NCPA - National Center for Policy Analysis

Income And Quality Of Life

May 3, 1996

A recent Dallas Federal Reserve study disputes the common perception that we are working harder and making less money as the American Dream becomes downsized-- finding instead that we are actually being paid more for working less.

  • We are now paid for 237 hours we don't work -- vacations, holiday and the like -- compared to 181 hours in 1973 and 172 in 1950.
  • The share of women who work has more than doubled over the past two decades because many women want to work outside the home. A Syracuse University study shows that those who work progress economically -- while those who don't are stuck in poverty.
  • Households dependent on welfare made up the only group not to advance economically from 1979 to 1989.
  • There's been a 71 percent increase in households headed by a single mother; single mothers head almost half of all poor families.
  • Stagflation and back-to-back recessions took a big chunk out of families dependent on welfare between 1979-1982.
  • Although incomes for those families then rose until 1989, in real terms they stayed below the level a decade earlier.

By almost any measure of income and consumption, Americans are better off on average than they were 20 and 40 years ago.

  • Since 1973, real median household income rose roughly 0.5 percent a year -- after taking into account the decline in the size of the average household.
  • And real consumption -- the best measure of well-being -- was up an average of 2.2 percent a year per person.

A recent Democratic Policy Committee report falsely claimed that these increases show an absolute decline in living standards. But consider that the poorest fifth of families today consume more than average families did four decades ago. And the average person today consumes more than twice what he did then.

Experts suggest that the Democratic Policy Committee compare the first three years of the current expansion with the 1983-86 Reagan expansion.

  • Real median family income has stagnated since 1991; whereas it jumped 8.5 percent during those three Reagan years.
  • Real disposable income per person is now rising only one-third the 1980s pace.
  • And per capita consumption is increasing at only half the previous pace.

Source: Perspective, "America's Malaise?" Investor's Business Daily, May 3, 1996.


Browse more articles on Economic Issues