16 ms·

The American Middle Class Hasn't Gotten a Raise in 15 Years

85 points by api 12y ago

api 12y ago
I post because it's true and interesting, but the real trend goes back a lot further: to ~1970. http://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg http://thecurrentmoment.files.wordpress.com/2011/08/producti... Among other things, I think this exonerates Silicon Valley. Information tech did not cause this. I've smelled an agenda to frame SV and its larger economic and cultural orbit for middle class woes for several years, mostly emanating from curmudgeonly journalistic and literary circles. I think it's total baloney... the dates just don't match up. This murder occurred while the suspect was in diapers. Interesting in light of all the recent discussion around Peter Thiel's new book which argues that fundamental (as opposed to just incremental) technological innovation has slowed in most areas since roughly the same date. I would add the above graph to the very long list of things that went off the rails in the 70s. I'm very heartened by all this talk, especially given that it's coming from multiple points on the political landscape. I'm hearing liberals, conservatives, and libertarians all talking about how something really broke around that time-- something I've personally believed very strongly for many years. For years I've said that on or around 1970 "the future was cancelled." As for why-- I don't know. I scribbled down my own hypothesis here: http://adamierymenko.com/c/ http://adamierymenko.com/c/
- cm2012 12y ago
  The article actually explains away a lot of the differences from 1970-1999 by accounting for aging and household size.
  - api 12y ago
    I've been staring at a lot of these kinds of graphs for years. Most of them show gains in middle class income in the late 90s, which means that the statement "the middle class hasn't gotten a raise in 15 years" is accurate. Yet when you zoom way out nearly everything I've seen shows the decoupling starting around 1970 or shortly thereafter. It simply experienced a blip in the opposite direction from roughly '95 to 2000 and then the trend both resumed and accelerated. In stock trading they say "nothing goes straight up and nothing goes straight down," but the overall trend is what's important.
    - selimthegrim 12y ago
      So you think Balaji Viswanathan was right when he said the Paper Belt was going to pin it on the Maker Belt? (paraphrasing)
- hammock 12y ago
  You might enjoy this: http://strikemag.org/bullshit-jobs/ http://strikemag.org/bullshit-jobs/ Specifically the part where it talks about how the current establishment is squeezing the value-creating workers (teachers, police, factory workers, artists, mechanics, etc) while ballooning the "bullshit jobs" (school and hospital administration, lobbyists, PR researchers, consultants, etc)
  - seivan 12y ago
    Wow! I've been saying this ever since I saw the paper pushers at school taking a "fika" break every 15 minutes making us queue for hours just to turn in papers to our teachers. We call those "filfak" in Sweden. The "philosophical" faculty. Basically non-value creating personell that leeches on those who add value.
  - VLM 12y ago
    After reading the article I don't think the author has actually worked BS jobs. I have. BS jobs are more stressful because all you do all day is battle others with BS jobs, directly or indirectly. You're the footsoldiers of empire building. (edited to emphasize, we have a centrally controlled economy focused on limiting freedom, so rather than having 100 competing firms where footsoldiers would be highly advantageous, we have the .gov paid off to limit the marketplace to maybe 2 competing firms, each of 50 departments fighting tooth and nail with whichever department is weakest, lets say 25 of 50 of supposedly friendly internal departments, and the locals are a lot closer and more fun to fight than the competitor, so most of the foot soldier fighting is internal, not with customers or competitors) Humans are strong worthy opponents and battling them all day is tiring, either directly or indirectly as what amounts to being a toolsmith. TPS reports and such. A "real job" is much more asymmetric warfare. You, with high technology, cheap energy, financial capitalization tools, an advanced mechanized transport system, and health care support, vs a poor defenseless forest of trees. I wonder who will win? Even retail vs customer is fundamentally asymmetric warfare, not person to person warfare. Nationally, as per the article, we probably do spend only 10 or so hours per week working on average. But we also spend maybe 30 hours per week national average fighting other people, either directly or more likely as support troops. The purpose of this new procedure or report or process is solely for exec A to screw over exec B. Don't worry about the customers we have .gov on our side to eliminate competition. I don't feel bad about working these jobs. Some high level crook paid off the government to collect a huge amount of money in an unfair market. If I don't collect my share for basically doing nothing, the crook will get it. The system is designed so its completely outside my control other than accepting my cut for doing not much. Well OK then. My carefully designed TPS reports or new procedure or whatever will report my feudal overlord is better than the other feudal overlord. Whatever.
cm2012 12y ago
This is the first ever analysis I've seen of this that really digs into the different corollary factors - awesome! A perfect example of what I hoped 538 could do more of.
buckbova 12y ago
The trade deficit and globalization have more to do with this than demographics. "The United States has been running consistent trade deficits since 1980 due to high imports of oil and consumer products. In recent years, the biggest trade deficits were recorded with China, Japan, Germany, Mexico and Saudi Arabia. United States records trade surpluses with Hong Kong, Australia, Netherlands and Belgium." http://www.tradingeconomics.com/united-states/balance-of-trade http://www.tradingeconomics.com/united-states/balance-of-tra... http://economyincrisis.org/content/failed-trade-policies-have-erroded-middle-class http://economyincrisis.org/content/failed-trade-policies-hav...
programminggeek 12y ago
I think the fall of the middle class has a lot to do with a lot of different factors, but probably the biggest is the lack of negotiation that happens in our country by the average person. We are a country of price takers, not price setters. Most people are taking whatever price they are offered with no push back. No raises this year? Well maybe next year. Maybe a tiny bonus. Etc. Unions had their own set of problems and at some point might be unsustainable, but when people stop negotiating deals, they get taken advantage of. I've changed jobs more than some people I know because it would get me a better deal, and it has. But before that, I experienced myself and watched my parents stick to the same job without getting appropriate raises and bonuses for the work they did. In our current economy the best way to get a raise seems to be to switch companies because companies don't like giving raises and people don't like asking for them. Eventually what used to be a early raise negotiation will be a yearly job negotiation. It's starting to happen with younger workers and the more that is normal, the less efficient all these businesses will become. All because people stopped negotiating.
- Florin_Andrei 12y ago
  You negotiate with people you trust. When there's no trust, negotiations break down. The all-pervading "glue" of society is crumbling down.
  - bmmayer1 12y ago
    This might have something to do with the fact that we've outsourced much of our trust to the federal government. And no one trusts the federal government.
    - Florin_Andrei 12y ago
      Actually, your answer is not an explanation, but one of the numerous symptoms of this condition.
  - seanflyon 12y ago
    The only trust you need to negotiate is the trust that the other party will follow through on what they promised and we have the police to enforce that. Real trust is great, but you can negotiate without it.
deleted 12y ago
[deleted]
- quaffapint 12y ago
  What the linked article says... "Eighty-four percent of Americans have higher family incomes than their parents did." ...the question is "incomes" just raw income or did they adjust it? Clearly people will have more dollar bills, but that dollar bill doesn't go as far. I certainly know I'm not better off than my parents, I'm most definitely worse, but I still have a higher number on my paycheck. UPDATE:Parent comment was deleted, it referred to this... http://www.pewtrusts.org/en/research-and-analysis/reports/0001/01/01/pursuing-the-american-dream http://www.pewtrusts.org/en/research-and-analysis/reports/00...
squozzer 12y ago
Said Screwtape: If ever there were a bunch of stalks that needed their tops knocked off, it was surely they.
twoodfin 12y ago
In 1970, 55 percent of U.S. income was earned by households in the middle 60 percent of the income distribution. More than half of households were in what Pew Research Center has labeled the “middle tier” of households (those earning between two-thirds and twice the median income). In 2013, both numbers had fallen to about 45 percent. It's not clear that this is an apples-to-apples comparison, but this AEI chart suggests this statistic might not be as disheartening as it sounds: http://www.aei-ideas.org/2013/07/yes-the-middle-class-has-been-disappearing-but-they-havent-fallen-into-the-lower-class-theyve-risen-into-the-upper-class/ http://www.aei-ideas.org/2013/07/yes-the-middle-class-has-be... In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category. And that movement was so significant that between 1967 and 2009, the share of American families earning incomes above $75,000 more than doubled, from 16.3% to 39.1%.
- deleted 12y ago
  [deleted]
- api 12y ago
  "In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category." Is this for real? Are you actually serious? Go talk to some ordinary people, or maybe tour some of the country outside whatever rich coastal enclave you inhabit. Edit: to clarify: I don't trust the source. Doesn't it make you suspicious that AEI and their orbit are the only ones saying this while everyone else says otherwise? All I'm saying above is that my anecdotal experience clearly supports what "everyone else" is saying, not what AEI is saying. When I read stuff like that I'm like "uhh... what parallel universe is this from?" Pravda always had graphs that made the Communist Party look good too. (Side note: during the Bush years it really struck me how oddly "Soviet" the American right is in its thinking and character. I guess, like Nietzsche said, when you fight against something you become what you fight against.)
  - twoodfin 12y ago
    Does "everyone else" include progressive wonks like Matt Yglesias? http://www.slate.com/blogs/moneybox/2013/09/18/median_family_income_since_1989_is_the_stagnation_real.html http://www.slate.com/blogs/moneybox/2013/09/18/median_family... He's arguing that life has gotten better for the median family, not about how "fat" the distribution is around that family, but based on your other comments, I assume you think "everyone" agrees that things are getting worse.
jlmorton 12y ago
Any commentary on stagnant wages in the United States that does not mention health care is essentially not worth reading.
- bmmayer1 12y ago
  Explain?
  - jlmorton 12y ago
    Health care inflation has been substantially outstripping core inflation for the past several decades (though this trend has slowed, or possibly even reversed, in the past four years). Americans now spend nearly $18 of every $100 produced in the US on health care. For every $100 made in the United States, $1.50 is spent just on hospital administration. Wages are being eaten up by corporate health care expenditures.
- tsotha 12y ago
  Agreed. The amount employers are paying to employ people has gone up, in constant dollars. But the increase is getting eaten by the increased cost of providing health care.
  - forgotpasswd3x 12y ago
    Except for all the employees that don't receive health insurance through their employers...
    - tsotha 12y ago
      The bottom end has been held down by illegal immigration. You don't add eleven million people with sixth grade educations to the job market and expect wages for unskilled labor to go up.
  - f3llowtraveler 12y ago
    Increased regulation of health care == increased cost of health care.
serve_yay 12y ago
I fear the truth is worse, that some of us have gotten fairly large raises (or you might even say exited the middle class) and the rest are taking a pay cut relative to decades past.
forgotpasswd3x 12y ago
This post seems to have been flagged down pretty fast.

85 points by api 12y ago

api 12y ago

I post because it's true and interesting, but the real trend goes back a lot further: to ~1970. http://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg http://thecurrentmoment.files.wordpress.com/2011/08/producti... Among other things, I think this exonerates Silicon Valley. Information tech did not cause this. I've smelled an agenda to frame SV and its larger economic and cultural orbit for middle class woes for several years, mostly emanating from curmudgeonly journalistic and literary circles. I think it's total baloney... the dates just don't match up. This murder occurred while the suspect was in diapers. Interesting in light of all the recent discussion around Peter Thiel's new book which argues that fundamental (as opposed to just incremental) technological innovation has slowed in most areas since roughly the same date. I would add the above graph to the very long list of things that went off the rails in the 70s. I'm very heartened by all this talk, especially given that it's coming from multiple points on the political landscape. I'm hearing liberals, conservatives, and libertarians all talking about how something really broke around that time-- something I've personally believed very strongly for many years. For years I've said that on or around 1970 "the future was cancelled." As for why-- I don't know. I scribbled down my own hypothesis here: http://adamierymenko.com/c/ http://adamierymenko.com/c/

cm2012 12y ago
The article actually explains away a lot of the differences from 1970-1999 by accounting for aging and household size.
- api 12y ago
  I've been staring at a lot of these kinds of graphs for years. Most of them show gains in middle class income in the late 90s, which means that the statement "the middle class hasn't gotten a raise in 15 years" is accurate. Yet when you zoom way out nearly everything I've seen shows the decoupling starting around 1970 or shortly thereafter. It simply experienced a blip in the opposite direction from roughly '95 to 2000 and then the trend both resumed and accelerated. In stock trading they say "nothing goes straight up and nothing goes straight down," but the overall trend is what's important.
  - selimthegrim 12y ago
    So you think Balaji Viswanathan was right when he said the Paper Belt was going to pin it on the Maker Belt? (paraphrasing)
hammock 12y ago
You might enjoy this: http://strikemag.org/bullshit-jobs/ http://strikemag.org/bullshit-jobs/ Specifically the part where it talks about how the current establishment is squeezing the value-creating workers (teachers, police, factory workers, artists, mechanics, etc) while ballooning the "bullshit jobs" (school and hospital administration, lobbyists, PR researchers, consultants, etc)
- seivan 12y ago
  Wow! I've been saying this ever since I saw the paper pushers at school taking a "fika" break every 15 minutes making us queue for hours just to turn in papers to our teachers. We call those "filfak" in Sweden. The "philosophical" faculty. Basically non-value creating personell that leeches on those who add value.
- VLM 12y ago
  After reading the article I don't think the author has actually worked BS jobs. I have. BS jobs are more stressful because all you do all day is battle others with BS jobs, directly or indirectly. You're the footsoldiers of empire building. (edited to emphasize, we have a centrally controlled economy focused on limiting freedom, so rather than having 100 competing firms where footsoldiers would be highly advantageous, we have the .gov paid off to limit the marketplace to maybe 2 competing firms, each of 50 departments fighting tooth and nail with whichever department is weakest, lets say 25 of 50 of supposedly friendly internal departments, and the locals are a lot closer and more fun to fight than the competitor, so most of the foot soldier fighting is internal, not with customers or competitors) Humans are strong worthy opponents and battling them all day is tiring, either directly or indirectly as what amounts to being a toolsmith. TPS reports and such. A "real job" is much more asymmetric warfare. You, with high technology, cheap energy, financial capitalization tools, an advanced mechanized transport system, and health care support, vs a poor defenseless forest of trees. I wonder who will win? Even retail vs customer is fundamentally asymmetric warfare, not person to person warfare. Nationally, as per the article, we probably do spend only 10 or so hours per week working on average. But we also spend maybe 30 hours per week national average fighting other people, either directly or more likely as support troops. The purpose of this new procedure or report or process is solely for exec A to screw over exec B. Don't worry about the customers we have .gov on our side to eliminate competition. I don't feel bad about working these jobs. Some high level crook paid off the government to collect a huge amount of money in an unfair market. If I don't collect my share for basically doing nothing, the crook will get it. The system is designed so its completely outside my control other than accepting my cut for doing not much. Well OK then. My carefully designed TPS reports or new procedure or whatever will report my feudal overlord is better than the other feudal overlord. Whatever.

cm2012 12y ago

This is the first ever analysis I've seen of this that really digs into the different corollary factors - awesome! A perfect example of what I hoped 538 could do more of.

buckbova 12y ago

The trade deficit and globalization have more to do with this than demographics. "The United States has been running consistent trade deficits since 1980 due to high imports of oil and consumer products. In recent years, the biggest trade deficits were recorded with China, Japan, Germany, Mexico and Saudi Arabia. United States records trade surpluses with Hong Kong, Australia, Netherlands and Belgium." http://www.tradingeconomics.com/united-states/balance-of-trade http://www.tradingeconomics.com/united-states/balance-of-tra... http://economyincrisis.org/content/failed-trade-policies-have-erroded-middle-class http://economyincrisis.org/content/failed-trade-policies-hav...

programminggeek 12y ago

I think the fall of the middle class has a lot to do with a lot of different factors, but probably the biggest is the lack of negotiation that happens in our country by the average person. We are a country of price takers, not price setters. Most people are taking whatever price they are offered with no push back. No raises this year? Well maybe next year. Maybe a tiny bonus. Etc. Unions had their own set of problems and at some point might be unsustainable, but when people stop negotiating deals, they get taken advantage of. I've changed jobs more than some people I know because it would get me a better deal, and it has. But before that, I experienced myself and watched my parents stick to the same job without getting appropriate raises and bonuses for the work they did. In our current economy the best way to get a raise seems to be to switch companies because companies don't like giving raises and people don't like asking for them. Eventually what used to be a early raise negotiation will be a yearly job negotiation. It's starting to happen with younger workers and the more that is normal, the less efficient all these businesses will become. All because people stopped negotiating.

Florin_Andrei 12y ago
You negotiate with people you trust. When there's no trust, negotiations break down. The all-pervading "glue" of society is crumbling down.
- bmmayer1 12y ago
  This might have something to do with the fact that we've outsourced much of our trust to the federal government. And no one trusts the federal government.
  - Florin_Andrei 12y ago
    Actually, your answer is not an explanation, but one of the numerous symptoms of this condition.
- seanflyon 12y ago
  The only trust you need to negotiate is the trust that the other party will follow through on what they promised and we have the police to enforce that. Real trust is great, but you can negotiate without it.

deleted 12y ago

[deleted]

quaffapint 12y ago
What the linked article says... "Eighty-four percent of Americans have higher family incomes than their parents did." ...the question is "incomes" just raw income or did they adjust it? Clearly people will have more dollar bills, but that dollar bill doesn't go as far. I certainly know I'm not better off than my parents, I'm most definitely worse, but I still have a higher number on my paycheck. UPDATE:Parent comment was deleted, it referred to this... http://www.pewtrusts.org/en/research-and-analysis/reports/0001/01/01/pursuing-the-american-dream http://www.pewtrusts.org/en/research-and-analysis/reports/00...

squozzer 12y ago

Said Screwtape: If ever there were a bunch of stalks that needed their tops knocked off, it was surely they.

twoodfin 12y ago

In 1970, 55 percent of U.S. income was earned by households in the middle 60 percent of the income distribution. More than half of households were in what Pew Research Center has labeled the “middle tier” of households (those earning between two-thirds and twice the median income). In 2013, both numbers had fallen to about 45 percent. It's not clear that this is an apples-to-apples comparison, but this AEI chart suggests this statistic might not be as disheartening as it sounds: http://www.aei-ideas.org/2013/07/yes-the-middle-class-has-been-disappearing-but-they-havent-fallen-into-the-lower-class-theyve-risen-into-the-upper-class/ http://www.aei-ideas.org/2013/07/yes-the-middle-class-has-be... In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category. And that movement was so significant that between 1967 and 2009, the share of American families earning incomes above $75,000 more than doubled, from 16.3% to 39.1%.

deleted 12y ago
[deleted]
api 12y ago
"In other words, America’s “middle class” did start largely disappearing in the 1970s, but it was because they were moving up to a higher-income category, not down into a lower-income category." Is this for real? Are you actually serious? Go talk to some ordinary people, or maybe tour some of the country outside whatever rich coastal enclave you inhabit. Edit: to clarify: I don't trust the source. Doesn't it make you suspicious that AEI and their orbit are the only ones saying this while everyone else says otherwise? All I'm saying above is that my anecdotal experience clearly supports what "everyone else" is saying, not what AEI is saying. When I read stuff like that I'm like "uhh... what parallel universe is this from?" Pravda always had graphs that made the Communist Party look good too. (Side note: during the Bush years it really struck me how oddly "Soviet" the American right is in its thinking and character. I guess, like Nietzsche said, when you fight against something you become what you fight against.)
- twoodfin 12y ago
  Does "everyone else" include progressive wonks like Matt Yglesias? http://www.slate.com/blogs/moneybox/2013/09/18/median_family_income_since_1989_is_the_stagnation_real.html http://www.slate.com/blogs/moneybox/2013/09/18/median_family... He's arguing that life has gotten better for the median family, not about how "fat" the distribution is around that family, but based on your other comments, I assume you think "everyone" agrees that things are getting worse.

jlmorton 12y ago

Any commentary on stagnant wages in the United States that does not mention health care is essentially not worth reading.

bmmayer1 12y ago
Explain?
- jlmorton 12y ago
  Health care inflation has been substantially outstripping core inflation for the past several decades (though this trend has slowed, or possibly even reversed, in the past four years). Americans now spend nearly $18 of every $100 produced in the US on health care. For every $100 made in the United States, $1.50 is spent just on hospital administration. Wages are being eaten up by corporate health care expenditures.
tsotha 12y ago
Agreed. The amount employers are paying to employ people has gone up, in constant dollars. But the increase is getting eaten by the increased cost of providing health care.
- forgotpasswd3x 12y ago
  Except for all the employees that don't receive health insurance through their employers...
  - tsotha 12y ago
    The bottom end has been held down by illegal immigration. You don't add eleven million people with sixth grade educations to the job market and expect wages for unskilled labor to go up.
- f3llowtraveler 12y ago
  Increased regulation of health care == increased cost of health care.

serve_yay 12y ago

I fear the truth is worse, that some of us have gotten fairly large raises (or you might even say exited the middle class) and the rest are taking a pay cut relative to decades past.

forgotpasswd3x 12y ago

This post seems to have been flagged down pretty fast.