Just about everyone realizes how bad the economy has been over the last few years. What most people don’t realize is that for most Americans the economy began to stagnate well before the financial crisis. While per capita income in the U.S. grew through the start of the financial crisis, in practice almost all that growth in income went to top earners. But for average Americans economic conditions have been stagnant for the last decade.
Since its peak in 1999, the median income has fallen almost $3800. And this was also a decade where families were required to spend even more of their income on health insurance. We now have 7% of Americans making less than the poverty level, at a time when virtually all the income increase over the last decade went to the top 5%.
I’ve talked about this before but it can not be said enough. Since 1980, Americans have not seen their income rise in lock step with GDP as happened in the previous years.
And the small amount of increase has almost all gone to top 5%. The average American has not seen much increase in pay. Over a 30 year period.
This, to me, represents a structural problem; one that will not be solved anytime soon.
More jobs will help but it is unlikely that that the forces in place will do much to stop this stagnation of wages. For the first time in American history, Americans will be making less than their parents.
What will alter this?