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.