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Here's kind of a wild stat that came out of testimony from Senator Warren's hearings on the minimum wage the other day. if the share of worker's wages had remained a constant since 1960, as a component of the GDP, (relative to other parts of the economy, such as corporate earnings, dividend earnings, etc.) and the minimum wage had been adjusted with inflation accordingly, the current minimum wage would be $22 an hour. As it is, the buying power of the $1 minimum wage would correspond to a minimum wage of about $9.25 an hour, but it's actually more expensive to live than it seems, since food, rent, health care, education, and energy costs are higher proportions (compared to, say, the cost of a TV).

Where exactly is the minimum wage relative to the mythical middle class family, and the economy as a whole since 1960? Yes, 1960 is kind of an arbitrary date, but it basically represents the entire working life for your parents if you're in solid throes of middle age like I am or the entire generations of your parents and grandparents if you're just graduating from college, so setting the wayback machine to 50 years is a decent point of comparison.

I took a brief dive into historical Census, BLS, and World Bank economic data.

Median family income was about $5600 in 1960, which would correspond to about $44,000 now; median family income in 2011 was just over $50,000, which was down over 7% since 2007. Median earned income for people who worked is around $28,000. Family income peaked in 2000 and has had a steady downward decline ever since, more precipitously since the 2008 recession, down about 10% overall; it's essentially at its late 1980s level, but again the "non-optional" costs that eat up income are significantly more than they were then; e.g. flying on vacation and buying a TV is cheaper, eating and prescription medication is more expensive.

Mean income is about 25% more than the median income as of 2011; in 1960 it was less than 10%. This is a measure of income inequality, since the farther away the mean is from the median the more the curve is stretched. There are other measures of income inequality, but the shrinking of the middle class is certainly evident in this one. Given the huge portion of two-income families, the difference from 1960 is even more stark. The Census bureau doesn't track dual-income families historically, but the female labor force participation rate has been demonstrated to correlate very strongly: in 1960 the participation rate was 38% for women and 82% for men, by 2010 this had closed to within 7% (about 72% for men to 65% for women), by Bureau of Labor Statistics numbers.

Somewhat digressively, I looked at women's wages as a percentages of men's; in 1960 they were 60% for full-time, year round work, and in 2010 they were 77% for full-time, year round work. (Women's Committee on Pay Equity stats). (There is something to note here, btw: this number was actually higher in 1951, the first year for these numbers, at 64% - the numbers went steadily downward, dipping up in the 1970s, but only got back to 64% in 1985!!)

To get back to the minimum wage, in 1960 a two-earner family working full-time year round at the minimum wage could earn 71% of the median income; in 2010, a couple working full-time at minimum wage jobs could earn just 48% of the median income (which, we will recall from above, was down 10% in real dollars anyway from its peak in 2000.)

Now US GDP is about $14 trillion right now, give or take a trill. In 1960, in constant adjusted dollars, it was just under $3 trillion (you may quibble about the use of GDP to measure an economy, of course, but it's our usual baseline.) The US population in 1960 was 179 million; in 2010 it was 309 million. Breaking this down per capita, ONLY for "earning" families, earned income went up about 62% from 1960 to 2010, while adjusting for population increases GDP went up about 270%. For dual-income minimum wage earners, income went DOWN 24% from 1960 to 2010.

Now tell me it's going to break the bank to raise the minimum wage a couple of bucks.

Now for a bonus, tell me where that increase in the GDP since 1960 went to. Families did OK from 1960 to the early 80s, even with the inflation and deindustrialization woes of the 70s; since 1986 they've been flatlining in terms of inflation-adjusted income, and their share of the total growth of GDP has been plummeting.

Originally posted to TheCrank on Tue Mar 19, 2013 at 08:12 AM PDT.

Also republished by In Support of Labor and Unions.

Poll

Are you better off than you or your parents/grandparents were in 1960?

29%8 votes
3%1 votes
14%4 votes
51%14 votes

| 27 votes | Vote | Results

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    Some people are intolerant, and I CAN'T STAND people like that. -- Tom Lehrer

    by TheCrank on Tue Mar 19, 2013 at 08:12:25 AM PDT

  •  1960, what a curious year to pick. (3+ / 0-)
    Recommended by:
    TheCrank, BlackSheep1, RiveroftheWest

    1960 was the year I first went to work as a lad at my uncle's gas station. Pumped gas, wiped windshields, and checked fluids with a smile, all for two dollars an hour, twice the then minimum wage.

    I can still remembert the purchases made with that first paycheck, some 'cool' clothes my parents wouldn't fork out the cash for.

  •  asdf (3+ / 0-)
    Families did OK from 1960 to the early 80s, even with the inflation and deindustrialization woes of the 70s;
    As a single mom with three kids I did ok on minimum wage during the mid 1970's.  Had enough to pay rent, utilities, food, and even child care.  Today, if I was in that same situation I would be totally screwed which was already true during the late 80's and the only way to barely make ends meet was for my kids who were a bit older by that time was to be latch key kids. It was a harder struggle in the late 80's even though I made a bit more than the minimum wage.
  •  1968 Was Its Peak. (3+ / 0-)

    10.50 an hour 1968 adjusted for inflation, into the 20's per hour adjusted for productivity.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Tue Mar 19, 2013 at 08:40:49 AM PDT

  •  Your poll question is very difficult (5+ / 0-)

    On the one hand, the obvious answer is Yes. We are living longer, have better health care, are better educated.  I know it's not popular around here to say so, and much of the right's claims on this are exaggerated, but indeed the poor of 2013 are better off than the poor of 1960 (although I submit they have less of a chance of getting out of poverty than in 1960). We have a ways to go, but yes the African-American and Hispanic communities are better off today, as is the LGBT community.   Your list of things that are more expensive - actually, food and energy are a lower % of our income than in 1960.  Technology has also brought more luxuries into the lives of the middle class than they had in 1960 as well.

    Some of the answer as to where the $$ went is that it went into the product. For example, a TV in 1960 cost $100.  Applying inflation to this, a TV would cost $785 today.  Well, $785 today would get you a 48" flat-screen HDTV with all the bells and whistles - your $100 TV in 1960 got you a huge box with a 24", crappy, black/white picture screen, and tinny sound.  

    But, on the other hand, in many respects we are not better off.  For example - education: in 1960 most jobs didn't even require a high school education, let alone a college degree.  Not true any more.

    My father came out of high school, did his 3 years in the army, then came home and went to work as a machine operator for GE. Did that for 40 years, retired with a decent pension.  Worked 7:00 to 3:00, eating lunch at his station. Home by 3:20, which allowed him to join a golf league, coach our sports teams, do yardwork during the week, etc. so that the weekend was free for family activities. My mother stayed home until my youngest brother was in middle school, then went to work.

    We had a vacation at the beach every year, a nice house, a car in the driveway, a trip in to a Red Sox and a Celtics game every year, etc.

    Me? I'm at work at 8:00, work until 6:30 or so, 30 minute drive home, workout since I'm behind a desk all day, it's 8:00 pm before I get to be with my family. Got laid off after a merger, found work for 3 years working 80 hours a week for a slave driver, now in a better situation, but still. Have to save everything I can to send my daughter to college. Saturday is spent cleaning, yard work, running errands, etc., not really a day off at all. Dad had 4 weeks vacation, I have 2.  Going to a pro sports game is a luxury I can't afford. My wife works as a teacher as well.  We live in a nice house, but nothing big.

    All in all, I'd rather have my dad's life. And I fear my daughter will be saying the same thing in 30 years.

    Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

    by absdoggy on Tue Mar 19, 2013 at 08:50:02 AM PDT

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