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The U.S. economy reveals a complex picture

Tuesday, June 19th, 2012 

The economic story of the past 40 years — wage stagnation, increased poverty rates, rising consumer debt — stands in sharp contrast to earlier periods in American history, when an expanding economy brought broader prosperity and created a large and dynamic middle class. The charts below tell the story in ways that words, alone, cannot.

How wages have changed

After World War II, Americans experienced constant wage growth, but that began to stagnate in the early 1970s. Since then, median income, while growing in real dollars, has barely kept up with inflation. U.S. Census data show median wages have increased less than 2 percent since 1979. In the same time frame,  revolving consumer credit has increased 15 times over.

“What it takes to maintain a middle-class lifestyle with that median income has become more and more  difficult,” said Steve Schnapp of United for a Fair Economy. 

It’s not that the economy was less productive, however. Technological innovation has made it possible to be more productive, with a smaller workforce.

“All these increases in productivity did not result as an increase in returns to workers,” said Schnapp.

Ongoing poverty

Child poverty rates in the United States are among the highest of wealthy countries. There has also been a staggering constant gap in child poverty among different ethnic groups — despite anti-poverty programs.

“Compared to other countries, first, we have more unequal incomes to begin with, and second, we do less to try to have a strong safety net for families with children,” said Julia Isaacs, a visting scholar at the Institute for Research on Poverty at the University of Wisconsin-Madison.

Isaacs says the introduction of Social Security and Medicare made great improvements to poverty rates among the elderly. Nearly 35 percent of the elderly population lived in poverty in 1959 compared to roughly 10 percent today. 

“We are very cautious in how much government assistance we provide to children,” said Isaacs.

Housing struggles

More than $19 trillion of household wealth was lost in the Great Recession, according to the Treasury Department. Besides the stock market, nowhere was this loss of wealth felt more than in home values. 

As prices soared over the last decade, some buyers purchased out of fear they would be priced out of the market. Despite the fall in home prices, Jeff Lubell at the Center for Housing Policy says affordability for homeowners has worsened. 

“We hear a lot about how home prices today are more affordable relative to incomes than they have been for a long, long time. And that very well may be,” said Lubell. “But when you look at the share of income that homeowners today are spending on housing, it actually suggests that housing is much less affordable that it was even just a few years ago.”

Declining incomes of 5 percent for homeowners and 4 percent for renters have aided in the erosion of affordability. Lubell says nearly a quarter of all working households are spending half or more of their income on housing costs.  

Workshop staffers Kat Aaron and Madeline Beard contributed to this report.

 

 


Wages

jobs
SOURCE: Institute for Policy Studies analysis, BusinessWeek magazine, Associated Press, Bureau of Labor Statistics

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Jobs

wages
SOURCE: Bureau of Labor Statistics, Barry T. Hirsch and David A. MacPherson, U.S. Census Bureau

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Homes

homes
SOURCE: U.S. Census Bureau, Bipartisan Policy Center

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Debt

poverty
SOURCE: Calculations by the Project on Student Debt on data from U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study (NPSAS) and Peterson's Undergraduate Financial Aid and Undergraduate Databases, copyright 2011 Peterson's, a Nelnet company, all rights reserved, Federal Reserve

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Poverty

debt
SOURCE: U.S. Census Bureau

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Food

food insecurity
SOURCE: U.S. Department of Agriculture report, “Household Food Security in the United States in 2010,” U.S. Census Bureau

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What Went Wrong

Donald Barlett and James Steele are revisiting America: What Went Wrong, their landmark 1991 newspaper series, in a new project with the Investigative Reporting Workshop. Over the next year, the project team will examine how four decades of public policy has shaped America's ongoing economic crisis.

Issues

Back Story

The authors talk about What Went Wrong

Donald Barlett and James Steele talk about the project, and why they decided to revisit a book they wrote two decades ago, in a series of video clips produced by the Workshop.

Nation's Story

Who pays the taxes?

Who pays the taxes?

We feature charts, maps, photos and other visualizations that reflect the state of the economy as part of our What Went Wrong project. This column chart shows the growing disparity between what individuals and corporations pay in taxes. In the 1950s, the difference was 22 percent. Recent figures show the difference is 62 percent.

Rags to rags: Economic mobility hard to come by

New Pew Center on States report confirms that moving up the American economic ladder is difficult, even though most people have more income than their parents.

Homelessness takes it toll on Florida's youngest

Florida, as a center of the housing boom, still struggles to recover from the Great Recession. Financial stresses and widespread foreclosures have placed families in precarious situations, resulting in a spike in child homelessness. Susannah Nesmith reports in the Broward Bulldog.

Older workers face challenges in Silicon Valley

An advanced degree and experience in the tech sector should be a ticket to a job in today's economy. But older workers in the heart of the new economy, Silicon Valley, are finding their resume is not the issue. Aaron Glantz reports in The Bay Citizen.

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Read an Excerpt

The Betrayal of the American Dream on Google Books

The Betrayal of the American Dream on Google Books

Check out the first chapter of Barlett and Steele's 2012 book here.