The Real Story Behind Middle Class Wages

ShareOfGDPFrom 1950 to 1970, the percentage of US GDP devoted to wages, salaries, and other compensation, in other words, what the vast majority of us call “income” hovered near between 50% and 52% of GDP overall (see St. Louis Federal Reserve chart for more information).

Beginning in 1970 that number began to decline. Under Ronald Reagan and the GOP’s union busting antics, it accelerated.

Today, in 2016, the percentage of GDP that is devoted to income of the middle class, that is wages, salaries, etc., has fallen to about 42%, a 10% decline from its peak. According to the US Census Bureau, this works out to $50,740 per family, not separating by race, which shows further problems (See Table 1, Page 3 of Incomes, Earnings, and Poverty Data from the US Census Bureau). In practical terms, what does this mean?

We have a GDP of approximately $17.947 trillion in 2015. That 10% the middle class has lost amounts to $1.794 trillion dollars. That $1.794 trillion, divided by 320,000,000 people works out to $5608.43 per capita, which means the average family of four in 2016 should be earning $73,173.75.

You hear activists saying that the rich have gotten richer? They have, amounting to 10% of GDP per year every year and this is at your expense. The numbers are right there in the charts.

Imagine what every family could do with $22,400 more per year. Imagine the extra discretionary spending this creates. Imagine how many more jobs are created by that discretionary spending due to new and increased demand.

If you want to understand what has happened to the working class in America since 1970, and especially since 1980 and the dawn of “supply side” voodoo economics, this is the core of it right here. Look at which politicians have fought hardest to make the rich richer and to bust unions, making you poorer. And if you look at that, there’s one overwhelming answer, over and over again – Republicans. Republicans have fought for tax cut after tax cut for the wealthy. Republicans have fought to allow jobs to be shipped overseas. Republicans have fought against unionization and for “right to work” laws which are really union busting laws intended to put the power in the hands of the employer, and not the employee.

And when you look at this data, right there in front of your face, ask yourself why you vote for Republicans when they consistently do this to you. And if you vote Republican, ask yourself that while you look in the mirror and hit yourself with a bat at the same time, because that’s what you’re doing when you vote for the GOP – you’re hurting yourself first and foremost.

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One thought on “The Real Story Behind Middle Class Wages

  1. *
    Cara. Readers:

    I was employed by the federal government from 1977 to 1985.

    I received a variety of increases to my gross pay during those years – promotion grade increases and annual adjustments:

    – My net pay increased as my gross pay increased during President Carter’s administration.

    – My net pay dropt despite my gross pay increases during President Reagan’s administration.

    – My take-home pay in 1985 was less than my take-home pay in 1980. I could not survive that way.

    Look it up in Reagan’s executive orders, he re-instituted the ‘spoils system’. His cronies took the lion’s share of your taxes during his years. The Supreme Court eventually over-ruled those ‘personal services contracts’ as a violation of the federal personnel laws and regulations.

    Minimum wage of 40 years ago would be the equivalent of as much as $20 / hour today.

    Who out there really thinks you wanna keep blaming Democrats?
    *

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