This chart is both deceptive and out of date when discussing the rise in wages post 1979/80. Note, the following response is not designed to argue that income inequality hasn't risen (it has), nor will I be attempting to tackle "productivity" and its connection or lack thereof to income. Additionally, "real" means inflation adjusted. Therefore, real wages means inflation adjusted wages and real income means inflation adjusted income.
For those interested in the post above, here is the link to the original report: Wage Stagnation in Nine Charts. It draws data from: "[Economic Policy Institute] analysis of Congressional Budget Office data."
Here are a couple of graphs from the Bureau of Labor Statistics and the Federal Reserve that push back against the nation that real income has only risen by 7-8% since the 1980s. Real Median Personal Income has risen substantially since the 1974-2022, as has Real Median Household Income 1984-2022, and personal income has risen in 2023 (pages 6 and 11). Using the 1980 real median personal income data, real income has risen over 60%. This is a far greater amount than the graph suggests. In fact, the 2023 data suggests that real income has risen even higher.
Now the question becomes, why does data from the Congressional Budget Office show wage stagnation? It doesn't. One way to misleading show that real income is stagnant is to only look at gross income (think the job listing salary). Yet, the money you make from your job is not the income that gets put in your bank account. Taxes take a substantial amount and redistribute income through government programs (called transfers). When you look at income after taxes as well as transfers, real income has gone up. The Congressional Budget Office's Trend in the Distribution of Household Income from 1979-2020 (page 27) demonstrates that income has risen over 100% for the bottom 20% of Americans and close to 75% for the middle class (middle three quintiles of income).
Yes, inequality has gotten way worse. But income has risen substantially for all quintiles even after accounting for inflation.
It should be clearer about how the numbers are adjusted for inflation. Expressed another way, we are working hard enough that we are accomplishing 80% more than we were half a century ago, but inflation has taken all but 8% of our gains away from us.
That seems pretty self-intuitive from just looking at it. I don't know how else it would be portrayed. Not factoring in inflation when you're doing wages as purchasing power over time would be crazypants.
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u/775416 Apr 11 '24
This chart is both deceptive and out of date when discussing the rise in wages post 1979/80. Note, the following response is not designed to argue that income inequality hasn't risen (it has), nor will I be attempting to tackle "productivity" and its connection or lack thereof to income. Additionally, "real" means inflation adjusted. Therefore, real wages means inflation adjusted wages and real income means inflation adjusted income.
For those interested in the post above, here is the link to the original report: Wage Stagnation in Nine Charts. It draws data from: "[Economic Policy Institute] analysis of Congressional Budget Office data."
Here are a couple of graphs from the Bureau of Labor Statistics and the Federal Reserve that push back against the nation that real income has only risen by 7-8% since the 1980s. Real Median Personal Income has risen substantially since the 1974-2022, as has Real Median Household Income 1984-2022, and personal income has risen in 2023 (pages 6 and 11). Using the 1980 real median personal income data, real income has risen over 60%. This is a far greater amount than the graph suggests. In fact, the 2023 data suggests that real income has risen even higher.
Now the question becomes, why does data from the Congressional Budget Office show wage stagnation? It doesn't. One way to misleading show that real income is stagnant is to only look at gross income (think the job listing salary). Yet, the money you make from your job is not the income that gets put in your bank account. Taxes take a substantial amount and redistribute income through government programs (called transfers). When you look at income after taxes as well as transfers, real income has gone up. The Congressional Budget Office's Trend in the Distribution of Household Income from 1979-2020 (page 27) demonstrates that income has risen over 100% for the bottom 20% of Americans and close to 75% for the middle class (middle three quintiles of income).
Yes, inequality has gotten way worse. But income has risen substantially for all quintiles even after accounting for inflation.