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In my last post I noted that while the real median income for all workers in up more than 30% over the last 35 years, the real median income of White men isn’t much higher than it was in the early 1970s. In describing this phenomenon, I have spoken of wages being “flat” or “stagnant.” This is the common way of speaking about the matter, but it is inaccurate. To say that wages for a given group were “flat” or “stagnant” during a given period implies that they remained largely unchanged throughout that period. But the fact that wages are more or less the same at the end of a given period as at the beginning doesn’t mean that they have remained unchanged throughout that period, anymore than a roller coaster must be flat because you start and stop at the same point.
Indeed, if we take another look at the Census Bureau’s Historical Income Tables, what we find is that wages (even for White men) have been anything but stagnant over the last 35 years. In actuality the real median income for White men fell nearly 10% between 1974 and 1982, only to rise 15% from 1982 to 2007. In addition, real median income for women increased only slightly between 1974 and 1982 and actually fell slightly for blacks during the same period. (If you are wondering why real wage growth was so bad between 1974 and 1982, you might want to check out my review of Robert Samuelson’s The Great Inflation and Its Aftermath).This is important for two reasons. First, many people who cite the “stagnant” wages figures often attempt to lay the blame for this apparent stagnation at the feet of Ronald Reagan and his conservative heirs. Ronald Reagan, however, did not become president until 1981, and while his policies are open to criticism on a number of grounds, he did not have access to a time machine, and his actions as president can’t be blamed for what happened in the 1970s.
More importantly, if real median wages really were flat throughout the period of 1973/74 to the present, one might want to search for ways to get them growing again. If, on the other hand, real median wages have been growing since the early 1980s, and only appear flat because of real wage decline in the 1970s (due to policies since corrected), then there is less of a reason to go looking for something in current policy that has caused wages to stagnate. To say this, of course, is not to say that there is nothing in current policy that is open to criticism, or that we shouldn’t try to get real wages growing even faster than they have been (if we can). It is only to express a preference for honesty when assessing social problems.