2011 October 23 Sunday
Median Paycheck Back To 1999

Workers can only afford to party like its 1999.

The median paycheck half made more, half less fell again in 2010, down 1.2 percent to $26,364. That works out to $507 a week, the lowest level, after adjusting for inflation, since 1999.

Beats partying like its 1699. But if we were as underexposed to media as 1699ers would we be happier?

The 1999 median figure is even worse than it looks at first glance because the unemployment rate is much higher than it was in 1999. The unemployed have lower potential earning power than the employed and they have no earning power right now.

The median number is for occupations that are pretty low skilled. At about $12 or so dollars an hour employer aren't getting highly skilled workers. Well, the demand for less skilled workers has been declining relative to the demand for highly skilled workers for decades. That's due to both outsourcing and automation. In spite of this it is an uphill battle to stop the influx of low skilled illegal immigrants. Combine outsourcing, automation, immigration, and rising costs of energy and other commodities and the result is median paychecks have gone back in a time machine to 1999. In a rational world where government was enlightened and concerned about its populace these causes would be discussed and policy changed appropriately. But no.

Some argue (incorrectly in my view) that we live in in a period of rapid innovation with big benefits for all. If the innovations really are large and rapid then their benefits are being eaten up by the many other things going wrong.

We wouldn't have an Occupy Wall Street movement or the Tea Party if median incomes still rose like they used to. But a number of factors have come together to halt and reverse median income growth. As a result different political movements are pushing for wealth redistribution, lower taxes, and assorted policies that their advocates (wrongly) expect will reignite economic growth and rising living standards. So you'll read people on the Left crying out for more education, mass transit, (which does less in Europe than American proponents believe) and infrastructure spending in the mistaken belief these forms of spending still offer positive ROI. At the same time right wing calls for lower taxes and less regulation are based on a different erroneous hopes.

One has to diagnose all the root causes before we can try to make the future less bad. But rising Asian demand for commodities, cheaper Asian labor, depleting oil fields, and other causes of our woes do not make it into mainstream debates on what is going wrong. I've laid out in past posts why economic stagnation and declining per capita income are in our future. My practical advice: try harder to make more and save more and think about how to cushion yourself from worse times ahead. Peak Oil along is going to hit the economy very hard. Lots of other factors are combining together to make the decline even worse. I've got no suggestions on how to prevent it. Things will get worse for some years before they get better.

Share |      By Randall Parker at 2011 October 23 07:27 PM  Economics Living Standards

A.Prole said at October 24, 2011 12:50 AM:

Believe it or not, median incomes in the UK are higher than those in the USA.
- And you're taxed just as much, despite what some people try to tell you.
Oh, and due to British 'socialised medicine' there's no worry over medical insurance of doctor's bills.
Those Mexican immigrants and right-wing 'free trade' globalists filthy cunts at the WSJ and 'The Economist' really f*cked you up.
Perhaps the prescription is some good ol' fashioned British #or Swedish# leftism.

In said at October 24, 2011 8:23 AM:

I've got no suggestions on how to prevent it. Things will get worse for some years before they get better.

The thought occurred to me the other day that the majority of things that need to happen are politically and culturally close to not possible (never say never). That said there must be some positive changes that can occur. Perhaps a good strategy for us would be to identify those things and push for them.

Lono said at October 25, 2011 8:40 AM:

Ron Paul

antipodean realist said at October 28, 2011 2:41 PM:


British incomes may be relatively high, but UK living costs are also high. Nationalised medicine is about the only bargain. Housing and motoring costs in the US mid-West are far lower than in the UK, and UK consumer goods are taxed at 17.5 percent, compared with 5 to 10 percent in the US. If the US had lower unemployment, lower immigration and a more affordable medical system it would be a very cheap place to live.

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