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Why Are Worker Wages Stagnating? Ask Pope Francis

Why Are Worker Wages Stagnating? Ask Pope Francis

By Wednesday, 23 September 2015 10:12 AM Current | Bio | Archive

Not every American wants to be rich.

Pope Francis will remind us this week that money isn’t everything – but it isn’t nothing, either.

If the United States were a land of opportunity, then a typical worker would be able to move up the ladder over his career. Few would reach the top, of course, but pay should increase as workers gain experience and grow more productive.

That’s not happening, if the latest Census Bureau data is correct.

The median income for American males with a full-time job was $50,383 last year. Note that this is the median, not average. This income is for a worker exactly in the middle of the population. Half of male workers earned more than $50,383, and half earned less.

Note also that this data only covers male workers who actually had jobs for the entire year.

Someone who was unemployed obviously made less, but that doesn’t affect the median income figure.

Looking at the exact same data set for 1973, and using inflation-adjusted dollars, the median male worker earned $53,294.

That’s right; wages actually went backwards over this 41-year period, or roughly the length of a career. It could be your career, if you are around age 60 now.

The plot thickens when you consider the numbers over time. Median income rose steadily through the 1950s and 1960s and then stopped growing in the early 1970s. Even adjusted for inflation, men’s median income has stayed near $50,000 since 1973.

This doesn’t match the sunny descriptions of prosperity we get from politicians.

It spans periods of both Democratic and Republican power, so neither party seems able to change it.

Another twist: women’s median income kept growing through the 1980s and 1990s, even though it stayed below the male equivalent. Starting around 2000, female wages went flat as well.

What in the world is going on here?

When I saw this, I thought something must be wrong with the data. Yet multiple surveys over several decades produced consistent results.

There could be statistical problems. You can quibble with the inflation adjustment, for instance.

It’s also true that cash income doesn’t capture non-cash benefits like health insurance, which now account for a bigger part of workers’ pay. That could affect the numbers.

I don’t think it would be enough to change the broader trend, however, which still looks terrible.

You might also blame immigration. It could be a factor recently, but wage growth went flat long before the latest wave. Immigration can’t explain all of this.

Did something occur to cap worker income in the early 1970s? Several events come to mind.
  • President Nixon famously “closed the gold window” in 1971, setting the greenback adrift.
  • Nixon visited China in 1972, setting in motion what we would later call “globalization” and the movement of U.S. manufacturing overseas.
  • OPEC embargoed oil shipments to the U.S. and other nations that supported Israel in the 1973 Yom Kippur War. Inflation rose sharply for the rest of the 1970s.
  • The Vietnam conflict ended and the military downsized, adding thousands of young males to the civilian workforce.

I suspect these events and others all played a role. Whatever the cause, the evidence shows clearly that the American Dream is no longer dreamy for millions of people.

This, I think, is why so many voters are looking to outsiders – Donald Trump, Ben Carson, Carly Fiorina and Bernie Sanders – for help. We’ve given the politicians plenty of time.

Either they can’t deliver a solution, or they just don’t want to.

I think it might help us to hear from another outsider, one who is not captive to political or business interests. He’s in Washington right now, too. Pope Francis will address a joint session of Congress.

Some people have already made up their minds. They don’t like the Pope’s views on abortion, marriage, birth control, abusive priests, poverty, capitalism, climate change, or the Middle East.

I get that. I don’t like some of it, either.

Nevertheless, the Pope is someone who cares deeply about the average working people of this country – the same people whose wages went nowhere the last 40 years.

For a couple of hours, he will have the ears of the people who might do something about it.

I doubt Pope Francis will waste the opportunity. Whatever he says will be worth hearing.

Let’s just hope the right people listen.

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The Pope is someone who cares deeply about the average working people of this country – the same people whose wages went nowhere the last 40 years.
pope, wages, working people, economy
Wednesday, 23 September 2015 10:12 AM
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