Stagnating incomes have been a widely discussed aspect of rising inequality, and new research shows it’s not getting better [emphasis mine]:
Work and Reward: The Great Disconnect | The NY Times Editorial Board
Working hard and getting ahead used to go hand in hand. But that was a long time ago, before decades of stagnating incomes and rising inequality took their toll.
A study [Lifetime Incomes in the United States over Six Decades | Fatih Guvenen, Greg Kaplan, Jae Song, Justin Weidner] published recently by the National Bureau of Economic Research provides an unvarnished look at the damage. The researchers, from the University of Minnesota, the University of Chicago, Princeton University and the Social Security Administration, analyzed the lifetime income histories of millions of workers who started working from 1957 to 1983 and the partial histories of those who entered the work force after that. The research thus measures not only annual ups and downs or average gains and losses, but also longer-term economic mobility.
The findings are a stark reminder that the twin scourges of poor wage growth and income inequality, left unaddressed, will only worsen.
Men have been harder hit than women, partly because they had more to lose. Lifetime income rose modestly for the typical man who entered the labor force from 1957 to 1966. But then it began to decline. In all, the median lifetime income for men who began working in 1983 was lower than for men who started in 1967, by 10 percent to 19 percent, depending on the inflation measure used.
That works out to a total lifetime income loss of $96,100 to $243,350 — even after accounting for the rise in the value of nonwage benefits. The decline was mainly a result of lower pay after adjusting for inflation, and not from reductions in weekly hours or years in the work force. Over the same period, the median lifetime income of women increased by 22 percent to 33 percent, as more women spent more hours and years in the labor force. But the gains, from a very low starting point, were smaller than men’s losses and were not enough to eliminate the historic gap in hourly pay between men and women.
So, a systematic erosion of earning and the security of a middle and working class life, as well as the indirect impact on the children of these workers.
And prospects for the future are predictably bad for this economic cohort since the largest impacts are lower wages at the beginning of their work lives.
Currently, there just isn’t any real effort in place to resolve this highly negative trend, aside from generalized hand-wringing about income inequality, which has a tendency to be associated with tax policy rather than the need to drive higher income for workers.
Originally published at stoweboyd.com.