have been acquiring goods at much less prices from abroad (compared to their possible local cost),or producing them cheap locally (by using tainted materials,processes, like soaps shampoos, veggies, meat), the disparity distorts the corrections. The reason why a bar of soap is cheap is not because we all got rich but because it has toxic chemicals in it.
So i think its safe to say real wages for most people did indeed stagnate or decline. However, for the same reasons, it cannot be said that the last 30 years has been grim, because the local poverty levels do not compare anything outside US. You can be poor here but its way better than most other places.

I agree. I only use soaps made from a mixture of fairy dust and the tears of angels.

What on Earth has this thread got to do with what they put into bars of soap?