The Guardian: America's decline in wages can be traced to the George W Bush era

[kpete]

What if a re-reading of the data reveals the Reagan and Clinton years actually boosted the wages of blue collar and middle income households?



.....
The answer can be found in the pages of a report for the Brookings Institute that looks for the first time at census data going back to the beginning of the 1980s and examines groups of workers and charts their progress as they age.
http://www.brookings.edu/research/papers/2015/03/05-income-growth-decline-economic-prosperity-shapiro

It is a study that might help us understand the rise of Donald Trump as a populist blue collar hero and, at the other extreme, the left-leaning Vermont senator Bernie Sanders in the upcoming presidential primaries. Not because ordinary workers found themselves stuck in a rut for 30 years when all around them enjoyed the party of the century.

The new data shows that many of them had much higher incomes to splash on homes and cars. Instead the anger comes from their gains being wiped out from the 2001 recession onwards. And the only response of George W Bush’s team and the Federal Reserve was to protect the rich with tax cuts and cheer workers with ultra low interest rates that, as we know, underpinned the sub-prime mortgage scandal.


MORE:
http://www.theguardian.com/business/economics-blog/2015/sep/06/america-decline-in-wages-can-be-traced-from-the-george-w-bush-era

Other important findings from the report include:

Through the 1980s and 1990s, households of virtually every type experienced large, steady income gains, whether they were headed by men or women, by blacks, whites or Hispanics, or by people with high school diplomas or college degrees.

This broad income progress stopped around the turn of this century: From 2002 to 2013, the incomes of most households stagnated or declined even as they aged through nine years of expansion and two years of recession. The only types of households with rising incomes over this recent period were those headed by people in their mid-to-late 20s and those headed by college graduates — and their gains were much smaller than those achieved by young and college-educated households in the 1980s and 1990s.

This evidence contradicts the narrative told by those who simply track the value of aggregate median income from the 1970s to the present and claim that most Americans have made little progress for decades. The data used here report the median incomes of cohorts of households based on the age of the heads of those households each year, as those household-heads age. Unlike the dataset for a time series of aggregate median household income, the samples for this “age-cohort” series are stable over time.

This age-cohort analysis also highlights a distinct life cycle in the income progress of most Americans as they age. Throughout this period and across all of our tested demographic groups, households headed by people in their mid-20s to mid-30s experience the largest percentage gains in median income, after which those increases generally slow and finally stop when they reach their 50s.
The analysis of these extensive data establishes that our current challenges are not a long-term feature of the U.S. economy or an after-effect of the 2008-2009 financial upheaval. Shapiro’s analysis further shows that these problems also are not driven by economic impediments based on gender, race and ethnicity, or even education.

http://www.brookings.edu/research/papers/2015/03/05-income-growth-decline-economic-prosperity-shapiro

[Shandris]

1. "A rereading of the data"

Regardless of anything in the article, that might be the best anti-slogan I've ever heard. It's also horrifyingly accurate about a vast majority of our history at this point.

I think it's a good example of why there is no trust left in anything (and that is QUITE by design).

[pampango]

2. Interesting methodology. It certainly blasts both Bushes, particularly W.

He found that the 1980s boom, which gained traction in the middle of the decade, boosted the wages of all but the oldest group of workers. So large, steady income gains characterised the average household whether they were headed by men or women, or by people with high school diplomas or college degrees, whatever their ethnicity.

The momentum dissipated in the first Bush presidency between 1989 and 1993 and accelerated again in the Clinton years before running out of steam in the early 2000s

Then came the downturn. The second Bush era, under George W, was painful for almost all but twentysomething college graduates, who even survived the 2008 crash with barely a scratch, and was worst for those without a high school diploma. Shapiro says the least educated saw their incomes “devastated” after 2001.

It’s no surprise Shapiro is a cheerleader for the Clinton years, which he argues developed employment and productivity boosting policies that favoured women, minorities and low-income employees like no other time in recent history.