Census Bureau Reveals Grim Facts about Real Earnings of Men

Women weren’t so lucky either. But who got the spoils?

On the surface, the annual household income data released by the Census Bureau today, looks mediocre. But beneath the surface, it looks grim – grim for whom? Ha, we’ll get to that.

So the mediocre news right up front:

Median household income in 2017, adjusted for inflation (via CPI), inched up a measly 1.8% to $61,372. “Household income” is the entire pre-tax “money income” of a household, including wages, interest, dividends, Social Security, Workers Comp, child support, and the like, but excluding capital gains. The mediocre news is that median household income has finally inched above where it had been 18 years ago, in 1999:

Now the grim news: bitter reality for men.

But it’s not great for women either: For women who were working full-time year-round in 2017, median wages (income obtained only from working) declined 1.1% on an inflation-adjusted basis to $41,977 – from a record in 2016 of $42,448.

So a hiccup perhaps in a well-deserved series of increases going back to 1960. The female-to-male earnings ratio remained at the record level of 80.5%, first achieved in 2016, up from the 60%-range before 1982.

But for men – oh dude! Median real earnings for men who worked full-time year-round fell 1.1% in 2017 to $52,146: On an inflation-adjusted basis, men had earned more than that in 1972 ($53,609). This translates into 45 years of real-earnings decline for men:

Men have suffered the brunt of the real-wage repression over the past four decades, obtained in part via inflation, an insidious process where wages inch up, but not quite enough to keep up with the Fed-engineered loss of purchasing power of the dollar – a process Wall Street economists praise with conviction.

In addition, even a slight but systematic and purposeful miscalculation of the Consumer Price Index (CPI), which is used to adjust this inflation-adjusted income data — for example a percentage point or less each year — is cumulative; and over the span of four decades, the real-real earnings decline is large. Wonder why many men are frustrated?

So who got the spoils?

“Earnings” in this data set are the fruits of labor – so wages, salaries, and the like. But “household income” includes “money income” from other sources:

  1. Earnings
  2. Unemployment compensation
  3. Workers’ compensation
  4. Social security
  5. Supplemental security income
  6. Public assistance
  7. Veterans’ payments
  8. Survivor benefits
  9. Disability benefits
  10. Pension or retirement income
  11. Interest
  12. Dividends
  13. Rents, royalties, and estates and trusts
  14. Educational assistance
  15. Alimony
  16. Child support
  17. Financial assistance from outside of the household
  18. Other income

“Household income” is measured on a pre-tax basis. But it does not include noncash benefits, such as food stamps, subsidized housing benefits, or healthcare benefits — a hefty amount for executives at big companies.

While household income includes income from investment (items 10, 11, 12, and 13 in the list above), it does not include capital gains and other forms of capital appreciation of any kind, from portfolio gains and home-price appreciation to stock options.

In terms of the income distribution, the proceeds from investment (items 10, 11, 12, and 13 in the list above) play a critical role at the upper end. Again, this income does not include capital gains! This is how the median household income, pre-tax and adjusted for inflation, has grown by income segment (quintiles) and for the top 5%:

The inflation-adjusted household income of the top 5% (red line) has soared by $202,000 (119%) since 1967, to reach $385,289 in 2017 (not including capital gains). Compare this to the bottom 60% of households (three lines at the bottom), whose incomes have booked tiny gains. The bottom 20%, with a mean of $13,258 in 2017, gained just $2,925, or 19%, over the past 50 years:

This phenomenon of disproportionate income gains at the top doesn’t even include capital gains, which would skew the chart into the stratosphere, thanks in part to the Fed’s QE and zero-interest rate policy (now finally on the way out) to accomplish Ben Bernanke’s wealth effect. He explained it to Americans in an editorial in 2010 in the Washington Post. The explicit purpose was to make the wealthy – who already had the most assets – wealthier so that they’d feel more confident in their genius and more satisfied with their lives after the heavy losses they took during the Financial Crisis, in the hope that they’d spend a little more. The first part worked: The wealth effect created the Everything Bubble. But if these capital gains were included, the chart would look truly absurd.

However, for the bottom quintile on the income scale, their real household income has dropped 8.6% since 1999.

On second thought, Mr. Bernanke, strangling the real incomes of the 60% or 80% of households that spend nearly every dime they make and on whom the economy relies for growth, while enriching some households at the top that don’t even spend their gains — well, this may not have been the most effective economic model over the longer term, no?

But the Fed has now changed its tune. QE is getting unwound and interest rates are rising. Read… Markets Increasingly Sure: 4 Rate Hikes in 2018

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  133 comments for “Census Bureau Reveals Grim Facts about Real Earnings of Men

  1. Lion says:

    Said well, stagnating the middle class incomes for decade after decade has/will suck the life out of this country’s quality of life (for the non-elites).

    That and the continued insanity of military spending. F35 comes to mind.

    But it seems like this is the plan ?

    • sierra7 says:

      “But it seems like this is the plan ?”

      From the Reagan administration:
      “American labor must be reduced to a world level playing field before US corporations can compete in the world.”
      The play plan is working exactly as planned.

  2. MF says:

    I’m glad you pointed out that capital gains aren’t included.

    The reason why these charts would go into the stratosphere if they were is because high earners favor capital gains via stock options over salary- and bonus-based income. It’s a great gig if you can get it.

    If taxes favored paying high-income execs via salary, you’d see a truer picture.

  3. Gershon says:

    Until the 99% in this country get fed up with being screwed over by the Fed and its oligarch handlers, nothing will change and our lives and futures will only get bleaker.

    • kevin says:

      I always thought the 99% WAS fed up back in 2009 with their Occupy Wall Street movement and what nots; after all the financial shenanigans gained wide publicity, and also further back in 2001 when hordes of retirees lost their shirts during the dot-com bubble & burst?

      And now in 2018, look at everyone mulling over Bitcoin and digital currencies bubbling and crashing again and worrying over their future livelihoods or pensions.

      Do you seriously think anything has changed with the herd? lol.

      Look, the sheeple do not learn and never will; partly because human lifespan is too short to effect meaningful societal change (I would argue it was deliberately shortened too… but I digress ;-), and partly because the 99% still BELIEVE in and still want IN on the current global monetary system (no matter how exploitative and unfair it is)

      The 99% sheeple will rant about the inequality of it all on Twitter and Facebook, but then in a heartbeat, they will buy a lottery ticket hoping to get on the fast track onto the same global financial system that they deem to be unfair and exploitative. How’s that for sincerity? lol.

      Not many has the courage to do a Hail Mary like this guy who decided he would pay a minimum wage of $70 quid to his employees.


      I honestly admit I would do no such a thing, it is just too socialistic IMO and I might even risk wrecking my company and end up damaging my employees livelihoods in the process.

      However, I respect his courage for trying to DO something about it, rather than just ranting online like so many of the 99%.

      If you want to change the financial system, why don’t you go start a company and see if you can survive financially and yet do something that is beneficial for your employees (i.e. the 99%).

      If you can’t or is unwilling to do something about it yourself, then what makes you think the 1% will do it for you (the 99%)?

    • max says:

      1) no honest money to stop growth of government

      2) too many regulations, too much taxes, which force business to go overseas.

      winners are government employees,
      all jobs that can not be outsourced to cheap country ( like government regulatory agencies, scientist, lawyers ),
      and professional association jobs which business practices limit or prevent competition from overseas ( like doctors )

      Businessmen like free markets until they get into a market; once they are in it they want to block entry to others.

      Murray N. Rothbard:
The “partnership of government and business” is a new term for an old, old condition. We often fail to realize that the point of much of Big Government is precisely to set up such “partnerships,” for the benefit of both government and business, or rather, of certain business firms and groups that happen to be in political favor.
      We all know, for example, that “mercantilism,” the economic system of Western Europe from the sixteenth through the eighteenth centuries, was a system of Big Government, of high taxes, large bureaucracy, and massive controls of trade and industry. But what we tend to ignore is that the point of many of these controls was to tax and restrict consumers and most merchants and manufacturers in order to impose monopolies, cartels, and subsidies for favored groups.

    • Nick says:

      What do you expect people to do short of violence in the streets? Do you REALLY think carrying signs and protesting, writing congress critters, etc. is going to change anything? I hate to say it but our country was founded on violent revolution (last resort of course) and that is the only thing that is going to make these banksters and government politicians start thinking about the little people. But the elites run the court systems etc. Going out and perpetuating violence, no matter how well justified, will land you in jail and ruin you nowadays. That’s the problem with America. We are a bunch of softies, a bunch of fat mice toppling over each other for the crumbs. The middle class should be banding together but we spend our lives trying to out compete each other thinking one day we will make it into the upper class. All this bs about left right politics is a distraction. The real war is most definitely class warfare but more specifically the middle class vs. the upper class. Or worse the working class vs. the white collar class to be honest.

      • kevin says:

        Nick, its BS to expect the middle class to “band together”. lol.

        Lets say you get a middle-class bloke with a fiery distaste of the 1% percenters trying to rally his troops for a revolution. Lets call him r her Redneck-Joe.

        All the 1% need to do is just offer some cash to Redneck-Joe or offer him a “business” opportunity to fast-track his wealth.
        If 100k quid cannot convince him, perhaps a million dollars will do it, or a job offer at some bank or even a free 1 year membership to an orgy club might do the trick?

        See what I mean? The point is the middle-class still believes in the global financial system and deep down still WANTS in.

        So don’t hold your breath for a revolution to topple the 1% and their hold on capital. It aint gonna happen until and unless you and you and you and you… is finally willing to give up on the current global capitalist paradigm, which I really doubt will ever happen.

        With the comfortable modern day conveniences and 24/7 entertainment options, most would rather be a comfortable financial slave than fight for any real change. You can’t even convince the sheeple to give up their TVs or Netflix, so you think the people will move their fat arses form their couches and fight for a better system? lol.

  4. MCH says:

    Let’s be sarcastic for a minute, this is going to go a long way to achieving equal pay for gender. At this rate of decline, we should be able to have a mission accomplished in may be 10 or 20 years. And its all thanks to the Fed.

  5. alex in san jose AKA digital Detroit says:

    The economy’s fucking wonderful right now, for the top 10%. And that’s who matter. Not you. Not I.

    We can just eat cake, or something.

    • Michael Fiorillo says:

      Working people have always been expected to take s&@! But now they’re expected to eat it.

    • polecat says:

      “We can eat cake, or something.”

      Would ‘hardtack’ suffice .. ??

    • vinyl1 says:

      I would expect most of the readers of a stock/economics/business blog to be in the top 10%. That starts at a household income of $112K, which is not really that high in many parts of the country.

  6. Justme says:

    Excellent article, Wolf. Men are frustrated, and they have every reason to be.

  7. rivereddy says:

    If the median wages for women are roughly $42,000 and for men $52,000, why is household income only $61,000? Surely the number of dual income households would more than offset the number of single income households, no?

    • Wolf Richter says:

      Lots of singles.

      • Gershon says:

        Millennials and Generation X males (I would not go so far as to call most of them “men”) are putting off marriage and household formation, both because of their failure to accept adult responsibilities, and because many would be non-viable candidates, earnings-wise, to marry or start a family. That is going to have a detrimental long-term effect on our society.

        In addition, with the entire system stacked against them, many men are turning to the MGTOW movement and swearing off marriage entirely.

        • Keeps changing says:

          It’s amazing how feminists ignore the issue of hypergamy. Women look to partner with those of equal or higher social (economic) status. With the income of female graduates now out-pacing those of male graduates, the perceived “acceptable” stock of male partners is in decline. Just look at the slew of articles where younger females are complaining about the lack of men; and of course, it’s a male problem.

          You could also throw in the issue of housing affordability as well, though this probably has more to do with fertility rates.

        • Tiger of Winter says:

          Well said. Thank you for saying what everyone sees…but is just a wee bit too PC to verbalise.

      • Ed says:

        Also, the one wage-earner family still exists.

        It might be more common at the low and high income groups and less common in the lower middle class, I’d hazard.

        • Wolf Richter says:

          I know a couple like that, kid is now 2 (a lightening bolt of energy), she’s staying home. She got married late, and it was a now-or-never kind of situation.

          He owns an ag company and is doing well, but he told me that he’s looking forward to the day his wife is going back to work because life is expensive these days.

        • alex in san jose AKA digital Detroit says:

          Ed – the scenario I can imagine where the one-wage-earner can raise a family is in a rural or semi-rural situation, where they own arable land and only need “cash money” for “store-boughten” things, and to pay taxes. They’ve got a garden, livestock, kids grow up knowing how to hunt and fish, and forage.

          They need to be able to make it on yearly average of half-time work at minimum wage. They may well make more, but they have to be able to keep it together on that little.

          There had better be no “sins” like addiction to drugs or alcohol, or gambling. Even gaming or porn will be too expensive in terms of time and money.

          They’d better have a good social network, too. This “all for one and every man for himself” that’s the basis of American society just won’t fly.

          So, we’re actually talking about Mormons, Amish, or any of the micro-sects of Christianity that tout this kind of life. You’re probably not going to make it being secular; secular people think too much. If there’s one thing in our society that’ll get you into trouble, it’s thinking too much.

        • Keeps changing says:

          There was an article in an Australian paper last week referring to a survey in which millennial men where complaining that workplace outcomes were increasingly favouring women. I wrote that this results from the pressure felt when starting a family and the male becomes the sole bread-winner. Halving the household income and increasing the number of mouths to feed makes one much more sensitive to loosing out on a promotion or wage rise.

        • Crysangle says:

          Single earner family is possible but you have to do the grounndwork. It does not mean being cheap on anything either. So an example I know is a single parent with family of several. Bought land and self built small house over a year ( person need not be physically strong, just perseverance – there are easier but not so good options even, like pre-fab ) , good location , good quality – outside of planning regs. but he knew what would pass, were other options inside regs. slightly more expensive. House cost five hundred dollars m2 total ( 50 dollars ft2) . Reduced all outgoings – solar energy for example, works fine. Car from fifteen yrs old low mileage , good condition economical a thousand dollars, insurance three hundred, repairs few/none. Local rates, a couple hundred dollars. Nice garden. Income is a thousand a month, does fine for all basics and more besides. People used to live like this in the past, raise good families – in fact often with less. It can be done. Like you say, it is important to find a fair community, like those you mention, or permies etc., because if you do not fit in /have no backup by numbers, other local people ( often via authorities) will pick on you, will cause difficulty one way or another. A main point is to choose somewhere you like living also (duh), where there are options of some variety not too far off if just living more remote is not your choice. This is maybe the hardest part, finding a good location to set up, that you are comfortable with, that you think will serve and stay good over the long term. Has to be looked on as an adventure, with its trials and rewards. Perseverance, planning, patience, improvisation all go far. Not for everyone, but for those with the can do, it is very worthwhile….small amount of savings, a years average physical work, and your world is your own. Within all of that you learn to appreciate many other ordinary things of the world around – you don’t have to be rich or in debt, these are things you could not buy, just have to take the iniative and make the effort.

      • d says:

        Thanks for a great website and articles. But ya left out the chart for women…

        • Wolf Richter says:

          Men and women each have their own line in the chart (blue for men, green for women).

          I have a request: Could you please add some additional letters or numbers to your alias “d”? There is a long-time commenter here who also uses “d” as alias. And it gets very confusing.


    • Petunia says:

      In the gig economy there is a lot of down time and long periods of uncompensated unemployment. If you don’t show up, they don’t pay you. If they don’t need you today, they don’t pay you. Some of that is buried in the wage suppression of the chart.

  8. OutLookingIn says:

    A Conversation:

    “What is that mob at the gates screaming about”?

    They want bread Madame. “Give it to them then.

    But there is no bread Madame. “Well, let them eat cake then”!

    We all know what happened after, to Marie and her husband Louis.
    This is what the elites have become terrified of. Hence the proliferation of “bolt holes” around the globe, with New Zealand being the favorite.
    They have sown the wind, now the time draws near for them to reap the whirlwind. They will save themselves and throw all others under the nearest bus.

    • Duke DeGuise says:

      You’re such a buzzkill: and here I was, expecting to party with Elon at his bars and nightclubs on Mars!

    • Caliban says:

      What will New Zealand do if an American Carrier Strike Group shows up offshore to “extradite” some of these people from those luxurious boltholes?

      • Ambrose Bierce says:

        44 might have done that, a boatload of marines sailing around the Caribbean visiting banks. A trillion dollars left the country, and when Bernanke realized the books didn’t balance he reflated the missing money. Setting up offshore tax shelters had became a cottage industry, there were seminars on how to do it. China currently has it own problems with capital flight. Now the US is a hot money destination. The US is a financial resource to be plundered. What the janitors and cab drivers are doing is really of no concern.

      • J Gayhart says:

        What person in any political party in America that would actually issue an order to do that? I don’t see anyone in either the Democratic or Republican party that would be willing to chase down their Masters to New Zealand. If anything, they probably would be ordering the Strike Group to escort them to their bunkers located there!

        Your assuming that if s**t hits the fan, an economic collapse or worse, that the sailors in the U.S. Navy would still be getting paid and still willing to take orders?

      • alex in san jose AKA digital Detroit says:

        Caliban – Hand ’em over, obviously. It’ll be like a free visit from the Orkin Man.

  9. KPL says:

    “On second thought, Mr. Bernanke, strangling the real incomes of the 60% or 80% of households that spend nearly every dime they make and on whom the economy relies for growth, while enriching some households at the top that don’t even spend their gains”

    What else do you think the Fed is good at?

    It is gonna be the same next time around. The sitting ducks are getting lined up.

    • Gershon says:

      After the tech bubble bust, the housing bubble bust, and the upcoming bust of the Everything Bubble created by the Fed’s Keynesian lunacy, perhaps the millions of Americans who lose their retirement funds and houses will finally get pissed off enough to do what we should’ve done in 2008: End the Fed.


      • two beers says:

        Oh, FFS.

        “[…] the upcoming bust of the Everything Bubble created by the Fed’s Keynesian Milton Friedman lunacy […]”


        If you demonstrated that you knew the difference between monetary policy and fiscal policy, your other, often good points would carry more weight, because you would be arguing from knowledge instead of ignorance.

        DuckDuckGo is your friend.

  10. Kenny Logins says:

    Those charts are sobering. Where does it end?
    The parasite seems to show no abating and would rather kill it’s host than taper it’s consumption.

    The plebs need to wake up and stop participating.

    Collapse the system then start again without the parasites sapping the bulk of their productivity.

  11. Old dog says:

    Great and timely article Wolf!

    3,000 years of history show that every time wealth inequality becomes as pronounced as it is now, a revolution, or war, ensues. Or, as it happened in Venezuela, society simply collapses.

    I can’t think of any exception to that principle. Because of that, I fear that the next decade in the US will be ugly. Ugly and awful. Especially for those in the middle income range who think they can dodge the worst. For the people who are already suffering, it’s already ugly and awful.

  12. Ian says:

    Thanks Wolf!!!
    I’m an occasional commenter and regular reader. Always interesting and instructive.
    This chart confirms my suspicion that things were better for most US workers – particularly the construction industry – in the 70’s than they are now.

    • Steve says:

      Valid point.
      That said I would argue that the primary causes for our current state, other than self-serving politicians, is:
      1) Globalization. Back in the 70’s, the US still enjoyed a near monopoly on productive capacity. That is no longer true.
      2) Tax reform act of 1986. Which capped exec comp for tax purposes and shifted to incentive comp. And so was born the twisted practice of stock options.

      Without stock options executive compensation would not be nearly as high as it is currently. And the perverse incentive to inflate stock prices above all else wouldn’t exist.

      • sierra7 says:

        Just proves that we live within a “….criminal enterprise system” with no police on watch.
        Another commenter above stated that “…..(para) when the people get fed up you get revolution….”
        Yes. But, in my opinion we aren’t there yet. There are many “sh56ho543” in America were many are “hurting” but there is too much of the country yet doing fairly well and don’t want that “revolution”….yet….

  13. North says:

    The charts show that real income flat lined from about the time of the end of the gold standard and the start of the petro-dollar.
    Or is the fiat petro-dollar designed to excessively reward capital over labor this disabling the bottom 9 deciles and enrich the the 1st.

    • Kent says:

      The US went to the petro dollar when the US reached peak internal oil production in 1972. The US started importing massive amounts of oil and the trade deficit ballooned.

      Income stagnation was a function of higher oil prices and inflation in the ’70’s coupled with the crushing of labor unions in the ’80’s and ’90’s. Wolf blames the Fed. I blame American voters.

      • Paul says:

        There is plenty of blame to go around, but I reserve a portion for the unions.

        All other things being equal, you can’t give something to somebody without taking it away from somebody else.

        To see that, you must look at the physical wealth produced, the goods and services and how they get apportioned based on the money flows.

        Physical wealth must be produced before it can be consumed.

        Just looking at the money, it is not evident.

        The unions were not crushed by voters, they were crushed by their greed.

        Higher wages without higher productivity produces only inflation.

        The minimum working wage in Thailand was increased by 65% about 5 years ago after a vote won by a populist party.

        Most workers get the minimum wage in Thailand.

        That increase in wages, however, did not make the crops grow faster, did not make chickens consume less feed while growing, etc.

        The result was simply that the price of food in general doubled in the next 6 months.

        I have not discussed it with anybody who thinks they are any better off now than before.

        • Wolf Richter says:


          You said, “There is plenty of blame to go around, but I reserve a portion for the unions. All other things being equal, you can’t give something to somebody without taking it away from somebody else.

          This is hilarious because how did the wealthiest get their wealth, according to your logic? Did you just provide an answer when you said: “you can’t give something to somebody without taking it away from somebody else.

        • Paul says:

          Yes, I am a conservative, and that is exactly what I think of unions.
          Are you aware that unions were an outgrowth of the “World Labor Movement”, better known as communism?

        • Wolf Richter says:

          McCarthy lives!

        • Bobber says:

          Paul, if you are against giving workers the ability to group and bargain, then are you against corporate mergers? Is it fair to give one sector of society (i.e., corporations) the ability to group to gain efficiencies of scale, but not others (i.e., labor)? If you believe in the free market, like I do, then you need to support unions. However, there should be regulations that prevent unions from gaining too much power, like anti-trust regulations on the corporate side.

        • Shane From Melbourne says:

          I have a more complex outlook upon unions. I think that unions should be banned in the public service sector where the priority is to serve the public and not be focused upon pay and job conditions especially the outrageous public service pensions that taxpayers have to fork out for, but in the private sector anything should go- the major corporations are big enough boys to handle themselves in wage and working conditions negotiations with unions without the aid of government intervention.

    • Neal Woods says:

      It isn’t very constructive to assign blame for outcomes that have numerous causes. Witness the endless debates about who lost the game or the election or whatever and you come to see that nobody has a calculus for isolating the independent causes that inevitably lead to effects. Hell, not even logicians have this.

      Solutions matter more anyway. The population could force central banks to print money to put labor resources to work rather then leaving them to rot. There could be a movement to neutralize actors within the economy that take without producing.

      Plenty of solutions that acknowledge there’s this thing called the future worth fighting for.

      • Paulo says:

        The anti union statement begs the question, “If the US is now only 7% unionized in the private sector, why are wages so low? Duh.

        I’ve worked for companies that would pay you $2.00 an hour if they could.

        My son has a union job and works for a company that is doing extremely well. His wage is $60.00/hr. He is also paid an additonal $7.00/hour for a pension contribution….+ full benefits and a company house while on shift. It’s about 2X what he made for the non-union competition. Why do you think all the productive and experienced workers switch over?

        • Kurtismayfield says:

          I would argue that you would have to be crazy to be in a public sector job and not have a union.

          Imagine being a teacher, fireman, or police officer and having no job protections from false accusations, from elected officials, budget cuts, etc. No one would ever take that work, it would be all precarious 1-2 year gigs.

  14. phusg says:

    > to accomplish what Ben Bernanke called the “wealth effect.” He explained it to Americans in an editorial in 2010 in the Washington Post. The explicit purpose was to make the wealthy – who already had the most assets – wealthier

    Wolf, is this the same editorial without paywall? https://www.federalreserve.gov/newsevents/other/o_bernanke20101105a.htm

    The passage that comes closest to what you’re saying is I think:

    “And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

    So I would say that as Bernanke equates stock holders with consumers generally, that he either didn’t explain it as explicitly as you say he did or stocks are held even more widely in the US than I thought (via pension schemes?).

    • Wolf Richter says:

      Yes, it’s the same editorial. But there is no paywall in front of the WaPo article.

      BTW, I think the term “wealth effect” to describe this — similar to “trickle-down economics” — predates Bernanke’s chairmanship, and I don’t think he invented the term. But by now, it has become a standard term to describe this.

  15. kk says:

    How would things change? The rich have, by definition, the wealth and consequently, the power, and they are not letting go. The USA was organised around high pay and low prices for most of its existence, now population growth, resource exhaustion and technology are pushing it into the standard economic model of high prices, low wages and a very rich ruling group. Welcome to the world yanks, no more the exception, just another country like all the rest of us …..

    • RangerOne says:

      The return of strong unions to fight for fair pay would help. As we have clearly seen there companies are fairly adept at controlling wage increases due to normal market forces with their bag of tricks.

      The question as to whether more unions are even possible is an open one given more jobs could flee overseas…

      Not sure how or when we got to the point that conservative radio host bash unions as evil entities hell bent on distorting the market on behalf of lazy people who can’t cut it. But that seems to be what most conservatives think of unions these days….

      • Gershon says:

        If you go to open secrets dot org, you can see who really owns “your” representative by seeing who their campaign contributors are. Right now both parties are owned by their oligarch and corporate donors. That will not change unless and until such fat cat campaign contributions become politically toxic and voters refuse to elect “representatives” who are bought and paid for by the oligarchy.

      • alex in san jose AKA digital Detroit says:

        I recently got my hands on a copy of “Hard Times” by Studs Terkel, and it’s amazing the pro-union and pro-little-guy sentiment that was just in the air in the 1930s. There was much more a sense of it being the “fault” of the economic collapse and not the individual, and the interviewees time and time again state that if another Great Depression were to hit now, people would be much, much nastier.

        Conservatives are just doing what hate-mongers have always done. It’s not so much in fashion to aim the hate at racial or ethnic groups, so it’s being aimed at social classes. “You didn’t get a 2nd serving of pudding because Bob Cratchit over there got gruel!! Get ’em!!”

        • sierra7 says:

          Probably 99% of Americans have no clue on how/why organized labor grew in Europe and then in the US. No clue. Even those who have belonged to various unions have no clue. I know this from experience having served as a steward for more than 20 years and owned two small businesses. Organized labor contributed mightily to that “ladder up” from the depths of despair. Corporations (business) didn’t hand it to the masses; many died in the streets, in factories etc. for the creation of the “middle class”. Propaganda, treasonous politicians, corrupt union leaders have destroyed the only ladder for a better life and convinced the general public that unions are hideous. No historical memory; no clue as to how to better their present lives.

    • Anon1970 says:

      The super rich of today still have the wealth and the power but the families, in most instances, are not the same as they were 50 years ago. Does anyone remember when the Fords, Rockefellers, Duponts and Mellons were symbols of great American wealth? None of their heirs are still on the Forbes 400 list.

      It is too bad for the millions of Americans who have voted against their best economic interests in recent years and allowed themselves to be hornswoggled by politicians who appealed to their worst prejudices.

      For most of its existence, the US was actually organized around high immigration (until the 1921 quotas), weak or non-existent unions (until the Great Depression) and lots of discrimination (until at least 1965).

      • Harrold says:

        The Rockefellers, Duponts and Mellons all gave away the bulk of their money to charities and to establish foundations.

        Now a days, billionaires take the money to the grave.

  16. Paul says:

    Another factor in the results that is a bit politically incorrect to discuss is the spendthrift culture that developed around 1970 or so. Maybe it was part of the Vietnam War counterculture movement, or maybe the “third generation” effect as the memories of the depression died off and the younger people “knew” only that every year would be better than the last, or maybe both.

    My mother taught me to always spend less than I made, invest the rest, and that debt for consumption was absolutely verboten. I have never even had a car loan, but have changed many an engine, transmission, etc. myself.

    Anyway, had the people of the second and third quintile in particular lived in 1200 square foot houses, driven an older 2-WD car, taken their coffee from home in a Thermos in one hand and their lunch in the other, worked a minimum of 40 hours a week, seldom ate at restaurants or fast food places, etc, and invested what they saved in income producing assets, the graphs in this article would look much different.

    The first quintile is a mix of those there only temporarily while starting out in life, and lifelong losers.

    I am amazed at high incomes are.

    On the other hand, I did not see any reference in the article to how many people had these FULL TIME JOBS.

    The average work week was 34.5 hours last I noticed.

    I seldom worked less that 50 – 60 hours a week when younger.

    34.5 hours a week was a part-time job while in college full time.

    Just for fun, I ran some numbers through the calculator the other day.

    If the total number of hours worked remained constant but were performed by people working 40 hours a week instead of 34.5, it would add nearly 9% to the unemployment rate.

    My views sometimes generate negative backlash as I have limited sympathy for the bottom half.

    There will always be a bottom half, by definition, but they could be a lot better off than they are if they tried harder and saved/invested more.

    Investments increase future earnings, debt does the opposite.

    I’m not saying it is easy, but neither is having a negligible net worth your entire life.

    • Bobber says:

      We see laziness on the bottom AND at the top. Why limit your comments to the bottom? Cronyism is running wild at the top. Many people haven’t worked hard like you have, but they have gained 1000x times your wealth through connections and cronyism. The people and corporations at the top are shielded from market forces in many many ways that are too numerous to list here.

      • Gershon says:

        Since 2009 the Federal Reserve has lavished $15 trillion in printing-press “stimulus” on its favored investment banks, allowing them to go on a speculative spree unmatched in human history while debasing every dollar in your wallet and mine, and tripling household debt as the cost of living outstrips wages that have remained stagnant in real purchasing power terms since the 1970s. The Fed has used its “No Billionaire Left Behind” monetary policies to further enrich the already super-wealthy at the expense of everyone else. The middle and working classes in this country will be increasingly pauperized until we shut down the Fed and excise this cancer from our nation and economy.

      • alex in san jose AKA digital Detroit says:

        The working class has to work, hard. And if they even try to take a vacation or any kind of a break they’re “sinful”.

        Meanwhile the owning class generally just had to show up, being members of the Lucky Sperm Club.

      • Paulo says:

        Come on, Jared and Ivanka work hard. So does Daddy./sarc

    • Harrold says:

      Those 34.5 hour work weeks are by design. Any more hours and the worker is not part-time, but full-time and might qualify for benefits.

      Rotating shifts and on demand scheduling makes it almost impossible to cobble together two part-time jobs and work 50 hours a week any more.

    • Crysangle says:

      I don’t belong in any quintile lol, but still feel I am more constructively active than most, and I agree with no debt. Society often just seems to needlessly chase itself in circles a lot of the time…a.k.a. a person with a thousand rooms still can only sleep in one.

    • James says:

      Are you saying the data shows that the pay of men dropped 8.6%, in proportion to their laziness, while a tiny fraction of uber-mensch showed the Grit® to roll up their sleeves and yank bootstrap with an Ayn Randian effort one hundred times superior to everyone else’s. Am I accurately describing your analysis?

      I have unpopular views too. One is that most people who froth about hippies, unions and “lazy” poor people are the very same who lived through the most prosperous era in our history, which happened to also be the most socialist, unionized, and tax-progressive. They’re generally an older, 2nd-generation Americans type who enjoyed incredibly cheap higher education and/or good-paying blue-collar work. They had access to pristine wilderness and local, organic food by default, at no extra cost until they traded those for a “nest-egg” in Dow Chemical. But they never express any gratitude or humility for any of that, and in fact claim responsibility for their forebears’ real sacrifices while simultaneously calling them socialist (HISS!) and working to dismantle them, then blaming the “low-lifes” (mostly blackish) for a decline in the American Way of Life®.

      Personally, I think the CPI is flawed if not manipulated, but the article rings true to me. A friend of mine mentioned a job “opportunity” at his company. The pay is about what I made literally TWENTY years ago for similar work. You don’t need to inflation-adjust that. Just… let it soak in.

  17. safe as milk says:

    certainly mirrors my experiece. i went from being a freelancer to running a small business fo 20 years. when i went back to freelancing, wages were only 14%. higher than they were in the 1990s. the kicker is that you can no longer get paid on a 1099 so deductions are a lot less.

    • chillbro says:

      Do you live in the same America? If employers had their way, we all would be 1099 job creators. Paying 7.5 percent for their share of your social security contribution is a real drag on profitability.

      • safe as milk says:

        you have a lot more options on a 1099. you do pay the ss but you can deduct so much more on the wages. also, you can join a “group” and get real health inaurance.

        • Arizona Slim says:

          Really? What groups are you referring to? The ones that offer association health plans? Been there, done that. The nicest way of referring to those plans is scams. Or junk insurance.

          I used to be on this plan. Thank goodness I never had to use it. Here’s why:


          Read the part about Mr. Christensen’s widow and you’ll see what I mean.

        • safe as milk says:

          i’m not giving tax advice but you should look into setting up an s-corp with people you trust. then the insurance companies will sell you a group plan.

  18. RD Blakeslee says:

    Great disclosure, Wolf!

    No wonder virtually the entire “establishment” (mostly comprised of the top quintile “earners”) lamented the change in the national administration which resulted in the current Fed policy, and are viciously fighting to dislodge it.

  19. Jon says:

    I am shocked wages are flat for men since 1972 – I would have expected them to have decreased by a lot given the skyrocketing real estate prices. I expected it to be easier in 1972 to save money than now.. Flat is truly surprising.

    • ChickenMan says:

      My understanding is that outsized increases in the prices of vehicles and real estate aren’t factored into the inflation numbers because these are figured as increasing in quality/luxury with the price, so you’re paying more for more, thus there’s no inflation! Easy.

  20. Sporkfed says:

    “On second thought, Mr. Bernanke, strangling the real incomes of the 60% or 80% of households that spend nearly every dime they make and on whom the economy relies for growth, “

    This explains the drop in money velocity and gives a truer picture of the economy for most
    people. The poor are middle class are disposable.

  21. ft says:

    This confirms calculations I did a while back where I determined that the purchasing power of my income was flat between early career the mid 70’s and my retirement in 2014. Advancing skill set, taking on more responsibility, increased productivity, experience…..none of that was compensated. People with whom I shared my calculations argued that I must be wrong. Nope. Bummer.

  22. breamrod says:

    where’s Henry Ford when you need him! 5.00 a day in 1914 was almost a quarter oz. of gold. Quarter oz. today 300.00. That’s 90,000 a year based on a 50 wk. year( 6 days as in 1914). People today talk about the middle class when it’s the working class that’s been thrown under the bus!

    • alex in san jose AKA digital Detroit says:

      $37.50 an hour for an 8-hour day. Isn’t that Union wages?

  23. JL says:

    Wolf – Any thoughts on Mark Perry’s analysis of the same data?


    There are some subtleties, but it’s fair to say that he reaches essentially the opposite conclusion. In particular, he characterizes the “rising income inequality” theme as “an imaginary hobgoblin.”

    • Wolf Richter says:

      Yeah, he would, wouldn’t he? Professor of Economics at the University of Michigan… these types of economists have been big proponents of the Fed’s policies, including the “wealth effect,” and a myriad other things that are responsible for the surging income disparity.

      I just glanced at his piece. It’s not worth reading. There is nothing in it to support the phrase in his title, “…little evidence of rising income inequality.” If he had seriously looked at the data, he would have found plenty of evidence, as I did.

    • Wisdom Seeker says:

      Thanks for linking that AEI article. I provided them with some critical commentary and linked back over here.

  24. Chris says:

    We should bring everyone into the top 5%. Then there is no inequality. Just like Sacha Baron Cohen says. We should bring the 99% into the 1%.

    • Crysangle says:

      How about some crowdfunding, have the 99 buy out the 1, numbers are on their side too… no..wait..

    • Steve says:

      That logic is so flawed. The 1% is relative. If you bring the 99% into the 1%, you will have a new 1%. Bracketing by its very nature is relative. Hence, there will ALWAYS be a 99%. The better question is is the standard of living for the 99% better today than yesterday?

      Each of Us needs to answer that one independently.

      • rhodium says:

        It was sarcasm… Albeit conservative sarcasm. If I could eat pennies I would bro

  25. RD Blakeslee says:

    As a West Virginian, I can tell you as a matter of fact that we are doing much better here under a new Republican administration – both houses of our legislature changed over in 2016.

    On the national level, note Wolf’s observation: “…the Fed’s QE and zero-interest rate policy (now finally on the way out) to accomplish Ben Bernanke’s wealth effect.”

    Things are changing there, too – fought tooth and nail by the “deep state”.

    It really isn’t a matter of dems. or repubs, IMO – it’s the top quintile vs. the rest of us – probably mostly dems. in that quintile – at least that’s who is doing most of the talking vs. the administraton in the media.

  26. Petunia says:

    The person you probably voted for is worth $2B. Yes, she is. Every democrat in congress is rich.

    I’m praying right now that you get everything you deserve.

  27. Prairies says:

    A chart of the average cost of living next to the chart of wage stagnation would be a scary sight. I would be surprised if the chart didn’t look like a steady stair case of inflation, while wages look like a dead man’s pulse.

  28. sama says:

    “Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.” John Steinbeck

    • James says:

      The common man would rather believe the lie that he can one day become rich, rather than face the truth that he is poor. And poor by design!

      – A hard political fact

    • BlueinTX says:

      “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.” ~ 
      LYNDON B. JOHNSON, 1960
      Applies today just as much as back then.
      Divide et imperium-divide and conquer.
      -What always amazes me in TX is that average working class men will act against their own best interest-that is anti union, anti ACA, anti taxes on wealthy etc. ; believing that they are “equal” to the Trump’s of the world.
      They are being played like a fiddle, and then they are shocked they earn less than their fathers, and have a lower overall quality of life too.
      And then they go out to vote for the same bunch of people who rob them blind!

      • steve says:

        And I suppose by ‘same bunch of people’ you’re referring to republican’s.

        Based on actually data, I’m safe in saying that democrats and republicans equally rob you blind and with equal enthusiasm.

        Personally, I would be happy if both parties would just leave me the f alone. Then nobody will have to get hurt.

        • BlueinTX says:

          I’m in full agreement with you, both parties rob you blind.
          We all need to consider the fact that both parties are neo-liberal pro-corporate entities, they are both out to enrich their paymasters.
          One party pretends to care about working people and minorities, while the other pretends to follow the church’s teachings and wraps itself in the flag.
          I consider myself a New Deal/Great Society Democrat, so I guess I should change my screen name to GreenInTX. :)

  29. Ted Freeman says:

    Incomes have largely stagnated over the last 45 years, but what hasn’t? Private debt service. In 1972, credit cards were still a new invention. As were student loans. Houses were smaller (and cheaper) on average. Cars were cheaper and loans of shorter length. Cell phones didn’t exist and health care was a smaller part of total spending on average. I could give more examples, but in 1972 a man making the median income had more cash to spend on savings and other discretionary items. And his wife didn’t have to work and send the children to the Petri dish known as day care. In 2018, it may be fair to say that it would require twice the income to have the same lifestyle.

    • Harrold says:

      Don’t discount the effect of sexual discrimination. Sexual discrimination was still rampant in 1972 and women were prevented from working in many fields.

      • Crysangle says:

        I’m glad most people still know how to discriminate between sexes. The trouble I think is that it is expected nowadays that discrimination be also part of how any business is run.

      • Philip says:

        How many people did you see working in fields in 1972? :)

      • Ted Freeman says:

        I agree, and many careers are still overwhelmingly lopsided to one sex or the other even today, indicating discrimination may still be present. Plumbing, construction, electricians, welders, and HVAC are male dominated while elementary education and nursing are female dominated. I propose a new federal agency sets and regulates a mandatory 50-50 male-female ratio in the above fields. It would be great for the economy, I guarantee it. :-)

  30. BenX says:

    If the median listing price of a house in Yuba City, CA is $320,000 (see recent Wolf post), and the median household income is $61,000, then a house in Yuba City, CA is over 5X gross income. And that’s presuming that people in Yuba City makes anywhere near a median income.

    Either one of those numbers is wrong, or there is some severe reverting to the mean (3X gross income) at some point in the future.

    • Ted Freeman says:

      The numbers and your conclusion are both correct. Prices will revert to the mean, but before they do, they could well crash far below that number. Real estate markets go illiquid very quickly in a downturn. And your example of Yuba City, CA is one of the tamer examples in the U.S. today.

  31. Gorbachev says:

    You really have to get a chart showing capital gains income for the 1%

    even if it’s for fun.

    Income did stagnate ,but so did cost of food,tv’s,housing products

    (but not housing itself) and so many other things.We decided that

    although running our business would give the same gross income

    our net was so much higher , we quit working for others many years


    It is hard to motivate yourself as opposed to having someone

    direct your day.

    • James says:

      Re: price “stagnation”, the Bureau of Labor Statistics, for one, says the cost of basic necessities has outpaced inflation for 30 years. I think it’s valid to also consider that food used to be organic by default, and more nutritious (soil depletion) so the quality has gone down. That applesauce today tests positive for literally dozens of chemicals is beside the point I suppose, but in an “apples to apples” comparison food, housing, education, healthcare and even clean water are all more expensive than in previous generations. Even healthful exercise costs more when you live in a polluted or unsafe area.

      If I’m not mistaken, much of this cost-of-living inflation is masked in the CPI by cost-of-goods deflation: cheaper TV’s and other non-repairable, throw-away goods.

  32. Gershon says:

    They vote for rich Republicans who are only looking out for themselves so they deserve what they get good and hard.

    Sure, and the Clinton Crime Family amassed a fortune based through corruption, crony capitalism, and influence peddling. Both parties are on the make and on the take, with not a dime’s worth of difference between them.

  33. Jeremy says:

    Just a thought:

    Every time there’s a sign of wage inflation, economists freak out and call for rate increases to tamp it down.

    Isn’t (mild, long-term) wage inflation what is actually needed to sort out that graph though?

    • Wisdom Seeker says:

      Yes, absolutely. Wage inflation for the lower 80% is what is needed to restore the economic balance.

    • Alistair McLaughlin says:

      Yes, but rate increases aren’t wrong. They’re just focusing on the wrong reasons for raising them (i.e. that wages increases cause inflation – the “cost-push” theory of inflation).

      Ten years of ZIRP haven’t exactly benefited wage earners have they?

    • rhodium says:

      Well that just goes to show you what the Fed really thinks. Inflation is good at solving overindebtedness but only when it goes into wages otherwise debt servicing doesn’t actually become more affordable. The fed doesn’t see a debt problem, they thought it was just a liquidity problem. They don’t really think it’s an asset valuation problem, although they seem to be awaking to that, they think economic weakness was a lack of investment… Do they think credit is used mostly for productive application? I think they assume it because they’re still living in the last century mindset and they seem blissfully unaware of asset speculation that is largely unproductive investment. When wages start to rise they think it means productive investment is tapped out, and the economy is “saturated” with no more slack. They will not acknowledge the possibility of stagflation and that a new poorer equilibrium has been reached. It goes against their faith in the numbers and their faith in unending economic growth, not to mention their faith in their own abilities.

  34. Robin Hood says:

    Getting near time for the peasants to grab pitchforks and torches and storm the mansion on the hill. The good news is that the modern mansion rarely includes a moat.

    • Keeper Hill says:

      It’s long past the time for pitchforks. I’m amazed its taken this long.

  35. jeremias says:

    Supply and demand.
    Bangladesh have 162 million citizens in 2016 .HALF THE USA POPULATION and enjoy household income of 602 US$ in year 2016.
    You can hire a US worker or 100 in Bangladesh.
    Who are going to make your NIKE?
    Believe in something (MONEY ).Even if it means sacrificing everything(USA WORKFORCE)

  36. ELJEFE says:

    Complements on this excellent post and your opening of “Household income” is the entire pre-tax “money income”! The median is just another data point unless the reality of every increasing governments’ taxes and burdens(theft) across this timeline is applied. That said, I recently did a simple analysis of currency devaluation to show my daughter whose annual salary is in the public domain. The value I used was my annual salary when I graduated in 1971 and my monthly salary was when I retired in 2010. When I retired I was making as much monthly as I was annually in 1971. My simple message was, so you think you’re well off! With all the phony, goal-seeked government statistics issued endlessly and the MAGA fiction where else can we go to other than WOLF STREET! As a current example of total fiction, here’s a headline from FOX “Middle-class income highest on record: Fact check”.

  37. Auld Kodjer says:

    Mr Wolf – Can you please (further) educate me.

    The GINI Index for the USA stayed in the band of 40-42 for the 22 years to 2016. Is it flawed?

    With thanks and regards

    • Wolf Richter says:

      Auld Kodjer,

      The Gini is a comparative measure, between countries, produced by institutions such as the World Bank and the OECD. These comparisons are generally not in my bailiwick … because I’m less concerned how the US ranks against Bangladesh or Mexico.

      The Gini is generated by an algorithm that looks at the data submitted by countries and interprets the data and turns the data into a homogenized index. This is OK when comparing countries. But when it comes to the US, I like to look at the actual data directly rather than have some OECD algorithm interpret it for me (lagging a year behind the Census Bureau).

      That said, here are some things.

      All the Gini data sets I looked at show worsening income and wealth inequality in the US.

      Of note: higher values mean higher income inequality, or higher wealth inequality depending on the type of Gini.

      The World Bank’s Gini index for the US is up slightly since 1997 (your reference range) and hit a new high in 2016 of 41.5 (latest data point). On a longer scale, it has surged: in 1979, it was 34.6

      The OECD’s Gini indicator of top 20% vs. bottom 20%, the US is the third worst in the world, behind Mexico and Chile. In terms of “Relative Income Poverty,” the US is also the third worst in the world.

      Here is the OECD’s Gini income distribution data set by country. Select “United States” at the top right. It shows the deterioration in all categories over the years.

      Here is an easy-to-read chart, for inequality in household income distribution by Gini coefficient for the US. It surged from 0.43 in 1992 to 0.48 in 2016.

      • Auld Kodjer says:

        Thank you Sir.

        That is a bronze medal of shame.

        Now the Gini is out of the bottle, I wonder what your top three wishes are for correcting the inequality?

        Perhaps a decent minimum wage, all sorts of tax reform, and draining the swamp?

  38. sierra7 says:

    An indication of how well this article is presented is the number of commenters and the variation of responses. This article generated about 2X the normal number of responders. Thx Mr. Richter!

    • Keeper Hill says:

      Actually you get that many responses on this because the average person knows this to be true. The general economy doesn’t help the average person anymore. Thus people are pissed and you get the political climate we have with crazy left and crazy right.

    • Wolf Richter says:

      My calculation error when I looked at the raw data (rather than the text). Punched in the wrong number in my HP-12C? Fixed. Thanks.

  39. vinyl1 says:

    I think this sort of analysis may be skewed by leaving out the ‘informal’ economy. Virtually no households in the top two quintiles earn money off the books, but many in the bottom two quintiles do. Moreover, they are not paying 15.3% self-employment tax, Federal income tax, and state income tax on this income. They don’t have to buy business insurance, and if their customers aren’t satisfied, too bad. This means that their businesses are far more profitable than the legitimate businesses that the officially affluent self-employed have.

    If you official household income is $40K, making another $12K off the books puts you up there with households with an official income of $60K.

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