Home > upward income redistribution > Workers wages in the United States are lower today than they were back in 1972. (3 charts)

Workers wages in the United States are lower today than they were back in 1972. (3 charts)

from David Ruccio

BN-HY153_realwa_G_20150417085212 BN-HY156_bytheh_G_20150417085434

The Wall Street Journal notes that workers wages in the United States are lower today than they were back in 1972.

In particular, both average real weekly earnings and real hourly earnings of production and nonsupervisory workers peaked in October 1972 (“when Richard Nixon won re-election, Eugene Cernan became the last man to walk on the moon and the Dow Jones Industrial Average closed above 1,000 for the first time”) and they still haven’t reached that level more than four decades later.

fredgraph

To put this decline in workers’ wages in perspective, during the same period, worker productivity rose by about 70 percent.

Even more concretely, the weekly paycheck in October 1972 was the equivalent of about $811 in today’s dollars. If their wages had increased at the same rate as their productivity, today workers would be making $1378 a week. Instead, last month, average weekly earnings were just under $703.

So, workers are producing much more today than they did in the early 1970s but are still being paid less than they were then.

  1. BC
    April 17, 2015 at 11:55 pm

    http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=18bm

    David, the growth of debt-money (M2) supply and the associated growth of GDP is a much better metric for assessing the actual purchasing power of working-class wages and salaries, i.e., the bottom 80%+ of US households.

    By this metric and including the higher costs of payroll taxes, energy, and housing has a share of household income, the purchasing power of working-class earned income has fallen 75% since the mid-1960s.

    Consequently, by the same metric, the average salary of a new college grad today is equivalent to the 1970 purchasing power of MINIMUM WAGE.

    That is, it requires a university credential today in the US to compete for the equivalent purchasing power of minimum wage in 1970 at 40 hours/week and 52 weeks/year.

    Therefore, including the debilitating costs of regressive taxation of earned income, including self-employment, for a growing majority of Americans, it does not pay to sell their labor at a race to the bottom for subsistence after taxes, debt service, and unaffordable “health care” costs that are now 18-19% of GDP, $10,000 per capita, and $26,000 per household.

    Americans can no longer afford our (un)economic system, i.e., the cost of gov’t, “education”, debt service, and “health care”, which combined now equals an equivalent of 54% of GDP.

  2. April 19, 2015 at 6:30 pm

    Reblogged this on ihtis69.

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