America’s economy has been slowing since the 1970s.
If you don’t believe me, let me convince you:
1. GDP Per Capita Growth’s Slowing
GDP growth has been slowing since the 1970s, but it doesn’t look that bad until you factor in population changes.
America’s population is growing fast (because of immigration, not natural births), and this dilutes our GDP growth per person. For example, if the population grew by 2%, then the economy would have to grow by 2% to keep pace (otherwise we’ll have smaller shares). More wealth per person means a higher standard of living.
GDP growth per person has been 0.147% since 2012—it was 0.34% during the Great Depression. That’s twice as bad.
2. Income Inequality Is Rising
The Gini Coefficient measures inequality (in this case, regarding income). The higher, the more unequal. The lower, the more equal. If it’s too high or too low, that can lead to political instability.
America’s GC has been growing since 1973, and is now roughly where it was during the 1920s (right before the Great Depression).
3. The Middle Class Is Shrinking
Spending on “needs” shrunk, while spending on “wants” increased between 1934 and 1985 for most American households, pointing to real economic growth.
In the late 1970s, incomes began to diverge (income gains went to the 10%), which meant that the median household (ie. most Americans) have actually seen a decrease in prosperity—yes their incomes have risen, but this rise has been largely mitigated by dramatic increases in fixed costs (like rent).
4. The Rich Get Richer
The divergence from the above chart is plotted in the graph below. This shows how the working and middle class has been let down by the political elites.
5. Our Purchasing Power’s Declining
The impact of this income disparity can measured in tangible goods, in this case, McDonald’s Hamburgers, bottles of Pepsi, and Hershey’s chocolate bars. In 1985, a year’s worth of work at the median wage bought you way more than in 2014.
6. Real Wages Haven’t Grown Since 1973
Most American’s haven’t seen their incomes rise in 4 decades. Real earnings (income accounting for inflation) peaked in 1973, and it’s been downhill ever since. This graph shows the real (inflation-adjusted) vs nominal (the number on the bill) wages for wage-earning Americans.
7. Americans Are Working More For Less
Even though most Americans aren’t making more money, they’re working harder.
This graph shows how although American worker’s productivity is increasing (they’re doing more work per hour, because of better technology etc.), they’re not being paid for it. This is largely due to offshoring.
The gap began to appear in the 1980s—before that wages rose in tandem with productivity. Henry Ford would be ashamed.
8. America’s Lost 7 Million Manufacturing Jobs
One of the reasons incomes have been decreasing is because America’s shed many of its middle class jobs, leaving just those at the top (the CEOs and designers) and those at the bottom (waiters, burger-flippers) in America—we lost our manufacturing jobs to China and Mexico.
Since 1979, we’ve lost over 7 million, good-paying, manufacturing jobs.
9. The Real Unemployment Rate Is 13.3%
This chart shows how America’s population is broken down—most of the country doesn’t work.
Sadly, there are 23 million people who don’t have jobs, but would like them.
America’s economy is on life-support, it’s time we got it working again. Find out how.
Bureau of Labor Statistics. “Civilian labor force participation rate by age, gender, race, and ethnicity.” Accessed June 5, 2016. http://www.bls.gov/emp/ep_table_303.htm
Chao, Elaine L. 100 Years of US Consumer Spending, Data for the Nation. New York: US Department of Labor, 2006.
Federal Reserve Bank of St. Louis, “All Employees, Manufacturing.” Accessed Nov 20, 2016. https://fred.stlouisfed.org/series/MANEMP
Hipple, Steven F. “People Who Are Not in the Labor Force: Why Aren’t they Working?” Bureau of Labor Statistics: Beyond the Numbers (4), 2015.
Maddison, Angus. The World Economy: Historical Statistics. Paris, OECD Publishing, 2003.
Olver, Lynne. “The Food Timeline.” Accessed July 15, 2016. http://www.foodtimeline.org/foodfaq5.html#
Townhall.com “The Major Trends in US Income Inequality Since 1947.” Accessed June 10, 2016. http://finance.townhall.com/columnists/politicalcalculations/2013/12/05/the-major-trends-in-us-income-inequality-since-1947-n1757626/page/full