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Now, if worker compensation was growing significantly faster than inflation, wouldn't we expect the amount of disposable income to be higher, and hence savings

Now, if worker compensation was growing significantly faster than inflation, wouldn't we expect the amount of disposable income to be higher, and hence savings and debt to be lower? Not necessarily. If college education and its financing became more broadly available and increased expected lifetime earnings by more than the cost of the debt to pay for it (+ opportunity cost), you might expect to see many more households with college debt without your expected lower incomes. We've been living through two decades of historically low rates of interest and inflation. It's possible that had folks in the 1970's seen rates like that, they might have chosen to debt-finance more as well.

cromwellian 14y ago
It is true that credit is a lot easier to come by, and given American's trade deficit/capital account surplus, a lot more money across the world is flowing into the US, like crack into a poor neighborhood, obviously increasing borrowing above what it would have been in the 70s. I'm not sure how to square this, it pollutes the data. It does seem to me however, that given the loss of manufacturing jobs, and the increase in low end retail / service jobs, that there has been downward pressure on wages.