American Economic Realities
The national income, or Gross Domestic Product (GDP), is the main measure of a nation’s economic success. Since 1970, the national income of the United States has more than tripled: that fact alone is reason enough for our leaders to rejoice.
But has that gain in national income benefited most Americans? Who has contributed to that growth? What has happened to us and our families as a result of the increase in our collective income? Have all Americans shared in this growth? Have American families prospered as a result of being American?
Household income: To answer these questions, let’s start with a reasonable yardstick in determining whether or not families are better off: median family income. Median family income is a measure of the middle group of family income; it means that as many make above the number as make it below. When someone says “middle class,” this is what they mean by “middle.”
Unfortunately, the news on this figure for the last 36 years is not good, but that would not be news to most of you. Despite what the media tells you, the average household income, overall, is not as good as it was for middle class Americans 36 years ago.
Any Economics 101 class will teach you that in order to compare incomes from differing years, we must correct for inflation. We all know a dollar in 1970 bought a great deal more than a dollar in 2005. So, taking the inflation rates from each year into account, income from different years has to be corrected to a single year’s value, so we can compare apples to apples. In the graph above, we see the 30 year trend has not been very favorable, showing an increase in family income of a little over 20% over the same time frame that national income has nearly tripled.
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