On Friday, I wrote about the income inequality problem.  Well, that discussion  really has been one of the recurring themes of my blog- because the problem is so widespread. (I even have published a monograph on the subject.)

But, as you saw from the graphs of Friday’s blog (shown here in smaller sizes), even though output per manufacturing worker is still increasing (which is a form of productivity), their wages are not. The American worker is not sharing in the wealth that is accumulating  in this country.

Drs. F Guvenen (Minnesota), GKaplan (Chicago), J Song (Social Security), and J Widener (Princeton) (National Bureau of Economic Research) just published a new study of how worker’s earnings have been changing since 1932. They limited their analysis to workers who spent a minimum of 15 years in the work-force, so they could avoid skewing the data for those who have no long-term interaction with work and wages.

But, their analysis was very different than most I’ve seen. Instead of looking at how folks’ income have changed over the years, they examined workers of a given age and how that cohort’s average income has changed over the years. In other words, they didn’t examine the personal change in my (or your) income that occurred over the past 45 years- instead they compared my income when I was 25 to those who are 25 now (and  to those who were turning 25 for each year in between). Likewise, the same comparisons were made for those at age 55 and for ages in-between these two “extremes”.

This study elucidated that the US income inequality is not simply a result of the widening gap between younger and older workers. No, the data demonstrate that only the top 2% or so (the so-called ‘economic elites’) have shown income gains. Everyone else is making less nowadays than their counterparts from former times- especially since the 1970s breakpoint.  (I have repeated explained how Dr. Milton Friedman led the charge to break the corporate obligation to its workers and its community; he proposed that the corporation need not care for either- just for its bottom line.)

OK. Maybe not everyone. Because women were really not in the workplace in years past. And, the data indicates that the income levels for women are slightly better than their male counterparts of a given age. (Don’t expect to hear the cries about that 81% number diminish, though.)

One other interesting finding in the data. Younger folks who entered the workforce between 1990 and 2000 managed to earn more money than their earlier cohorts. But, since 2000, this cohort’s compensation has also dropped.

Which means it’s a good time to recognize that 1 in 4 of us now undergo significant income shifts (that’s a 25% change) annually.  Couple that with the fact that for those with increases in income levels experience a median increase of $ 20.5K; and for those who experience a drop in income, that value is $ 25K.  Or, that in 2014, 60% of us experienced a financial shock (that means a job loss, death, or major car repair expenses).

No wonder we feel insecure.

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