Real Median Income and Real GDP per Capita
Reader Noni Mausa sends a link to this story:
The commercial media is telling us two perfectly contradictory stories about the American economy. The first is how wonderfully rich we are in the United States. The stock market’s booming — some analysts predict the Dow will break the 15,000 this year — the economy is expanding at a healthy clip, productivity growth is up and unemployment and inflation are relatively low.
But, at the same time, we’re also told that we don’t have the money to pay for a robust social safety net. When it comes to paying for universal health coverage, affording retirement security for our elderly, investing in programs for the poor or educating our children, we need to pinch pennies. According to this story line, we face a looming “entitlement crisis” — we won’t be able to afford to keep the Baby Boomers in good health and out of poverty, we’re told, unless we slash their benefits and privatize the programs that their elderly parents enjoy today
There’s more in the article – its worth a read. But it got me thinking about two old posts… one on Real GDP per capita and one on real median income. Using data from those posts, I put together the following graph…
Now, neither of these tow series accounts for debt, but basically, the one thing that we can see is that wherever it is increased wealth and productivity is going, its not going to the median worker, which is to say, its not going to at least 50% of the population. In four of eight administrations starting with Ike, the median real income actually dropped. Even when the real median income rose, even under Clinton and JFK/LBJ and Reagan, real median income never grew by much as the real GDP per capita.
Conclusion – Paris Hilton is becoming more efficient and productive relative to the rest of us.