Heckuva Job, Chimpy!

This is what tax cuts for the rich will get ya’.

American men in their 30s today are worse off than their fathers’ generation, a reversal from just a decade ago, when sons generally were better off than their fathers, a new study finds.

The study, the first in a series on economic mobility undertaken by several prominent think tanks, also says the typical American family’s income has lagged far behind productivity growth since 2000, a departure from most of the post-World War II period.

[snip]

In 2004, the median income for a man in his 30s, a good predictor of his lifetime earnings, was $35,010, the study says, 12% less than for men in their 30s in 1974 — their fathers’ generation — adjusted for inflation. A decade ago, median income for men in their 30s was $32,901, 5% higher than 30 years earlier.

[snip]

The report also found that between 1947 and 1974, productivity, or output per hour, and median family income, adjusted for inflation, both roughly doubled. Between 1974 and 2000, productivity rose 56% while income rose 29%. Between 2000 and 2005, productivity rose 16% while median income fell 2%, challenging “the notion that a rising tide will lift all boats,” the report says.

[Isabel Sawhill of the Brookings Institution] said several factors could explain the divergence:a growing share of income going to the highest-paid workers, or to profits; an increased share of labor compensation going toward benefits such as health care; or a decline in the number of wage earners in the typical family.

[emphasis added]

4 thoughts on “Heckuva Job, Chimpy!

  1. pansypoo says:

    but but but they’ll keep spending. right?

  2. Andy Gossett says:

    A rising tide will sink the leaky barges.

  3. Bob White says:

    You emphasize the quote, “the typical American family’s income has lagged far behind productivity growth since 2000, a departure from most of the post-World War II period”. During which periods were there also departures from the post-WW2 norm? During recessions, that’s when. Typical analysis of economic cycles is measured from recession trough to the next recession trough. Starting a comparison at the peak of a boom period (2000) and ending two years after the so-called “tax cuts for the rich” (2005) will lead to problematic results. Wages typically decline during and after a recession. Unemployment usually worsens even after a recession has ended and growth returned (because companies that have had to fire people fear rehiring).
    The effects of the tax rate cuts have been almost universally beneficial. The rising tide has indeed lifted nearly all boats (but some higher and faster than others — sucks to be poor — I’ve been poor and I’ve been rich; I recommend rich). My personal income has fallen to less than 50% of what it was in 2002. I don’t blame this on tax rate cuts, but on the end of insanely high salaries of the dot.com era.
    Still, the longer term trend discussed by this article compares two roughly equal periods (47 to 74 and 74 to 2000). This showed a generational discrepancy. It also reflects none of Bush’s policies.
    Finally, you emphasize one of the three factors that might explain the divergence between productivity growth and wage growth. Emphasizing the one that resonates with your personal view does not diminish the likelihood that the other factors play a significant part. I might also mention that the study might have missed other factors explaining the divergence.
    In particular, post-recession wage growth lags economic growth because people get paid in descending order of importance to the organization generating revenue: shareholders, executives, critical employees, highly-skilled employees, and finally, the most easily replaced less skilled employees. I didn’t invent this hierarchy, but ridiculing it does not change it.

  4. Interrobang says:

    By what measure of “beneficial” are tax cuts that primarily benefit wealthier people “beneficial” to everyone? It seems to me that the declining infrastructure, mounting governmental debt, and rising income inequality fostered by tax cuts (note I said “fostered,” not “created,” please) are not beneficial in particular to anyone, especially not the wealthy, who overwhelmingly benefit from governmental services and infrastructure.
    Also, I don’t see that Holden was “ridiculing” any particular hierarchy, but it certainly seems ludicrous to me that shareholders are considered more important to most companies than operational employees and executives (in that order), particularly in light of share and stock prices being largely unrelated to actual corporate performance and based mostly on marketing hype, short-term trend analysis within a very limited model, and the herd mentality.
    Tangentially, since nobody was ridiculing what you claim they were, ridicule is not necessarily immediately effective in creating social change, but can be a powerful force for showing up the absurdities and injustices of the current social situation, which can then lead to reform.

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