NCPA - National Center for Policy Analysis


September 26, 2006

Why aren't workers outraged by their economic condition?  On the surface, it would appear that workers should be in open revolt, says economic columnist Bruce Bartlett.

  • According to the Bureau of Labor Statistics, the average worker is no better off today than he was seven years ago in real terms; in August 2006, his average weekly earnings were $275.49. In August 1999, they were $275.61 (both in constant 1982 dollars).
  • Census Bureau data confirm this trend; according to recently released information, median annual earnings for men fell to $41,386 in 2005 from $43,158 in 2003 (in 2005 dollars), despite steady economic growth.
  • Median household income peaked in 1999 at $47,671 (in 2005 dollars) and fell every year thereafter until 2005's small uptick ($46,326).

Despite wage and income stagnation at the macro level, people continue to move up out of the working class into the middle and upper classes, explains Bartlett:

  • According to the Census Bureau, the percentage of all households with an income below $25,000 per year (in 2005 dollars) fell to 27.1 percent last year, from 27.6 percent in 2004.
  • In 1995, 28.9 percent fell into this income class. In 1985, the percentage was 30.5 percent. In 1975m it was 33.1 percent.
  • At the same time, the percentage of households that are considered well-to-do -- those with an income above $75,000 (in 2005 dollars) -- rose to 28.3 percent last year, from 27.9 percent in 2004. In 1995, only 24.4 percent of households had that much income, up from 20.2 percent in 1985 and 14 percent in 1975.

In short, despite all the talk about the rich getting richer at the expense of the poor, the fact is that the percentage of households with low incomes has fallen and the percentage of those with high incomes has risen, says Bartlett.

Source: Bruce Bartlett, "Wages of Stagnation,", September 26, 2006.

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