Wage Growth in America

WAGE GROWTH IN AMERICA….Brad DeLong has a nice, readable introduction to income and wage trends over at his place that’s worth a look. At MaxSpeak, Max Sawicky comments that “I don’t envy the politician trying to explain it in less space,” while the Sandwichman wonders if the tiny growth in wages over the past few decades is even tinier than it looks because some of it is due to the fact that the average worker is older now, and older workers get paid more regardless of whether average wages are going up.

Well, here’s a single data point that addresses both questions. It’s a chart that shows median income for 35-44 year old men and women since the end of World War II.

First the good news: women have made steady increases ? though it’s worth noting that about half of that gain is because women work more hours than they did 30 years ago. On an hourly basis, the increase since then amounts to about 1% per year.

And men? Not such good news. The average 40-year-old guy made $44,000 in 1973, and that was as good as it ever got. Today that number is about $40,000. It’s gone down even though the American economy has nearly doubled on a per-person basis during that time.

So where did all the money go? What happened in 1973 that suddenly stopped wage growth for half the population in its tracks? And what should we do about it?