Income and Wages

Stagnant Incomes

Average family incomes are substantially lower today than they were back in 1989. In the entire post-World War II period, American families have never before gone seven years with no increase in average incomes.

  • The Census Bureau reported that real median household income increased by 2.7 percent in 1995, the first increase in six years.

  • Still, median household income fell by 3.6 percent from 1989 to 1995 after rising by 8 percent from 1980 to 1989.

  • This left median household income 3.8 percent lower in 1995 than in 1989.

  • Further, most of the reported increase in household income in 1995 was due to government transfer payments.

  • The median earnings of women working year round, full time have not shown an increase since 1992, and declined 1.5 percent in 1995.

The apparent stagnation or decline of real incomes may be exaggerated by the methods used for adjusting for inflation. However, even with corrected adjustments:

  • Median family income shows an increase of 1.4 percent from 1989 to 1995, or 0.3 percent per year.

  • By contrast, median family income shows an increase of 17 percent from 1980 to 1989, or 1.9 percent a year.

Source: Alan Reynolds http://www.a1.com/hudson/arupdate.html, "Just the Facts - About Income 'Growth,'" Foresight, Vol. 1, No. 1, January 1997, Hudson Institute, Herman Kahn Center, 5395 Emerson Way, Indianapolis, IN 46226, (317) 545-1000.

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