Economic “Boom” Proves False As Median US Wage Falls 12.5%

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You want to know something important, dear reader? Something that really matters? Well, read on…

We’ve been saying that the boom is a fraud. It is a speculative boom, not an economic boom. It lifts up asset prices and makes rich people think they are richer than ever. But it doesn’t increase real economic output – at least, not in the United States of America – or make average people any better off.

Of course, the leftists have been saying this for years. But who cares what they say. Even when they do spot a real problem, they invariably come up with a solution – more government meddling – that makes it worse.

Still, this is something they’re not wrong about.

An item from yesterday’s news:

According to data from the Pew Charitable Trust’s Economic Mobility project, a generation ago, American men in their 30s had median annual incomes of about US$40,000. Today, men of the same age, make about US$35,000 a year, adjusted for inflation. That’s a 12.5% drop over the last 30 years.

What do you make of that, dear reader?

We begin by asking the obvious questions: how is it possible that the biggest boom in the most advanced capitalistic economy in history has not made ordinary people wealthier? How could it be that Reagan’s Supply-Side Revolution…the blissful Clinton years…and the super-debt, super-spending era of George W. Bush…have altogether failed to produce one solitary dollar of extra income for the average working man?

The leftists will have their silly prognoses and their quack remedies…the rightists will have their claptrap excuses and their pass-the-blame apologia.

And the average working stiff? He seems not to have even noticed. He’s living on borrowed time and borrowed money. He sees the new house his family lives in…he looks out in the driveway and sees his new, foreign-made car…and he goes on the Internet and finds new ways to get more credit. What me worry?

On the Yahoo News site, we found the following offer:

$510,000 Mortgage…Under $1,698 per month!

Let’s see, the average guy earns only US$35,000. Take some out for taxes and health insurance…yes, he might be able to swing it, if he doesn’t eat.

But even if he could make the payments – interest only – how could he ever put aside enough money to pay it off? But don’t worry, he’s getting used to things he can never get out of – tax obligations that follow him, no matter where he goes in the entire world…credit card bills…mortgages.

He has taken what Friedrich Hayek called ‘The Road to Serfdom.’ He is becoming a slave…to his credit cards, to his government, to his mortgage, to his nation’s foreign meddling and domestic commitments. The poor man has no way out.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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11 Comments on "Economic “Boom” Proves False As Median US Wage Falls 12.5%"

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Chris. Fulker
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I’m afraid the poor wage-earning middle-class man WILL find a way out. He may decide, in his myopia, to use his government to bail himself out. Help out mortgage-holders? Control prices and raise minimum wages? Reduce interest rates to provide even more cheap credit? But all of these will fall like feathers, amounting to nothing more than printing new “money”. Within the next few years we will see populist politicians, going mad in their desperation for tax revenue. They will set up scapegoats: immigrants, big business, small business, banks, tax evaders, “profiteers” and “hoarders.” They will close borders, put up… Read more »
Realist
Guest
Oh, let’s be honest here. None of this is a surprise. Globalization was always a race to the bottom – a way for robber baron CEO’s to dump their reasonably paid first-world employees and replace them with desperate third-worlders who would do the same jobs for a fraction of the price. Anyone who doubted that the vast majority of US employees would have to compete in that race was, ummm, shortsighted, I guess, is the most polite thing I can think of. I can think of many less polite ones. Circumvent environmental regulations by moving to the third world? Check.… Read more »
Dave
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If the average American knew as much about politics, history, global events and economics as he knows about fantasy football, NASCAR, American Idol and SURVIVOR……he might be making a little more financial headway in this slowly collapsing, fiat-currency-based and dysfunctional American society. In the end, I predict an American bloodbath along the lines of class, water rights, energy, religion, access to health care, food, race, sexual preference and geographical origins….. Maybe not tomorrow…but give it 5 to 20 years and it will most certainly happen as the U.S. Federal Reserve loses the ability to paper-over America’s inability to maintain her… Read more »
TJ
Guest

Amen Realist. Amen.

anonymous
Guest

Bonner. What you don’t understand is that the house has two incomes now. The wife works, or the significant other, or whatever. That’s the more important thing that has happened in the last 30 years. A flood of women entered the workforce. And now they wonder why they are so unhappy.

Simon Whelan
Guest
As Dr. Nick of the Simpsons sez : Hi Everybody ! In my opinion, Bill Bonner is a sanctimonious, arrogant, ignorant, condescending and cowardly hypocrite. Or, if you find that assertion unpalatable then how about this : On the continuum from being an ‘Utter Ignoramus’ to being an ‘Absolute Expert’ Bill Bonner is somewhere between a ‘Creepily Unctuous Know It All’ to an ‘Oleaginously Hypocritical Wise Acre’. You are perhaps now wondering why I say this ? Well, here’s my explanation : 1st off I do accept Bonner’s facts at face value; i.e. : According to data from the Pew… Read more »
Chris. Fulker
Guest

Simon, you’re just being noisy. Bill Bonner is not responsible for solving this mess ny more than you or me. Can’t someone point out the true nature of a problem without being called on to solve the world’s troubles?

It seems to me that if a whole household has to work now just to produce the same lifestyle that a single working father could fund in my Dad’s lifetime, then THAT is a drop in standard of living.

Jack Lacton
Guest

Heh. What a crock.

Why not try calculating after tax and benefits pay from the adjusted 70s to today’s figure? You might be a bit startled at how much better off people are.

Eric Torres
Guest

This survey probably is very accurate when I compare my income to my fathers. However my mother worked at home. My wife earns as much as I do. But now I have to help around the house. Boohoo. The world is change. Adapt, die, or get out of the way.

novice
Guest
I am somewhat puzzled by this phrase of the immovable object of deflation being crashed into by unstoppable inflation. It strikes me as an oxymoron at the very best, and if taken literally, it is a self-contradiction, and hence impossible. Overall, prices either go up, or they go down. They cannot do both, and hence we either have inflation or deflation at any one point in time. You cannot have both, all things considered. Therefore, it needs to be clarified what things or categories of things inflate, while other things deflate, and why this particular combination of some things inflating… Read more »
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[…] will leave you with this link to remind you of what happens when we don’t take a proactive approach towards our problems.  I would also recommend that all Australians read the Subprime Solution by Robert Shiller.  […]

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