“This is a pretty bleak picture”

Posted: 18 May 2017 in Uncategorized
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That’s the way Fatih Guvenen, an economist at the University of Minnesota and one of the authors of a new paper on the decline of the American middle class, characterizes the results of their study.

What the authors found is, first, comparing the cohort that entered the labor market in 1967 to the cohort that entered in 1983, median lifetime income of men declined by 10–19 percent. Thus, for example, in terms of real earnings (deflated by the personal consumption expenditure), the annualized value of median lifetime wage/salary income for male workers declined by $4,400 per year from the 1957 cohort to the 1983 cohort, or $136,400 over the 31-year working period.

For women, median lifetime income increased by 22–33 percent from the 1967 to the 1983 cohort, but these gains were relative to very low lifetime income for the earliest cohort.

Second, they found that inequality in lifetime incomes has increased significantly within each gender group, which is largely attributed to an increase in inequality at young ages. Thus, for example, the median income at age 25 has declined steadily from the 1967 cohort to the 1983 cohort. Moreover, median incomes over the first 10 years in the labor market for more recent cohorts (those that turned 25 in the 2000s) indicate that the trend of declining median lifetime incomes seems likely to continue.

What the results show is that more unequal incomes are not primarily a result of a widening gap between younger and older workers. Even among older workers, typical incomes have been falling while the richest have been enjoying more and more of the economy’s gains. Poorer workers—who tend to be younger—will likely earn more as they get older but they are not going to earn enough to make up the difference.

Yes, indeed, this is a pretty bleak picture.

Comments
  1. […] “This is a pretty bleak picture” […]

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