Posted on 06/24/2007 9:25:39 PM PDT by gpapa
WASHINGTON -- Seventy percent of Americans now say the economy is getting worse, a belief contradicted by a growing workforce, increased wages and household wealth, and a stock-market rally that has boosted worker-retirement investments.
(Excerpt) Read more at townhall.com ...
What's your source for that? I think you have it exactly backwards. After-tax real income, as reported on Federal tax returns, is increasing. Inflation adjusted household income has fallen in some income levels at the lower end, but households are also smaller nowadays, so per-capita income is holding up.
-ccm
Yes, I know, it’s from Brookings — but there are other studies that show a similar result.
MSNBC staff and news service reports
Updated: 12:25 p.m. ET May 27, 2007
The American dream has always held that each generation will enjoy a higher standard of living than the previous one, and that is still true, as measured by household income.
But the generational gains are slowing, and the increased participation of women in the work force is the only thing keeping the dream alive, according to an analysis of Census data released Friday.
A generation ago, American men in their thirties had median annual incomes of about $40,000 compared with men of the same age who now make about $35,000 a year, adjusted for inflation. That’s a 12.5 percent drop between 1974 and 2004, according to the report from the Pew Charitable Trusts’ Economic Mobility Project.
snip
“This suggests the up-escalator that has historically ensured that each generation would do better than the last may not be working very well,” said the report by Isabel Sawhill, senior fellow at The Brookings Institution, and John Morton, director of the Economic Mobility Project.
The report also found that many countries, including Denmark, Norway, Finland and Canada, offer far more economic mobility than in the United States when measuring by the income differences between generations.
snip
“Today’s data suggest that during a 30-year period of economic expansion, a rising tide did not lift all boats,” Morton said in a release accompanying the report, “Economic Mobility: Is the American Dream Alive and Well?”
Of course, the men who run American companies don’t have too much to complain about. CEO pay increased to 262 times the average worker’s pay in 2005 from 35 times in 1978, according to the report’s analysis of Congressional Budget Office statistics.
The pay gap between executives and the average worker continues to fuel outrage on Capitol Hill and among corporate shareholders nationwide. Many shareholder proposals to tie executive pay to a company’s operating or market performance are introduced at corporate annual meetings every year.
snip.
U.S. inflation-adjusted household incomes rose only 9 percent from 1974 to 2004 — a severe slowdown when compared with the 32 percent increase from 1964 to 1994.
Going back to 1820, per capita gross domestic product in the United States has grown an average of 52 percent for each 30-year generation, according to the report. But since 1973, median family income has grown only 0.6 percent per year, a rate that produces just a 17 percent increase over a generation.
“Thus, unless the rate of economic growth increases, the next generation will experience an improvement in its standard of living that is only one-third as large as the historical average for earlier generations,” the report said.
Over the next 18 months, the Pew project, which started in February, will continue to unveil analyses of data about the status of U.S. economic mobility.
Planned releases include a fact book containing mobility comparisons by race, gender, immigration and other measures, and an analysis of the impact of shifting federal investments in education and other domestic policies.
© 2007 MSNBC InteractiveThe Associated Press contributed to this report.
URL: http://www.msnbc.msn.com/id/18868904/
New Analysis Sees Men Failing To Reach Income Levels Of Previous Generation
New Project Studying Economic Mobility To Explore Health Of The “American Dream”
(WASHINGTON) – American men have less income than their fathers’ generation did at the same age, according to a new analysis released today by the Economic Mobility Project, an initiative of The Pew Charitable Trusts. Comprised of a Principals’ Group of experts from The American Enterprise Institute, The Brookings Institution, The Heritage Foundation, and The Urban Institute, the project seeks to investigate the health and status of economic mobility in America.
Today’s report, Economic Mobility: Is the American Dream Alive and Well?, was co-written by John E. Morton, managing director of Pew’s Economic Policy Initiatives and director of the Economic Mobility Project and Isabel V. Sawhill, Senior Fellow at the Brookings Institution and a Principal of the Economic Mobility Project. It includes analysis led by a research team at Brookings and outlines what economic mobility is, why it matters in today’s economy, and why it is important for policy makers to focus on mobility as part of the ongoing national economic debate.
According to the report, men who were in their thirties in 1974 had median incomes of about $40,000, while men of the same age in 2004 had median incomes of about $35,000 (adjusted for inflation). Thus, as a group, income for this generation of men is, on average, 12 percent lower than those of their fathers’ generation. While factors other than cash income also contribute to economic mobility, these data challenge the two-century-old presumption that each successive generation will be better off than the one that came before. The findings rely on new analysis of U.S. Census Bureau data.
In addition to the Principals’ Group, the project is also guided by a nonpartisan Advisory Board of nationally recognized economists, social scientists and policy experts. The initiative was launched in February and comes at a period of intense scrutiny of such issues as executive pay, the minimum wage and the quality of America’s public school system – the latter being of particular concern because education is widely agreed to be a key driver of mobility.
The expectation that each generation will do better than their parents has become a fundamental part of what we call ‘The American Dream’, but this new analysis suggests this bedrock belief may be shifting under our feet,” said Morton. “Income is not the only factor in overall economic mobility, but it is clearly a key component and today’s data suggest that during a thirty-year period of economic expansion, a rising tide did not lift all boats.”
“In modern America, mobility is increasingly a family enterprise,” said Sawhill. “While male incomes have decreased from that of the generation that came before, family incomes have risen slightly because more women have gone to work, adding a second earner to the family.”
The broader mobility story is complex with data challenges and many important questions left to be answered. Over the next year and a half, the Economic Mobility Project and its partners will research, analyze and present data to the broader public about the status of economic mobility in the United States. Future releases will include; a comprehensive fact book containing key data and trends about mobility, featuring chapters on race, gender, immigration and cross-national comparisons; a report on the leading factors or indicators behind economic mobility; and an analysis of shifting federal investments in education and other policies that may impact mobility.
The report and information about the project is available at www.economicmobility.org.
“Seventy percent of Americans now say the economy is getting worse”
Can’t we pass a law to keep pollsters out of our old age homes and metal institutions?
Find out who they spoke to and cut off the fruit cup for those people.
One of the best posts I've read on here in a long time! Well done.
I think they selectively chose data (as is typical with these Pew/Brookings studies) to make their point, rather than look at the data and see what it tells.
I know these risks very well.
The question about the future of the US economy or better the US consumption is quite old.
It is true that we have high personal debts and a negative saving rate. WE have a real estate bubble in some areas in the US ( but not only in the uS).
I am from germany and the german economy in the last decade showed how important (consumer) psychology is.
I believe if we see weak signs on the US labour market joining the general feelings of the consumer and the risks above we really have a problem ( or better the US).
And then it could be really hard because of the role of private consumption for the US economy. The US can not export their way out of the problem.
The incomes listed are in “constant dollars.” So the 1974 figures could have been $25,000 in 1974 dollars, which would equal about $40,000 in 2007 dollars.
The American consumer seems to be pretty much tapped out in terms of disposable income and debt. Our trade balance, particularly with China, is appalling. As is the illegal immigrant situation.
We seem to be addicted to cheap products, cheap labor and cheap credit.
This cannot be sustained much longer
Someone can make a strong case by using the arguments you refer to and some others but the present US private consumption numbers are still OK while this scenario is on the table for years now.
I mean who knows. I think it is very hard to make a judgment about individual situations by using very general numbers. There is no doubt that every additional burden for the US consumer is a huge problem for the uS economy.
I would at least agree that i would be really surprised if the growth numbers of the US government will come true. The first Q1 growth was really low but we will se how the Q2 will be.
Very well put. Outstanding post. The press has been singing that same note my entire life.
It’s interesting because I could live off of $25,000 here in the midwest just fine, but, when I lived in Los Angeles, 25 grand was considered living in poverty.
After tax income is not the same as wages as is pointed out in the article you cited. I posted that "individual wages, adjusted for inflation, have been decreasing for a number of years." The article you cited agrees with this.
... and that leads to the question:
What is inflation ?
Or what worth is a buck... if you don’t know how come you are happy with a 20% increase of your payment check ?
Your money grants you so different lifestyles and security depending on where on this planet or where in the US you are - what matters for the individual if there’s 3 or 7% inflation calculated by official guidelines.
These offical guidelines are even changed and adjusted ‘to be more valid’.
You are right those ideas work for an individual, but probably not for the whole society.
As a nation we have a debt based money system. Most money in circulation is debt, and as the debt is payed off the money disappears. Therefore in 10 years or 20 years if we are yet more productive then today, and more populus we will have to be further in debt then ever.
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