Rock Hard Income Data

"Wages are stagnant" has been one of our politicians' favorite phrases this year. Lo and behold, they're technically right, but only in the most misleading and overly pessimistic way possible. Here, have a graph:

If you don't right-click on this graph and select "Open Link in New Window" I'm going to get angry. ...At least click on it to see the bigger version, then press Alt + Left arrow to come back. There, you just learned a new trick.

I predict exactly half of my audience is going to feel offended because they already knew that shortcut... The other half will be impressed with themselves from now on by using it...


Anyways, if the graph hasn't already done all the speaking for me, I'll point out some stuff. First off, remember that this is real median income, so it's been adjusted for inflation, and it's the income of the "middle man" in the country - not the average, mind you, but the de facto center of the middle class.

1. From 1969 to about 1983, wages really were stagnant. Real median income stayed around $40,000.

2. From 1983 to 2007, though, we've seen about a 20% increase. This means the median household is 20% richer... If that wasn't clear enough...

3. Yes, indeed, from 2000 to 2007 we've seen a slight decrease in median income. From just over the $49,000 peak in 2000 to just over $48,000 in 2007. That's not that bad, right? Not something that should cause politicians to think that capitalism has failed, at least...

4. In 40 years, from 1967 to 2007, we've seen about a 31% rise in household income. Considering that we're working, on average, fewer hours than ever, I'd say that's pretty good.

(The dark line - "Total Private" is the overall average weekly hours worked. Unfortunately I could only find a graph that went to 1999 on short notice... It's pretty effective, though. Just not very "Rock Hard.")

So what does this all mean?

Basically - ignoring some very slight (but often exaggerated) variations in the number of people in each "class quintile," i.e. the middle class, upper-middle, etc. - this means that, compared to 40 years ago, the average family/household can now afford 1/3 more useless crap by doing almost 10% less work.

If that's not good news for fans of large houses, fancy cars, iPods and other useless crap, I don't know what is.

Yes, wages may be stagnant over the past few years, but that's not because the fabric of our society somehow changed, or that capitalism is causing our downfall. Wages and income can't go up all the time - Recessions, increases in global competition, business cycle changes, technological growth and all sorts of other details cause adjusted-for-inflation income to actually go down every once in a while. Fortunately, as soon as we adapt to a change, we go back to earning more money for less labor.

Of course, that's physical labor I'm talking about... We're actually doing more thinking than ever before, and getting paid a higher premium for it, apparently.

And that's why we're all so fat.

The end.

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UPDATE For Doubters: Here's the same chart from up top, but without adjusting for inflation. Notice that if you don't adjust stuff for inflation it'll always look exaggerated - I mean, for God's sake, they were makin' less that $7,000 in 1967 and they were still middle class:

And for easier comparison, I put this chart down again so you can see the dampening (or income-eating) effects of inflation on the same basic data:
So if I didn't adjust for inflation, I'd be saying how we're making almost 700% more than we were 40 years ago, instead of just the 31%.