I don't mean to be sexist, but I've wondered purely out of curiosity if the decline in wages is related at all to the entry of women into the work force. You've nearly doubled the number of wage seekers without necessarily increasing the supply of jobs.
I also wonder if two income earners are likely to earn more money than a single income earner for a given labor demand, considering overhead of employment, which I think has also increased over time (e.g. benefits). That couple explain some of wage stagnation, I'd bet.
I don't think you're being sexist. I think that's a very good question. If we roughly double the supply of labor, but have roughly the same number of jobs - what would happen? Wages would naturally go down. It's obviously not that simple, but there's good reason to believe that the entry of more women in to the labor force put downward pressure on wages.
What will be interesting is if the more recent trend of young men leaving the labor force will put upward pressure on wages, or if the jobs will just disappear.
One interesting observation that supports this is that women's labor rate participation had a slower ramp. Not a doubling over night. Following that, their wage equality has slowly been ramping, too. Both of those sound like gradual dilutive trends on the labor supply/wage graph.
I REALLY like the idea of looking the cumulative burden of employer-born costs of employees as the percentage of dual earners goes up.
my "bet" is that you'd find that the cost of those benefits have been growing at par with the women's labor force participation rate. Take a look at the charts in the Slate Star Codex post on Cost Disease, and overlay the growth in Women's labor force participation rate, and growing pay equality. The relationship is likely not perfectly causal, but there might be a meaningful effect in there.
Why would we have the same number of jobs? If more women are working who didn't before, they will need some way to commute to said job, to buy work clothes as well as leisure clothes, have more disposable income, etc.
That alone isn't enough data to answer the question. I arbitrarily picked 1962 as a starting point, and while the number of employees since then has approximately tripled, the population of US citizens has approximately doubled, in addition to the gradual entry of women into the work force. Additionally, the page you linked shows number of employees, and does not account for the possibility of multiple jobs effectively replacing the work of one person because of job market saturation, and an associated depression of wages.
It's not sexist to suggest increasing labor supply due to women's entry into the workforce might factor into decreased prices. (Though women were always in the workforce to a greater extent than many 1950s nostalgics want to admit, just in lower prestige and lower wage jobs). What would be sexist would be to suggest that the solution is to exclude women from the labor force in the future.
no, that is quite unlikely to have much explanatory power here. you're applying static thinking to a dynamic system. women have been integrating into the work force for the past 100 years. it wasn't an instantaneous doubling all of the sudden. consumption grew in lock-step with labor supply over those many years, so labor demand rose as well to meet the new consumer demand. a so-called virtuous cycle.
wage stagnation is tied to the growing wealth of the top 1%, not working women.
> I've wondered purely out of curiosity if the decline in wages is related at all to the entry of women into the work force
Adding workers adds wealth per capita; it's not a zero-sum situation. Adding more workers to the economy grows the economy, by more than the salaries of those workers (if they cost more than they produced, they wouldn't be hired). Now all these women are producing value, they increase productivity, and they also can afford to buy things from you.
Consider it this way: Where would you rather open your store, a town where only the men work, or where both the men and the women work?
On average, workers born in 1942 earned as much or more over their careers than workers born in any year since
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.
While economists have been concerned about recent data on earnings, the new paper suggests that ordinary Americans have been dealing with serious economic problems for much longer than may be widely recognized.
The new research shows that in the past, a good guide to forecasting typical career earnings among Americans of a given age has been their average income they were 25.
Young workers’ incomes are still declining today, suggesting that their trajectories over the rest of their careers will be lower as well.
I suspect that the at 25 income prediction will be less and less accurate as a predictor given high value PhD's. In the past the rarity of those programs might have covered up the problem with using those estimates for that group, but as it grows it probably creates substantial challenges for such a metric. Similarly, with start-ups becoming more popular, income at Age 25 might value options at 0 and lead to an underreported value for anyone in a successful exit. Willingness to take risk with low income when young, might also lead to situations where founders are reporting 0 income at 25, but are likely to have successful careers regardless of whether they exit.
Statistically, those high value PhDs and successful exits are way off on the high end of the tail of the distribution for all 25-year-olds. I suspect they are not going to budge the median values at all.
https://www.reference.com/education/percentage-americans-phd... says: "According to U.S. Census 2013 data, 1.68 percent of Americans over the age of 25 have a PhD. [...] [Adding in medical doctors], the total percent of Americans referred to as doctors equal to 3.16 percent."
I'm guessing only a small part of those will be what you would call "high value", so I don't think there's enough there to shift the statistics in the way you say.
> On average, workers born in 1942 earned as much or more over their careers than workers born in any year since
1940s is also the time when US companies started offering health insurance, moving more of the compensation into non-monetary realm (health, dental, vision, life insurance policies, stock options and stock purchase plans).
The tax code also evolved to the point where it's extremely lenient on non-monetary benefits (e.g., health insurance is deductible for companies) and extremely punitive on monetary compensation (top-bracket 39.6% income tax rate, for example, is higher than cigarette tax or gasoline tax, which sends a rather interesting message to the public).
The middle class is decreasing mainly because of divorce and thus the creation of single parent homes; additionally middle class families leave the middle class because BOTH parents work and thus moving them into the upper class - when if one of them worked they would stay in middle class.
I don't think that's true. While the term is of course loosely defined, unless you are at the top of the middle class, you can't leave the middle class by simply doubling income.
This doesn't make any sense. Just because divorce rates have gone up somewhat since the 40s doesn't mean that it's structural. People get remarried. Also, if one person makes 60k and then moves in with another person making 60k, they don't magically become upper class at 120k, because they still have most of the expenses of two people minus some savings in housing (which most people wave by buying huge houses)
actually, if you define upper class as the top quintile in household income (a common objective definition, as opposed to the also common colloquial "how you feel" definition), then anything above $112K in household income is upper class:
In a CNBC Millionaire Survey it can be observed that a majority of millionaires polled, representing the wealthiest 10 percent of Americans, described themselves as middle class (44%) or upper middle class (40%)... Estimates for the size of this group [upper class] commonly vary from 1% to 2%, while some surveys have indicated that as many as 6% of Americans identify as "upper class."https://en.wikipedia.org/wiki/American_upper_class
That might well be accurate. Class and income are not the same thing. A college professor is upper class even if they don't make millions, because of connections and authority. Likewise, "a single-digit millionaire doesn't have effective access to the legal system."
And on the contrary, (in an oldish article), 19% of Americans believe they are in the top 1% of income earners, and 20% more believe they will one day be [1].
Sure it's objective in the mathematical sense, but if you have 2 kids and two people working with a combined income of 112k you'd be upper class? I feel like a better way of looking at it would be average household income/average area COL per person or something, right?
Additionally, if the wealth distribution curve for the country is basically a backwards "L" with the bend at the ~99th percentile, the difference between the 60th and 80th percentiles isn't really meaningful since the "upper class" is clearly the 99th percentile.
Edit: obviously there are also social caste connotations that used to be applied here too, but I'm only interested in the economic definition.
While "top quintile" might be a useful economic definition, it's not the dictionary definition, nor the one used by many Americans when discussing class (which has major social considerations, in addition to economic ones).
From Merriam-Webster:
a social class occupying a position above the middle class and having the highest status in a society
Many of the HN regulars are upper income, but very few would qualify as upper class (most of us lack the political and social connections).
> The middle class is decreasing mainly because of divorce and thus the creation of single parent homes
Citation needed.
What, exactly, is the magnitude of the effect of single-parent homes on the size of the middle class? Without answering that, your "gut instinct" explanation, if that's what it is, is meaningless.
There is plenty of data showing the negative income effects of divorce and single parent households.
One major conclusion of their research is that the family income of children whose parents divorce and remain divorced for at least six years falls by 40 to 45 percent.
As per the Census Bureau (table F-10), in 2014, married couple families with one or more children under 18 years, earned an average income of $111,278. In other words, traditional two-parent families earned an income that was more than three times higher than for households headed by a single mother.
Saying that the income of a single-parent family is lower does not remotely answer the question of "What is the magnitude of the effect of single-parent homes on the size of the middle class?"
We have the same percentage of single parent families now as in 1995 (29%). That's over 20 years, the number has barely budged. So how does your answer relate to the question of the decline of the middle class since then?
If the majority of your income comes from salary or wages, you are not in the upper class, no matter how high that number is. The primary defining characteristic of the upper class, in my opinion, is supporting your lifestyle via your ownership, rather than your labor.
Certainly, there is some fuzz and overlap there. A retiree earning $50k/year on dividends and capital gains meets that criterion, while a top-shelf skilled professional or DINK couple earning $400k/year solely from working 40 hours per week (each) does not. The latter could certainly become upper class rather easily just by paying off debt, avoiding unnecessary expenses, and dumping excess cash into index funds, but as long as that plan can be cut short by two simple words ("you're fired") they haven't crossed that class boundary yet.
Generally, when the middle class shrinks, it isn't because a significant portion of them are becoming upper class. More often, it is because expenses rise faster than prevailing wages. The mark of the middle class, to me, is being able to comfortably pay all living expenses with all adults in the household working no more than one full-time job (probably salaried, but not necessarily) at 40 hours per week. You can get everything you need with just one job, and some of what you merely want.
The instant you cross that line where you have to abandon desires and work longer to make ends meet, you're in the lower class. There are certain needs in the US that are not actually survival-level necessities, but rather mandatory to meaningfully participate in civil society. Those have expanded. In earlier decades, you essentially just needed a motor vehicle, a location-based telephone number, and a mailing address. Now, you also need one or more person-based telephone numbers, an Internet connection, and various forms of insurance. Expense categories expanded, even as costs for each expense rose. Median wages stayed stagnant. So people drop out of the middle class. They stop going to the movies and take on more hours or a part time job in order to pay their phone bill.
>Median wages stayed stagnant. So people drop out of the middle class. They stop going to the movies and take on more hours or a part time job in order to pay their phone bill.
But we can get that "side-hustle" now, so that makes it all right?
Right. Those Uber ads are rather tone-deaf to fears of downward class mobility. They try to paint the company as helping middle-class people earn extra money to buy the things they want, when in actuality the majority of rides are driven by lower-class people that are trying to earn their living as drivers.
One person's second job may be another's primary source of income.
I take most of these articles with a grain of salt. The Washington Post has not (lately, at least) been a source of hard hitting analysis. Additionally, this study has not been peer reviewed, but they certainly treat it as though it has.
Looking at the charts and the analysis - one concern raised is that workers starting out in 2010 had lower real wages than their counterparts from 1969.
A really simple explanation might be that in 2010 we were still in the deepest part of the biggest recession in recent history. What do you think that would do to starting wages?
I know there is a narrative they are trying to tell, but in the past 12-24 months they are so obviously biased I simply don't believe anything they write anymore.
Edit: I might add that I worry very much about the decline of the middle class. The problem is I don't trust any news source to tell me objective truths, and the more I dig for this information the more the black and white rhetoric doesn't seem to fit.
Thank you, I'm glad to see another comment like this. I've also started avoiding WP for similar reasons; it feels as though they've been trying to become Fox News for the left, which is not what I'm looking for in journalism. More and more it feels like discussion is being dominated by irrational actors, and news orgs pander to this for eyeballs.
You are cherry picking on the 2010 issue. The graphs show lines for the beginning of every decade since 1980. The year 2000 was basically the peak of the .com bubble, and it still showed 25 year olds making less than 25 year olds in 1980.
I get your point about selecting data from any individual year, but the trend lines shown in the graphs cover entire periods.
The peak for the average worker seems to revolve around 1965-1970, based upon various stats that I've read. This jives with my personal experience also. My father, who was employed in manufacturing as a foreman (and later, cost accountant, after earning his degree), was on his way up until the late 1970s. It was right around that time that manufacturing operations in the midwest and northeast started their first moves toward lower labor costs by relocating plants to the south and southeast (later, even this would not be enough and they would move to Mexico, China, etc.). The main purpose seemed to be union-busting. It practically killed our family, financially. My parents used up all of their savings (quite a bit, I might add) while my father tried, in vain to find employment. They had to sell their custom-built dream home (think modest 70s home, not modern McMansion monstrosity), and we were, technically, homeless for half a year while we lived with my aunt/uncle. My father eventually found employment as a cost accountant, but we had to uproot our lives and move to Florida. And, more importantly, my father's real earnings never recovered and he never got back to the level he had previously earned.
There's a lot of evidence to show that all of this was intentional and orchestrated:
I wonder when it is going to become clear that America's economic growth has peaked.
I recently read that Warren Buffet made the point in 2006 that in order for America to continue growing as it has for the last century, the Dow would have to surpass 2,000,000 by 2099, and during the years 2000-2006, it didn't grow at all from its place at roughly 11,000 (but now it appears to be growing again).
Sidestepping the question of whether or not it has peaked, and when that peak was/is, it seems to be in everyone's best interest to at least pretend that it has not, and perhaps, will never.
I assume you mean, the size of the economy has peaked. The rate of growth was never thought to be increasing (i.e., it didn't grow 4% one year, 4.1% the next, etc.).
This question is answered by well-known data, GDP growth. That popular number represents, effectively, the increase in the economy's size every year. The U.S. economy has grown and continues to grow every year since 1950, with the only exception being 2008, the worst year of the Great Recession.
What does that mean? If it means, literally, U.S. Gross Domestic Product has reached its peak, then my point that the GDP has grown every year but one since 1950 answers the question. To be clear: Every year since 1950, except one, the U.S. GDP has been larger than the year before.
Well, in the case of oil, the limiter is a physical thing - accessible petroleum deposits. (which; things like fracking and shale oil were able to somewhat mitigate or replace).
In the case of economic growth, it's productivity (which is a function of automation), and monetary supply (which is a function of fiscal policy guys playing chicken with the banks). It's not clear that there is a hard physical limit on either of these quantities.
In fact: the innovation represented by automation, might also be seen as similar to the factors against peak oil: as fracking and shale oil are also technical innovations.
I'm not talking about the rate of growth peaking. I'm talking about the size of the economy.
You've only illustrated my point. Everyone is very highly incentivized to believe that the growth of the economy is infinite. I mean, just look at the numbers! It only grows, never shrinks.
Is it really possible for economic activity in a country to grow forever with no upper limit? If not, then what's the upper limit?
An interesting question, but I think theoretical at this point. The evidence is very strong, not only in the U.S. but in other advanced economies who all perform similarly. In addition to the evidence, expert opinion (economists) seem unanimous; that is, I've never heard one say otherwise.
Fundamentally, the size, i.e., the output of the economy is easy to compute: Inputs (resources, such as labor and capital) x Productivity (how much benefit is wrung from the same resources).
The inputs generally increase. One major input that increases is labor. As the population grows, there are more people doing productive work. Productive workers, which is almost everyone with a paying job and very many without one (homemakers, volunteers, etc.), produce more than they consume - an important point. It's not a zero-sum situation; adding people doesn't reduce everyone's slice of the pie, it makes the pie bigger.
Productivity also increases. You see it in SV every day, with better and better software, as one simple example. Every improvement in knowledge and technology, in every field, adds to productivity. Is there a limit to productivity? It's hard to imagine, but if there is then we're nowhere near it.
> Everyone is very highly incentivized
Or maybe the evidence is very strong. For example, is everyone is incentivized to believe the theory of gravity, or is the evidence very strong?
I appreciate that business is not zero-sum, but what happens to a non-zero sum when parts start getting subtracted from it? The population is growing at a rate of about 1%, but labor participation is down around 14 million people since 2002, and has not started to bounce back. And how does widespread underemployment, a growing deficit, and billions of dollars in debt owned to foreign countries play into the picture?
Call me Chicken Little but I don't see how economists can be optimistic about growth until all or at least some of these trends start going in reverse. Economic growth doesn't just result from coming up with snazzier software - it requires citizens to acquire and deploy capital.
* 14 million is a big number, but it's less than 5% of the U.S. population. I do agree that it's a serious concern, but because of the welfare and economic opportunity for those people, and because of the social disruption of economic inequality; the economy in aggregate is doing well. For those interested, you can find the numbers here (you can adjust the years at the top):
https://data.bls.gov/timeseries/LNS11300000
* Debt is a bad word colloquially, but in finance / business / economics, it's actually a great efficiency: Instead of useful resources (e.g., money) sitting around unused (e.g., in a vault), they are lent out to others to make productive use of. Financial institutions are like Airbnb for money - others get to rent your asset while you don't need it, and you make something from it. Borrowing is fine as long as you are generating more income from the borrowed funds than it costs you - e.g., as long as the software you build with the borrowed funds earns a better return than the interest you owe. Generally, that works out well or people wouldn't have a reason to lend or borrow.
* As of December 2015, of the total U.S. federal government debt, 40% was held by foreigners. Interest paid was $94.9 billion that year. The U.S. economy was ~18 trillion that year, so the debt service was ~1/180th of U.S. income; not a problem. Source: https://fas.org/sgp/crs/misc/RS22331.pdf
I'm glad you're not an economist, because neither am I!
I'm of the mind that the recent jump in indicators like GDP and the Dow are more likely a result of corporate stock buyback programs than any real recovery. Corporate America spent about 4% of GDP on buybacks just last year. Meanwhile the GDP grew by half that amount. Stock buybacks are specifically designed to move stock prices higher.
I understand that debt can be used strategically, but America is running consistently in the red. So although the part of the national debt that's foreign-owned is small, it represents wealth that has permanently left the country.
It's possible to make money with fewer and fewer employees, and it takes less money to meet our basic needs and entertain ourselves. The result is declining birth rate and income. It is going to continue in this direction and we don't know what to do about it.
The article also doesn't take into account education and housing debt. Not only do you make less, more of what little you make goes toward things that would have been paid off after a few years. Add to that the expectation that the younger generation is footing the Medicare and social security bill for baby boomers and you have a case of generational servitude.
I have seen a ton of these kinds of articles posted here over the years, but none of them touches on what PG wrote in one of his essays: the reason salaries were so high after the war and until the 70is were that the US was the only country that had a modern, intact industrial base and so it was worth it for the companies to overpay for labor, in the same way that it is worth it for a start-up to overpay for e.g servers.
Later, after the boom, they started to cut their overspending.
So where did the "excess" from the "overspending" go in your model? Surely it didn't bring up the standard of living worldwide, because we'd have noticed it by now. No, your term "overspending" is far too loaded for me to believe in.
I am far more inclined to believe the Investor Class has been doing their damndest to widen the wealth gap at every opportunity since WWII, and wouldn't you know it, all the numbers add up. It's much more like there was a healthy dynamic between management, investors, and the working class, and it's all been shot to shit in the name of quarterly profiteering and Ayn Rand "bootstrap" delusions.
The Ayn Rand I know would throw all of our modern "capitalists" in prison for their theft, deceit, and immoral desire for the unearned. Best not to get your opinions second or third hand from the deliberately dishonest.
After World War II, about the time the US was about to begin its boom, people in Holland had to go out near the coal trains so that they could pick up whatever coal had fallen off the trains, or they would have nothing to heat their homes with; Germany was flattened as was Japan and Korea. Meat rationing in the UK did not end until July 4, 1954 – that's almost a decade after the war. Japan did not start getting back on its feet until the Korean War.
I have been to Germany and I can personally assure you that the life they live now is nothing like it was in 1950. So yeah, there's your rising standard of living worldwide. Key point _worldwide_, although some of it also happened to US.
I think it is actually a lot worse than household incomes suggest. Having a parent stay home is tremendously valuable to a household in providing childcare, food preparation and all sorts of other valuable labour. None of this gets measured in incomes/GDP but as soon as you have both parents working and paying for childcare, paying for prepared meals and so on it does get measured in household income and GDP. So when we just look at household income we're actually underestimating the decline because there also used to be more unmeasured value provided by stay at home parents.
When I see a statement such as, Income in men declined 10-19% over several decades, I think:
OK. Why? Is the ratio of young/old different from before? Were those living on social security included in those stats? What does that have to do with wages? Is it because men are choosing different jobs? Is it because they are working fewer hours? Is it because they are choosing to earn less, because cable TV and internet connection are enough? Is it because cars cost less? Is it because, generally over the population, men are choosing activities other than work? Is it because feminists have changed women who have changed men into deciding not to marry women, generally over the population, which reduces the drive or opportunity to pursue larger incomes? Is the pay hidden somehow, more now than before, going to medical costs instead of salary?
The conclusions in the news article depend heavily on definitions for "middle class" and "workers" and seem to assume that wealth equals money and that income equals wages.
Consider that women and African Americans were exclusively fenced off on the fringes of the workforce.
Between increased domestic supply of workers, increased supply of foreign workers, globalization and demographic drag as we need to pay the pensions of the baby boomers with smaller cohorts of workers. Combine that with anti-labor policies and its a no brainer why earnings are dropping.
I thought the question was going to be "why?" but instead the question they purported to answer was "when did it start?" Kind of a click-baity headline by the WP; I wish they had a "did not meet expectations" button :(
69 comments
[ 3.2 ms ] story [ 127 ms ] threadI also wonder if two income earners are likely to earn more money than a single income earner for a given labor demand, considering overhead of employment, which I think has also increased over time (e.g. benefits). That couple explain some of wage stagnation, I'd bet.
What will be interesting is if the more recent trend of young men leaving the labor force will put upward pressure on wages, or if the jobs will just disappear.
I REALLY like the idea of looking the cumulative burden of employer-born costs of employees as the percentage of dual earners goes up.
my "bet" is that you'd find that the cost of those benefits have been growing at par with the women's labor force participation rate. Take a look at the charts in the Slate Star Codex post on Cost Disease, and overlay the growth in Women's labor force participation rate, and growing pay equality. The relationship is likely not perfectly causal, but there might be a meaningful effect in there.
wage stagnation is tied to the growing wealth of the top 1%, not working women.
Adding workers adds wealth per capita; it's not a zero-sum situation. Adding more workers to the economy grows the economy, by more than the salaries of those workers (if they cost more than they produced, they wouldn't be hired). Now all these women are producing value, they increase productivity, and they also can afford to buy things from you.
Consider it this way: Where would you rather open your store, a town where only the men work, or where both the men and the women work?
On average, workers born in 1942 earned as much or more over their careers than workers born in any year since
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.
While economists have been concerned about recent data on earnings, the new paper suggests that ordinary Americans have been dealing with serious economic problems for much longer than may be widely recognized.
The new research shows that in the past, a good guide to forecasting typical career earnings among Americans of a given age has been their average income they were 25.
Young workers’ incomes are still declining today, suggesting that their trajectories over the rest of their careers will be lower as well.
https://www.reference.com/education/percentage-americans-phd... says: "According to U.S. Census 2013 data, 1.68 percent of Americans over the age of 25 have a PhD. [...] [Adding in medical doctors], the total percent of Americans referred to as doctors equal to 3.16 percent."
I'm guessing only a small part of those will be what you would call "high value", so I don't think there's enough there to shift the statistics in the way you say.
1940s is also the time when US companies started offering health insurance, moving more of the compensation into non-monetary realm (health, dental, vision, life insurance policies, stock options and stock purchase plans).
The tax code also evolved to the point where it's extremely lenient on non-monetary benefits (e.g., health insurance is deductible for companies) and extremely punitive on monetary compensation (top-bracket 39.6% income tax rate, for example, is higher than cigarette tax or gasoline tax, which sends a rather interesting message to the public).
Edit: and 120k/yr is nowhere near "upper-class"
http://www.taxpolicycenter.org/statistics/household-income-q...
1: http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hop...
Additionally, if the wealth distribution curve for the country is basically a backwards "L" with the bend at the ~99th percentile, the difference between the 60th and 80th percentiles isn't really meaningful since the "upper class" is clearly the 99th percentile.
Edit: obviously there are also social caste connotations that used to be applied here too, but I'm only interested in the economic definition.
From Merriam-Webster: a social class occupying a position above the middle class and having the highest status in a society
Many of the HN regulars are upper income, but very few would qualify as upper class (most of us lack the political and social connections).
Citation needed.
What, exactly, is the magnitude of the effect of single-parent homes on the size of the middle class? Without answering that, your "gut instinct" explanation, if that's what it is, is meaningless.
One major conclusion of their research is that the family income of children whose parents divorce and remain divorced for at least six years falls by 40 to 45 percent.
http://www.nber.org/digest/jul02/w8786.html
As per the Census Bureau (table F-10), in 2014, married couple families with one or more children under 18 years, earned an average income of $111,278. In other words, traditional two-parent families earned an income that was more than three times higher than for households headed by a single mother.
http://www.forbes.com/sites/aparnamathur/2015/11/18/the-cost...
Saying that the income of a single-parent family is lower does not remotely answer the question of "What is the magnitude of the effect of single-parent homes on the size of the middle class?"
I actually went and looked up the tables in the census: https://www.census.gov/data/tables/time-series/demo/families...
We have the same percentage of single parent families now as in 1995 (29%). That's over 20 years, the number has barely budged. So how does your answer relate to the question of the decline of the middle class since then?
Besides, two salaries won't move you from middle class to upper class.
Certainly, there is some fuzz and overlap there. A retiree earning $50k/year on dividends and capital gains meets that criterion, while a top-shelf skilled professional or DINK couple earning $400k/year solely from working 40 hours per week (each) does not. The latter could certainly become upper class rather easily just by paying off debt, avoiding unnecessary expenses, and dumping excess cash into index funds, but as long as that plan can be cut short by two simple words ("you're fired") they haven't crossed that class boundary yet.
Generally, when the middle class shrinks, it isn't because a significant portion of them are becoming upper class. More often, it is because expenses rise faster than prevailing wages. The mark of the middle class, to me, is being able to comfortably pay all living expenses with all adults in the household working no more than one full-time job (probably salaried, but not necessarily) at 40 hours per week. You can get everything you need with just one job, and some of what you merely want.
The instant you cross that line where you have to abandon desires and work longer to make ends meet, you're in the lower class. There are certain needs in the US that are not actually survival-level necessities, but rather mandatory to meaningfully participate in civil society. Those have expanded. In earlier decades, you essentially just needed a motor vehicle, a location-based telephone number, and a mailing address. Now, you also need one or more person-based telephone numbers, an Internet connection, and various forms of insurance. Expense categories expanded, even as costs for each expense rose. Median wages stayed stagnant. So people drop out of the middle class. They stop going to the movies and take on more hours or a part time job in order to pay their phone bill.
But we can get that "side-hustle" now, so that makes it all right?
One person's second job may be another's primary source of income.
Looking at the charts and the analysis - one concern raised is that workers starting out in 2010 had lower real wages than their counterparts from 1969.
A really simple explanation might be that in 2010 we were still in the deepest part of the biggest recession in recent history. What do you think that would do to starting wages?
I know there is a narrative they are trying to tell, but in the past 12-24 months they are so obviously biased I simply don't believe anything they write anymore.
Edit: I might add that I worry very much about the decline of the middle class. The problem is I don't trust any news source to tell me objective truths, and the more I dig for this information the more the black and white rhetoric doesn't seem to fit.
I get your point about selecting data from any individual year, but the trend lines shown in the graphs cover entire periods.
There's a lot of evidence to show that all of this was intentional and orchestrated:
http://www.laborrising.com/2013/07/union-organizing-and-the-...
Note, this was written in 1979, after about 10 years of the effects of the efforts of organizations like the Business Roundtable.
BTW, I can't help but add: the small hometown where I grew up in the midwest now has a pretty bad Oxy/Heroin/Meth problem on its hands.
The era also coincides with massive amounts of women entering the workforce.
I recently read that Warren Buffet made the point in 2006 that in order for America to continue growing as it has for the last century, the Dow would have to surpass 2,000,000 by 2099, and during the years 2000-2006, it didn't grow at all from its place at roughly 11,000 (but now it appears to be growing again).
Sidestepping the question of whether or not it has peaked, and when that peak was/is, it seems to be in everyone's best interest to at least pretend that it has not, and perhaps, will never.
I assume you mean, the size of the economy has peaked. The rate of growth was never thought to be increasing (i.e., it didn't grow 4% one year, 4.1% the next, etc.).
This question is answered by well-known data, GDP growth. That popular number represents, effectively, the increase in the economy's size every year. The U.S. economy has grown and continues to grow every year since 1950, with the only exception being 2008, the worst year of the Great Recession.
http://www.multpl.com/us-gdp-growth-rate/table/by-year
In the case of economic growth, it's productivity (which is a function of automation), and monetary supply (which is a function of fiscal policy guys playing chicken with the banks). It's not clear that there is a hard physical limit on either of these quantities.
In fact: the innovation represented by automation, might also be seen as similar to the factors against peak oil: as fracking and shale oil are also technical innovations.
You've only illustrated my point. Everyone is very highly incentivized to believe that the growth of the economy is infinite. I mean, just look at the numbers! It only grows, never shrinks.
Is it really possible for economic activity in a country to grow forever with no upper limit? If not, then what's the upper limit?
Fundamentally, the size, i.e., the output of the economy is easy to compute: Inputs (resources, such as labor and capital) x Productivity (how much benefit is wrung from the same resources).
The inputs generally increase. One major input that increases is labor. As the population grows, there are more people doing productive work. Productive workers, which is almost everyone with a paying job and very many without one (homemakers, volunteers, etc.), produce more than they consume - an important point. It's not a zero-sum situation; adding people doesn't reduce everyone's slice of the pie, it makes the pie bigger.
Productivity also increases. You see it in SV every day, with better and better software, as one simple example. Every improvement in knowledge and technology, in every field, adds to productivity. Is there a limit to productivity? It's hard to imagine, but if there is then we're nowhere near it.
> Everyone is very highly incentivized
Or maybe the evidence is very strong. For example, is everyone is incentivized to believe the theory of gravity, or is the evidence very strong?
Call me Chicken Little but I don't see how economists can be optimistic about growth until all or at least some of these trends start going in reverse. Economic growth doesn't just result from coming up with snazzier software - it requires citizens to acquire and deploy capital.
* 14 million is a big number, but it's less than 5% of the U.S. population. I do agree that it's a serious concern, but because of the welfare and economic opportunity for those people, and because of the social disruption of economic inequality; the economy in aggregate is doing well. For those interested, you can find the numbers here (you can adjust the years at the top): https://data.bls.gov/timeseries/LNS11300000
* Debt is a bad word colloquially, but in finance / business / economics, it's actually a great efficiency: Instead of useful resources (e.g., money) sitting around unused (e.g., in a vault), they are lent out to others to make productive use of. Financial institutions are like Airbnb for money - others get to rent your asset while you don't need it, and you make something from it. Borrowing is fine as long as you are generating more income from the borrowed funds than it costs you - e.g., as long as the software you build with the borrowed funds earns a better return than the interest you owe. Generally, that works out well or people wouldn't have a reason to lend or borrow.
* As of December 2015, of the total U.S. federal government debt, 40% was held by foreigners. Interest paid was $94.9 billion that year. The U.S. economy was ~18 trillion that year, so the debt service was ~1/180th of U.S. income; not a problem. Source: https://fas.org/sgp/crs/misc/RS22331.pdf
I'm of the mind that the recent jump in indicators like GDP and the Dow are more likely a result of corporate stock buyback programs than any real recovery. Corporate America spent about 4% of GDP on buybacks just last year. Meanwhile the GDP grew by half that amount. Stock buybacks are specifically designed to move stock prices higher.
I understand that debt can be used strategically, but America is running consistently in the red. So although the part of the national debt that's foreign-owned is small, it represents wealth that has permanently left the country.
It's possible to make money with fewer and fewer employees, and it takes less money to meet our basic needs and entertain ourselves. The result is declining birth rate and income. It is going to continue in this direction and we don't know what to do about it.
And the fact that we will never see a dime of Social Security.
Later, after the boom, they started to cut their overspending.
I am far more inclined to believe the Investor Class has been doing their damndest to widen the wealth gap at every opportunity since WWII, and wouldn't you know it, all the numbers add up. It's much more like there was a healthy dynamic between management, investors, and the working class, and it's all been shot to shit in the name of quarterly profiteering and Ayn Rand "bootstrap" delusions.
But the worldwide standard of living has massively increased over the past 50 years.
I have been to Germany and I can personally assure you that the life they live now is nothing like it was in 1950. So yeah, there's your rising standard of living worldwide. Key point _worldwide_, although some of it also happened to US.
OK. Why? Is the ratio of young/old different from before? Were those living on social security included in those stats? What does that have to do with wages? Is it because men are choosing different jobs? Is it because they are working fewer hours? Is it because they are choosing to earn less, because cable TV and internet connection are enough? Is it because cars cost less? Is it because, generally over the population, men are choosing activities other than work? Is it because feminists have changed women who have changed men into deciding not to marry women, generally over the population, which reduces the drive or opportunity to pursue larger incomes? Is the pay hidden somehow, more now than before, going to medical costs instead of salary?
The conclusions in the news article depend heavily on definitions for "middle class" and "workers" and seem to assume that wealth equals money and that income equals wages.
Between increased domestic supply of workers, increased supply of foreign workers, globalization and demographic drag as we need to pay the pensions of the baby boomers with smaller cohorts of workers. Combine that with anti-labor policies and its a no brainer why earnings are dropping.