Wages and incomes for the majority of Americans have now been stagnant for 15 years. Even as employment growth picked up in recent months, wages have failed to expand much more quickly than inflation. According to writer David Leonhardt, there is little modern precedent for a period of income stagnation lingering as long as this one.
Official records don’t exist before World War II, but the best estimate is that the Great Depression may be the only other period in modern U.S. history during which incomes have risen so slowly or not at all for so long and for so many. Over a recent 15-year period, inflation adjusted median family income actually declined by 4.3% according to data from the Census Bureau. If this were simply a function of recession, this wouldn’t be nearly as troubling. Recessions come and go.
But the primary factors behind wage stagnation appear to be structural in nature, and include globalization, which requires Americans to compete with hundreds of millions of poorer workers in other parts of the world, and technological change, which allows machines to displace human labor in large numbers. There are some who believe that the way to address this is through the tax code, while others tend to emphasize education and training.
