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Your Tuesday Morning Dose of Doom & Gloom

April 29th, 2014 - 5:22 am

obama_train_wreck_4-28-14-2

Ouch:

The real median income of American men who work full-time, year-round peaked forty years ago in 1973, according to data published by the U.S. Census Bureau.

In 1973, median earnings for men who worked full-time, year-round were $51,670 in inflation-adjusted 2012 dollars. The median earnings of men who work full-time year-round have never been that high again.

Part of the decline is due to increased competition from women entering the workplace, which is a good thing — countries without liberated women are at severe cultural and economic disadvantage to those who do have liberated women. Another part is the increased competition from a couple billion Chinese and Indians entering the global workforce. That’s a good thing, too, because poverty sucks and trade makes all countries richer.

So why aren’t American men benefiting from the increase in trade and the increase in wealth? This isn’t exactly a zero-sum game we’re playing — this country has enjoyed enormous (if enormously unsteady) economic growth since 1973.

If I had to guess, the drop in private sector unionization hurt. Unions held monopoly power over labor in several important industries, which jacked up wages to unsustainable levels. That’s been “corrected” by automation and foreign competition. Also, industrial manufacturing just isn’t the big wealth creator it once was. It used to take a special kind of Western country to host a manufacturing base, but now almost anybody can do it.

But I’m going to go out on a limb here and guess taxes and regulation might be mostly to blame. Everything we make, buy, and sell is taxed multiple times from farm or factory to home. But before we can pay those taxes, we have to pay our income taxes. Regulation has made everything more expensive, while also nullifying the take-home pay gains of increased productivity. Our high capital tax rates have turned trillions of dollars effectively into dead capital. Or maybe “undead capital” might be a better term, if I may coin it. It sits in banks, it’s parked in bonds, it’s “trapped” overseas — doing not much for anybody, and certainly not trickling down to the middle class.

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Top Rated Comments   
Terrific but unfortunately under-appreciated insights. The average person does not understand that our collective standard of living is only created by the production of goods and services that people want or need to consume - and where the true value of these goods/services is determined by how much people are voluntarily willing to pay for them. This is an inconvenient truth for creators of bad art and for the Assistant to the Deputy Director of Community Diversity for Bumrush County.

One issue I would take with your article - The middle class is not so much being destroyed as it is being replaced slowly by a coddled and highly compensated public service and government contractor middle class. The impact of this should not be underestimated. When you look at the value created versus the value paid to the public sector, it is stunningly out of proportion with what the free market would dictate if allowed to. Certain public service workers aside, most therein live a stress free life, never having to answer for the value they create and then retire early with a package worth millions and only attainable by a select few in the private sector.

On the other side of this cr*p sandwich handed to the private sector middle class are the government elites, crony capitalists and the wealthy. They care not a whit about high taxes. Corporations know that they can simply pass taxes on to their consumers (mainly us). The wealthy are, well, already wealthy and have a zillion ways to grow their wealth without showing income. All these high tax rates needed to fund the growth of the public sector and the entitlement class fall squarely on the shoulders of the hard working private sector middle class - preventing anyone in it from ever leaving it - accept by getting into politics, public service or becoming a ward of the State. Meanwhile we produce nearly all of the things that make dollars actually worth something.
17 weeks ago
17 weeks ago Link To Comment
Benifits that deliver zero value for 95% of people with them...

Pay through the nose with weekly payroll deductions (several hundred to almost a thousand dollars each month) THEN cough-up a 30 dollar "co-pay" as soon as you see a doctor for a whole 3 minutes?

And pretty large size deductables if I ever DO need anything..I gave you over 20 THOUSAND dollars in the past 3 years alone, maybe this first ever prescription should be on...YOU?

Total out -of-pocket "health care" for MOST people is a lot higher WITH insurance, than without...

Which is why we all we *really* need is catastrophic coverage, and not much else...but whoever gets that regular 700 a month from me in return for NO GOODS OR SERVICE for nearly a decade, wont have it any other way will they?
17 weeks ago
17 weeks ago Link To Comment
Taxes, specifically local property taxes...

Yeah, the Unions moved out of the Manufacturing Sector, and landed in the Schools.

How do you live a "median" lifestyle, with a "median" salary, when the local property tax is approaching 25% of your GROSS earnings?

You dont.

17 weeks ago
17 weeks ago Link To Comment
All Comments   (21)
All Comments   (21)
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In 1973, median earnings for men who worked full-time, year-round were $51,670 in inflation-adjusted 2012 dollars. The median earnings of men who work full-time year-round have never been that high again.

Even worse, they are using a multiplier of 4.62 from 1973 to 2012. I could easily justify a multiplier of 10.0 or greater, which would make 1973 wages well over $100k. And that's *average*.

Another change since 1973 is that it used to be a junior person made less and a senior person made more. Today, to a close approximation everyone makes the same (at least in the STEM jobs I know about). So the $100k average in 1973 might have been (was!) $200k or more for senior personnel, compared to about $50k today.

Ouch?
17 weeks ago
17 weeks ago Link To Comment
Terrific but unfortunately under-appreciated insights. The average person does not understand that our collective standard of living is only created by the production of goods and services that people want or need to consume - and where the true value of these goods/services is determined by how much people are voluntarily willing to pay for them. This is an inconvenient truth for creators of bad art and for the Assistant to the Deputy Director of Community Diversity for Bumrush County.

One issue I would take with your article - The middle class is not so much being destroyed as it is being replaced slowly by a coddled and highly compensated public service and government contractor middle class. The impact of this should not be underestimated. When you look at the value created versus the value paid to the public sector, it is stunningly out of proportion with what the free market would dictate if allowed to. Certain public service workers aside, most therein live a stress free life, never having to answer for the value they create and then retire early with a package worth millions and only attainable by a select few in the private sector.

On the other side of this cr*p sandwich handed to the private sector middle class are the government elites, crony capitalists and the wealthy. They care not a whit about high taxes. Corporations know that they can simply pass taxes on to their consumers (mainly us). The wealthy are, well, already wealthy and have a zillion ways to grow their wealth without showing income. All these high tax rates needed to fund the growth of the public sector and the entitlement class fall squarely on the shoulders of the hard working private sector middle class - preventing anyone in it from ever leaving it - accept by getting into politics, public service or becoming a ward of the State. Meanwhile we produce nearly all of the things that make dollars actually worth something.
17 weeks ago
17 weeks ago Link To Comment
So true, the Public school teachers im my district average over 100k..not bad for 185 work-days a year...

They pay NOTHING towards their bennies package, but have this little perk:

If they can get onto their SPOUSES Private Sector Employers Heath care plan, (instead of the schools) they get TEN THOUSAND DOLLARS in additional compensation from us taxpayers...

I guess because they "saved " us so much money, they deserve it all back (and then some)?
17 weeks ago
17 weeks ago Link To Comment
I'd generate more economic activity (i.e. more jobs) ... if I wasn't sending literally a third of my gross to government (fed, state, local). Government at all levels needs to shrink by half to make this sustainable. When government grows, all other segments of the economy shrink.

In other-words: "Nothing Grows Until He Goes".
17 weeks ago
17 weeks ago Link To Comment
Only a third!?
Where do YOU live, I'm moving there....

If you commute from North Jersey into Manhattan, between Property Tax, Tolls, State, Fed, Local and City taxes, youre "out" well over 50 grand a year before you ever buy your first loaf of bread or gallon of gasoline.

Now all those Angry Liberals who voted themselves out of a decent standard of living are moving into MY area, and bringing their bad voting habits with them.

17 weeks ago
17 weeks ago Link To Comment
Illegal immigrants have a huge impact as well. Around here, the going rate for illegals for the past few years is $10 an hour. (Yes, higher than the minimum wage!)

I did a calculation a few months ago where I “grossed that up” to a legal equivalent considering typical taxes, time off, health insurance, etc, and it came very close to an equivalent of $50k a year salary.

Which is exactly where the median has legal number hung for some time….
17 weeks ago
17 weeks ago Link To Comment
"Part of the decline is due to increased competition from women entering the workplace, which is a good thing — countries without liberated women are at severe cultural and economic disadvantage to those who do have liberated women."

Surely you can't be talking about America before women were told a career is more important than anything. There were millions of women who stayed at home and they weren't at a "severe cultural and economic disadvantage". Much has been written and experienced about the fact that is was the OPPOSITE of what you state. My mother and grandmothers, aunts, etc. lived very nicely on one salary and they weren't beaten into oppression/suppression nor were they at an economic disadvantage. There were millions more like them as well.

Try blaming the removal of the gold standard, the "free trade" agreements, the fed gone wild and still unaudited, public sector salaries and scratch off win-for-life- pensions, rampant immigration without justification, and last but not LEAST - the fact that when women did go to work in greater numbers, the manufacturers had no problem raising prices on everything because many families now had TWO wages earners. It became a vicious cycle.
17 weeks ago
17 weeks ago Link To Comment
The reason women work is because the taxes are so high, both husband and wife HAVE to work...

The Teachers Union Boss of my school district was quoted by the local paper during the their last strike:

"We know its a two-income area...parents will use up their sick days in a week or two, and have to get back to their jobs...we can hold out longer than that, so I'm confident we'll get what we're looking for"

Thse are people earning six-figures, going on STRIKE for even more...
17 weeks ago
17 weeks ago Link To Comment
Your analysis is correct, Mr. Green with this caveat: I personally believe the labor movement was created as a Potemkin Village by Community Organizer types like Samuel Gompers to entrap the unrepresented into a stridently anti - liberty regime. We also need to remember that 75 cents of every dollar confiscated by the Alphabet Soup Gestapo for alleged "services" is actually used to add tentacles to the metastasizing beast and thus enhance the pile of "undead" capital.
17 weeks ago
17 weeks ago Link To Comment
As stated below, you can't just look at cash earnings. You have to look at the whole of compensation, including benefits, working conditions, autonomy, etc.

That said, you also have to look at the total cost of labor to the payer. And, in addition to cash wage and non-monetary compensation, you have to factor in the government's portion of that cost. As intimated in the post, that government portion has risen since 1973 with higher worker's comp, unemployment insurance, regulatory compliance, regulatory risk due to employing others, etc.

I did just read a NYTimes post about farms in NY and elsewhere moving to milking robots. A portion of the reason was total labor costs, add in difficulty in finding reliable workers, the robots at $250k a pop are looking like they'll work out. The cows like them better as the robots milk on the cows schedule, not the dairyman/laborer's schedule. Of course, that doesn't do much for the laborer's pay.
17 weeks ago
17 weeks ago Link To Comment
You JUST read that in the Times? Seriously?
My uncle had a dairy farm Upstate in the 60's and 70's, NOBODY milked cows by hand even then...it was all automated (well, mechanical any way...suction hoses and tanks of some sort)
17 weeks ago
17 weeks ago Link To Comment
"...countries without liberated women are at severe cultural and economic disadvantage to those who do have liberated women."

As long as those women do not forget to reproduce. If they do then the limiting factor is a shrinking demographic of the people who made the country strong and then again, you have the same effect - shrinking or downward wage pressure.
17 weeks ago
17 weeks ago Link To Comment
"...women entering the workplace, which is a good thing — countries without liberated women are at severe cultural and economic advantage [sic erat scriptum] to those who do have liberated women."

I'm assuming the author meant to say "disadvantage"... (The editors are all out back smoking crack???) Still, I'd like a quote or study or something to convince me that such is true. Is it not the female vote that is widely reported to have elected the current "president"?

"Another part is the increased competition from a couple billion Chinese and Indians entering the global workforce. That’s a good thing, too, because poverty sucks and trade makes all countries richer."

Then why are we NOT richer. This shows an astonishingly shallow understanding of economics. I don't really care if some guy wearing a rag in Bengla-freaking-desh is a little better off when it makes me worse off. Screw him and the water buffalo he rode in on. This reflects a collectivist one world economic point of view that belongs on HuffPo.
17 weeks ago
17 weeks ago Link To Comment
Thanks for the typo correction, I have that fixed now.

I'd respond to the rest of your comment, but it reads as though you didn't bother with the second half of the column. If that's the case, I'm sure it was by accident.
17 weeks ago
17 weeks ago Link To Comment
They voted for him. Socialism is what they wanted.
17 weeks ago
17 weeks ago Link To Comment
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