President Obama’s ‘Hope and Change’ is not working out very well for the average American working man. Liberal’s are celebrating minimum wage being raised to $15 an hour, but the counter effect is many businesses cutting back employees hours and laying people off.
Breitbart reported that the average man with a full-time job in 2014 earned less than the average man in 1973, according to the Brookings Institution.
The think tank’s economy-focused Twitter account revived a striking statistic over the weekend, shedding additional light on the perceived economic stagnation and frustration among middle-income Americans in recent years.
— Brookings Econ (@BrookingsEcon) June 13, 2016
According to the Brookings report, first published in The Wall Street Journal in September, the median earnings of a man working full-time in 1973 was $53,294 — measured in 2014 dollars — while the median income for a man working full-time in 2014 was $50,383.
“This one fact, tucked in Table A-4 of the Census Bureau’s annual report on income, is both a symptom of an economy that isn’t delivering for many ordinary Americans and at least one reason for the dissatisfaction, anger, and distrust that voters are displaying in the 2016 presidential campaign,” David Wessel, director of the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy, wrote in the report.
The decline in wages is that much more notable when considered against the growth of the U.S. economy and increase in American productivity since 1973. As Wessel cites, the output per person in the U.S. has nearly doubled and the output per hour of work has grown nearly 2.5 times since the 1970s.
So what exactly is causing this?
As I often do when confronted with puzzles like this, I contacted Larry Katz, the Harvard University labor economist.
He identified three factors to explain the stagnation of men’s wages:
1. Although this is not the major factor, workers have been getting more of their compensation in benefits as opposed to the cash wages that the Census tallies. (The EPI chart takes that into account and tracks total compensation.)
2. Labor’s share of national income has been declining since 2000 and capital’s share has been rising. Labor’s compensation (wages and benefits) has not been keeping pace with productivity growth. In their new analysis of this phenomenon, EPI’s Josh Bivens and Larry Mishel argue, “ This decoupling coincided with the passage of many policies that explicitly aimed to erode the bargaining power of low- and moderate-wage workers in the labor market.”
3. The “most important factor,” Mr. Katz says, is the rise in wage inequality, the gap between the earnings of the best-paid workers and the ones at the middle and the bottom that has been widening steadily since about 1980. Economists differ over how much of this is the result of globalization, technological change, changing social mores, and government policies, but there is no longer much dispute about the fact that inequality is increasing.
While men have seen their median wages decline, women’s median wages have been steadily on the rise, growing 30 percent since 1973, from $30,182 to $39,621.