The American Dream died in February 1973.

[NNN0LHI]

http://www.realitybase.org/journal/2009/3/11/the-american-dream-died-in-february-1973.html

Since Bob Herbert wrote about Reviving the Dream today, this is a good time to put up the problem-defining graphs from a longer analysis I haven't finished.

The American middle class and working class are essentially the more than 90 million non-supervisory "production workers" who constitute 84% of non-government, non-farm employment. For 26 years, from 1947 to January 1973, their average hourly pre-tax earnings, adjusted for inflation using current methods, grew robustly and steadily at an average annual "real" rate of about 2.2%. At that rate, average purchasing power would double in 33 years. Parents expected their children to have more prosperous lives than their own, and it was happening. It was the Golden Age of the Middle Class. Then, suddenly and permanently, it ended in February 1973.

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The proximate cause of the sudden change is obvious. By definition, all of these "production workers" are "employed," and the BLS hourly earnings statistics are gathered from payroll records. Before 1973, employers as a group were giving their existing workforces average annual pay increases that exceeded the inflation rate by 2.2 percentage points. After 1972, they handed out increases that on average only just kept even with inflation.

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Meanwhile, the larger economy measured by real GDP per employee had a stagnant decade from 1973 to 1983. But then it took off and averaged 1.14% annual average growth for 25 years. That is modest growth compared to the 2.69% average from 1947 to 1973, but since 5/6 of American workers got a zero share of the post-1983 growth, those who did —presumably management and the owners of capital—did quite nicely.

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So, here's the problem in a nutshell. Average real earnings of the 5/6 of Americans who are production workers cannot go up—and the American Dream cannot be revived—unless employers consistently grant annual wage/salary increases that on average exceed the inflation rate. What changes would motivate and enable large, trend-setting employers to return to giving average annual wage increases—for their existing workforces—that exceed inflation by 1% or 2%?

[RagAss]

1. Nobody stood up to them...Nobody said a word...That's when they knew they could fuck us forever !

[kimmerspixelated]

2. Isn't that also about the time that

the gold standard was lost, and we just started printing money instead of backing it up with something, or do I stand to be corrected?

[NNN0LHI]

4. Union membership began to decline

[mimitabby]

3. sort of a narrow perspective

there's no way american workers are going to get payraises like you're talking as long as we continue with this global economy. Why pay me $50K when they can pay someone in China $5K for the same job. To me it appears much downhill scooting must continue before we can slowly build up.

[DJ13]

5. Our societal focus on stock investments as income will prevent us from recovery

The constant focus on increased profits every year has stagnated wages to the point these companies have choked off their own growth prospects.

[NNN0LHI]

6. What did people use to make up for their stagnant wages with prices increasing?

My guess is easy credit.

Don

[DJ13]

8. Before wages stagnated it was savings

Easy credit came into being to disguise the fact wages had stopped increasing if the article in the OP is correct.

[branders seine]

7. capitalists will never reward their workers. Ever cheaper labor is the only "free"

resource left to exploit.

[NYC_SKP]

9. kick and rec.. nt

[European Socialist]

10. Yup, The 70's were a pivotal time--The age of the average guy ended....

and lifestyles of the rich and famous began.

[BrklynLiberal]

11. kick..

[leveymg]

12. You need a real F/T job to get an annual wage increase. Fewer and fewer do.

Self-employment, P/T and temp employment without benefits has become the norm for a growing segment of the American work force. Even temp positions are becoming harder to find.

What we're seeing is a hollowing out of the U.S. employment base as big corporations move operations overseas. This is reflected in the U6 figures, that show a 17 percent underemployment rate, and even that underestimates the true situation by about half. About one-third of Americans who want and need a F/T job can't find one.

Of course standards of living for the bottom half are declining.

[Electric Monk]

13. Oddly enough, that's when I was born

Now I'm even more confused than I used to be :(

[B Calm]

14. The year I got out of the Navy

[NNN0LHI]

16. It was the year I graduated HS and entered the work force

And I didn't realize what was happening at the time but as I look back this is exactly what happened.

Don

[moondust]

15. The bad guys won.

[earth mom]

17. K & R & Bookmarked. nt