What's Happening To Americans' Income?

Policy Backgrounders | Economy

No. 138
Monday, January 29, 1996
by W. Michael Cox & Beverly J. Fox

Conclusion: Recent Gains Are On Par With History

"By 1992, people with graduate degrees made 2.5 time more than high school graduates."

In the public arena, reports can produce shock waves long before the facts are determined. Recent economic reports have been no exception. Economic doomsday stories have proliferated from superficial analyses based on aggregated wage and income statistics. A careful examination of the data that takes into account just a few of the surrounding factors -- the increase in employee benefits, the decline in median household or family size, the shortening in the average workweek and so on -- brightens the picture of Americans' progress in living standards.17 Indeed, from the perspective of the two broadest and most long-term economic aggregates -- per capita real GDP and consumption -- Americans' recent gains are on par with those garnered historically. There is little cause for alarm.

"From the perspective of per capita real GDP and consumption, recent income gains are on par with historical gains."

Aggregate statistics, of course, reflect averages. Some people have gained more, others less. But one thing can be said conclusively: the income of the well-educated has grown substantially faster than that of the less-educated over the past two decades. Clearly, education is one of the most effective tools Americans can use to increase their income potential.

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