EconoMinute: Median Household Income

EconoMinute: Median Household Income


This is Richard Wolff with another EconoMinute. In recent weeks the government has released statistics indicating that Americans’ household incomes went up between 2014 and 2015. And indeed they did. It’s interesting that that happened. It’s important. The gain was substantial. Median income, by the way, simply a measure that gives you a rough idea of how Americans doing. Half of Americans do a bit better, half of Americans do not-so-well, But it’s a good estimate of how things are going. If you believe that it was the beginning of a trend – and of course there’s no way to know that – then you could be really happy if you believed it was the continuation of something happening, then you could be very happy indeed. However, neither of those are true. That is we don’t know what’s going to happen but we certainly know what did happen. And once I go over that with you, you’ll understand that the hoopla about the improvement in 2014-2015 is a misplaced – and I’m being as polite as I can be here – is a misplaced attention to a result that actually is contradicted by the longer 20-year period. So here we go. Very simple. In 1997 the median household income was higher than it was ten years later. In other words: the whole period of 1997-2007 saw a decline in median household income. And the median household income in 2015 was lower than what it was in 2007. In other words, over the last 20 years household median income in the United States declined. It’s a clue, by the way, as to why so many people are upset and dissatisfied with the American economy. Enough so that if you’re on the left end of things political you supported Bernie Sanders, and if you’re on the right end of things political you support Donald Trump – among other reactions – and those include people who don’t want to support either of the major candidates, that’s how upset they are among other things with economic performance. And those folks are right. Over the last 20 years the productivity – how much is produced in an average hour of an average workers effort – has gone up. A lot. You might imagine that, if the output has gone up and the productivity of workers has gone up, that their median household income would go up, too. But if you imagine that, you’d be wrong. What happened over the last 20 years is that workers worked better and harder, and we produce more and more, but it all went to the 1% at the top, which is why median income dropped for 20 years. That’s the important thing. That’s what’s not paid attention to, neither by the major candidates nor by the media and that’s why this EconoMinute was focused on it. Thank you for your attention. This is Richard Wolff for EconoMinute.

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