Median income data overstate progress in some ways

Those numbers are not age-adjusted:

Has the median man made progress economically since 1980? Not really. While male median income rose (in 2017 $) from $35,589 to $40,396, or 13.5 percent, this modest increase masks the fact that the share of men in their peak earnings years has increased, and that earnings at the median within peak earnings years categories have decreased.

Note that population share for 35-64, prime earnings years, rose from 1980 to 2017; earnings fell for every population group between 25 and 54. The median 30 year old is making less than their counterpart from 27 years earlier, as is the median 40 year old, as is the median 50 year old.

Had income within each age category remained constant at 1980 levels, current median income for men could be $40,306, or almost exactly where it us now.

Here is the full Richard Green post, with a useful chart, via Mark Thoma.

Comments

So, just growing old increases your income.

More interesting would be wage by educational level by age.

Also, a median measure doesn't tell you much, any more than an average, across a large population with different levels of education.

You would want to look at income level by demographics (age, sex, race) and educational attainment over time to tell where the changes are. I believe high school drop outs continue to do worse than before. Here is BLS data by education level: https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm

"...just growing old increases your income"

Yes, partially true.

I think one thing that's also missing is how the human resources profession has evolved into acting the way the market does for labor. HR departments and consultants for salaried positions now have detailed tables based on hundred of factors (some of them age related) to define and balance what used to be negotiated, market based, or budget defined.

And it is a problem. It's among the blackest of black holes how and under what circumstances these determinations are made. It's time to shed some light on the process and make it transparent, and 'cultural taboo over wage/salary discussion' is not a good reason not to.

Just having a penis increases your income.

What's the point of all this mental masturbation?

Anyway, God Almighty created man and woman. There are only two genders.

"Just having a penis increases your income."

Nope. Young single, childless women earn more than their male peers. What increases your income long-term is not taking time out of the labor-force, not switching to part-time, and not choosing an occupation for flexibility and security over risk-taking and earnings potential.

I think more women get college educated than men, so unless you control for education, I don't know what the difference is. Still would get women make less when adjusting or controlling for education. But, perhaps you can direct me to your sources.

But men are far more likely to choose actual college degrees vs hate studies and gender based studies (but I digress). For reasons that no one will even try to explain most women choose college programs in stupid stuff.

Can you give me evidence that for the same STEM degree that men and women have the same relative compensation controlling for age; then do the same for non-STEM.

In keeping with your desire to go far afield from what I stated; can you give me evidence that Fords are better than Chevys?

Better control for fatal injuries per 100k for each of those professions, Bill.

What fraction of people choose XXX Studies as a major? I'd be shocked if it's even in the double digits. Meanwhile more women are in med school these days than men.

Correct. The percent of bachelors degree recipients who major in gender studies, ethnic studies, etc. is and always has been tiny.
https://nces.ed.gov/programs/digest/d17/tables/dt17_322.10.asp

Row three of that table tells us that fewer than 8K degrees were awarded in "Area, ethnic, cultural, gender, and group studies" in 2016. That's out of almost 2M bachelors degrees awarded, less than 1/2 of 1%.

Even if you choose to include "Multi/interdisciplinary studies" (which would be a mistake because in their early years new fields such as computational neuroscience, data science, etc. were likely to appear here as do mixed majors such as math-econ (as opposed to mathematical economics), philosophy-psychology, independent studies, etc.), there were only 49K of them in 2016, so the two groups combined were still less than 3% of the graduates.

My takeaway from this is that the vast majority of men are overpaid. By a significant amount. Probably $30,000 at least (in 2017 $). The current global median (household) is $9,700.

We need another 2-5 million immigrants a year if we’re going to hit the global median anytime this century.

Time for the orange one to be replaced.

So, US GDP needs to be slashed?

Or are you arguing the Fed needs to deposit $2500 a month in every male worker's account to pay for $39,000 in demand for production?

Stagnating men. Stagnating pay. Seems fair to me.

Stagnating men = c u c k s

basic data source is US Census Bureau -- how accurate is that data overall ?

(and collecting financial data ain't a legitimate function of Federal Census authority)

Alternatively: "progress" is a such a bogus conceit that it can be supported ONLY with defective and deceptive data. ("Progress" enjoys no temporal realism whatsoever, if our astrophysicists can be believed for one moment.)

How crude and unseemly of Holy Science and its pious academic devotees to be proffering such egregious temporal myths at this stage of the game . . . tsk and tut.

Not surprising. Isn't the real issue over if these numbers include health benefits?

If they do, and they contained the Obamacare subsidy for those at the low end, that would be an interesting adjustment.

Also, I don't think the data includes transfers like food stamps. So, you could eliminate them and it wouldn't show up in the data.

Benefits in general, yes.

The fact that he doesn't even mention how he deflated his income data is concerning. I've been harping on this point for a while, but Cochran recently had a blog post on it so I'm a bit more confident in asserting it now -- comparing "real" data over long periods of time depends heavily on which price index is used, and most price indexes are a combination of arbitrary and nonsensical.

In other words, you'd be silly to actually believe that Richard Green data.

+1. Even more, with a given chained price index computation method, the ratio of the GDP of a country at two different times does not depend
only of the economy of that country at these two times, but of all the history of economy in between. In other words, you could imagine a history an other parallel universe, with the US economy exactly as in ours
in 1980, and exactly as in ours in 2019, but where the GDP per capita computed with the usual Fed method being multiplied tenfold from 1980 to 2019, or divided tenfold, or whatever variation you fancy.

Bottom line : inter temporal GDP comparisons are closed to meaningless. Sadly, they seem to be multiplying on this blog in the last few days : this one in the US, the one in the next post between France 1984 and Poland 2019, and even worse, the one on August 20 comparing the GDP of the world in 2100 under two different climatic scenarios.

Non-rhetorical questions: How is this both true and yet GDP growth data in any year is meaningful? How is this consistent with longer term (rough) consistency of rate of GDP/capita growth at "economic frontier"?

Let me try to explain it with an analogy. Suppose you move an object under water. You have to push it strongly to overcome water's resistance.
At each time of the motion this means you need to provide energy to your object to make it move. Now suppose you bring your object back to its starting point. Then you have provided a lot of total energy, but nothing has changed. At each time the motion, it makes sense to talk of the amount of energy you provide by unit of time, but the total amount of energy between the beginning and the end of the motion makes sense only if you give the complete decision of the motion: you have given a lot energy to displace object and put it back in its starting point, but you could have done the same with zero energy by just doing nothing.

The analogy with economy is as follows: the energy given to the object at some by t by unit of time (the power) is the growth, which makes sense.
The total energy given to the object during the motion is the (variation of) the GDP, but this makes sense only if the motion is given : you could imagine 10 years of positive growth ending up with the exact same economy as you starter with.

Physicists would say that the water resistance force is not "conservative".
Mathematicians would mean the same by saying that the associated differential form is not "exact" (and even worse, in this case it is not "closed"). Similarly the differential form defining real growth (p_1 dq_1 + p_2 dq_2 + p_n dq_n, where there are n goods, p_i is the price of the good #i, and q_i is the quantity produced of that good) is not closed.

My comment on an earlier post: What killed the growth in real wages in the early 1970s? Wages have been flat since the early 1970s after many years of strong growth. Nick Rowe has an interesting answer: wage and price controls (Nixon imposed wage and price controls for those too young to remember). https://worthwhile.typepad.com/worthwhile_canadian_initi/2019/08/controls.html Look at the charts in Rowe's post. What Rowe can't answer, however, is why the control of wages has persisted long after (loooong after) the controls were lifted. Of course, the 1980s brought in the Reagan administration and its hostility to labor, and from the 1980s onward brought in the shift in production to China and other places. Did those developments merely reinforce the wage controls in the early 1970s? Absent the wage controls, would we have experienced 40 plus years of stagnant wages? One should recall that wage controls were imposed because of the belief that labor had too much power, and needed to be brought down a rung or two. My point is that if markets rather than wage controls had determined wages, would we be facing the situation that precipitated Applebaum's book? In other words, this isn't a market failure.

The early 1970s is when the population of immigrants in the US began blowing up after several years of being flat. Wages have been held down since then because the people in charge made deliberate policy decisions to increase the supply of labor.

The bigger factor is that more and women women entered the work force. That doubles the labor pool.

The US labor force participation by women was close to current numbers by 1999. It really hasn't changed much over the last 20 years.

https://www.dol.gov/wb/stats/NEWSTATS/facts/women_lf.htm#LFPWomenAge

True, but during the 70s, 80s, and 90s it was increasing. There are far more women in the work force more than immigrants. Also immigrants are not robots. Yes, the labor supply increases with immigration, but so too does the demand for labor.

One won't recall that labor "needed to be brought down a rung or two" because it "had too much power" because that was never the argument.

Now if you know what really happened versus what what was actually argued and claimed, well, we do have free speech, and everyone is entitled.
But referring to a memory that no one has? Please.

Read Rowe's post and look at the graphs of wage increases up to Nixon's wage controls. The hostility to labor, and unions, has yet to subside down here in the South, where unions (and wage increases) are blamed for every problem today.

"The hostility to labor, and unions, has yet to subside down here in the South, where unions (and wage increases) are blamed for every problem today."

You are hearing voices in your head. Every problem today is not blames on unions and wage increases.

Big-government proponent Dick Nixon's acts spurred High Unemployment, High Inflation, High Interest Rates, Slow GDP Growth, which were not conducive to wage growth, real or otherwise.

Government interventions, here among numerous others, wage and price controls, added to the problems.

So, blame the markets and increase governmental power to screw up more bigger. Brilliant!

Yes, my point: absent the wage controls, would wage stagnation have persisted for all these years. Once business got use to wage stagnation due to wage controls, it became the norm. Like the rising asset prices that will be our undoing.

It could be many things:
One would be the increase in welfare programs that occurred in the 1970's.
Another could be the loss of about half of all US manufacturing jobs since 1973.
Or management getting the lead over the unions.
Bifurcation of jobs into very low skill and very high skill jobs.
A decide in marriage (the marriage premium is about as big as the college premium.)

Oh, I forgot what I think is the most likely cause:
A decelerating rate of inflation.

And what happens to this data when you include the female half of the population?

It's also significantly understated by the impact of immigration over time. I'm in favor of more immigration, but numbers like these have to be taken with a grain of salt because they aren't comparing the same people over time, they're comparing different sets of people, with different backgrounds.

The population composition is significantly different now than decades ago, but percentage at what age isn't the only major difference.

Shocking anyone could live on so little as $40k yet apparently half of men make less.

'from 1980 to 2017' ... 'from 27 years earlier' - Hmm, should that instead be 'from 37 years earlier'?

I think this is an illusion. Basically the demographics of the workforce have changed. Just like standardized tests, scores are up for every ethnic group, but the mix has changed pushing down the average. Hispanic population was 6.5% in 1980, 17% today, with a much lower median income. Not sure the difference in working age male demographics, but it likely mirrors the nations economic changes. This suppressed average wage growth significantly. Back of envelop calc avg wage for latin american workers are 24% lower than whites, so this change pushes wages down 3%. On it's own.

Yup, Simpson's Paradox. Data are complex and thus generating statistics to summarize the data is not easy.

It's easy enough to say, as some commenters have: account for age. Account for education. Account for ethnicity. Account for marital status and children. Compare to women. But as we incorporate all those factors in the calculation we have an ever-multiplying set of statistical choices we have to make about how to model the data and properly account for these factors, and thus a multiplying list of critiques or questions that can be raised against the calculations.

This isn't exactly a Simpson's Paradox. Just because the low wages are concentrated in the hispanic population doesn't mean they aren't low wages and does indeed bring the numbers down.

Lots of low skilled immigration has kept the wages for low skilled workers low. Even if it mostly effects the low skilled immigrants directly.

"Just because the low wages are concentrated in the hispanic population doesn't mean they aren't low wages and does indeed bring the numbers down."

I was going to say: that's exactly what Simpson's Paradox is.

But upon re-reading, perhaps what you are saying is the the presence of low-wage immigrants causes market effects (higher supply of low skill labor, and thus lower price), and thus even non-Hispanics experience lower wages.

Or more accurately, wages that are lower than they otherwise would have been.

Plausible, it's classic Econ 101 or price theory. But we are now talking about hypothetical counterfactuals (non-Hispanic wages lower than they would have otherwise been) and we're indeed in the world that I described of trying to counteract or correct for Simpson's Paradox and having to use some model, be it statistical or economic, to try to explain what's going on. Even if we get people to agree to use say price theory to model what's going on, there is then the question of estimating what the elasticity of supply and demand are, as well as the size of the shifts of the supply and demand curves.

I guess you could say that this is inherent in all social science statistics, independent of Simpson's Paradox. It then boils down to a choice of what lens or framework we bring to the problem: same underlying issues of data complexity, different ways of framing the problem.

While I'm a big fan of using economics or in this case price theory to understand what's going on in the world, one advantage of invoking Simpson's Paradox is it can be invoked without using price theory at all, so unbelievers in price theory can't fall back critiquing price theory.

“Has the median man made progress economically since 1980? Not really.”

This can’t be concluded from male income alone. i earn about the same as my father did in 1980, but I am much better off because my wife earns way more than my mother did.

+1, this is the most important take away.

Men's wages have been relatively stagnant but women's wages have not. Women's participation in the Labor Forces stopped growing around 1999. What do the numbers say over the last 20 years versus the last 40 years?

When people make the assertion that wages have stagnated over the last 40 years are they tracking the same composition of people in 1970 through 2010 and watching their wages not change?

Or are they taking a population of people in 1970 and comparing them to a totally different population in 2010 and observe their wages remain unchanged.

The later approach is a piss poor use of statistical techniques.

Allow more building = lower cost of living and more construction jobs.
And of course inflation is overstated.
Crime is down.
The air and water are much cleaner. Was there still leaded gasoline in 1980?

While median income might not have risen, median income for white males has risen. So has median income for white women. So has median income for non-white males, and non-white women. How? With 40 million immigrants, mostly low-wage, it makes median income a much less valuable statistic. (See Conard’s Upside of Inequality).

From 1980 to 2016, median earners have seen their income share fall from about 80% to 65%. Can a declining median income share grow either GDP or inflation? A pernicious median income share decline perhaps inevitably follows forty years of tax cuts.

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