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.
Bill Clinton’s Community Reinvestment Act diverted hundreds of billions — trillions? — of dollars of productive capital into houses, which are not a productive asset. The inevitable collapse wiped out a decade or more of wealth gains for the middle class, and virtually wiped out the first and second generation American black middle class. The Fed’s ZIRP and QE have compounded the damage, taking what should have been modest savings increases from the middle class and giving them to Wall Street and to Washington. It’s no coincidence that the Street has reached dizzying new heights just as Washington, our new imperial capital, is the centerpiece of the nation’s wealthiest newly-rich nation. Washington of course doesn’t actually produce anything — no software, no shipping, no mineral wealth, no energy, not even clever financial tools. What Washington mostly does is to make the job more difficult for those who do produce those things. I suppose at least our capital rivals Hollywood in the production of sordid and ultimately forgettable entertainment.
So when you look at your shrunken or stagnant paycheck, think of how much of it went to six-figure bureaucrats whose job it is to make sure you’ve purchased the correct health insurance. When you look at the minuscule returns on what you’ve managed to tuck away into savings, think of the Wall Street guys taking a cut of even that.
It was a century in the making, but the Great American Middle Class has been stopped in its tracks. Without change, without liberation, the next step is its decline and eventual elimination. As I noted years ago, Progressivism has become an essentially feudal political philosophy, seeking to lock the cronies in at the top. The benefits for everyone else seem quite generous, with expanded welfare spending on everything from food stamps to health insurance to old age to preschools. And they are generous — right up until the other people’s money runs out.
And judging by yesterday’s Census report, that day might be closer than we’ve reckoned.
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