The 40-Year Slump: The State of Work in the Age of Anxiety
Source: The American Prospect
... Since 1947, Americans at all points on the economic spectrum had become a little better off with each passing year. The economy’s rising tide, as President John F. Kennedy had famously said, was lifting all boats. Productivity had risen by 97 percent in the preceding quarter-century, and median wages had risen by 95 percent. As economist John Kenneth Galbraith noted in The Affluent Society, this newly middle-class nation had become more egalitarian. The poorest fifth had seen their incomes increase by 42 percent since the end of the war, while the wealthiest fifth had seen their incomes rise by just 8 percent. Economists have dubbed the period the “Great Compression.”
... Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by $1,500. To be sure, it was a year of mild recession, but the nation had experienced five previous downturns during its 25-year run of prosperity without seeing wages come down.
What no one grasped at the time was that this wasn’t a one-year anomaly, that 1974 would mark a fundamental breakpoint in American economic history. In the years since, the tide has continued to rise, but a growing number of boats have been chained to the bottom. Productivity has increased by 80 percent, but median compensation (that’s wages plus benefits) has risen by just 11 percent during that time. The middle-income jobs of the nation’s postwar boom years have disproportionately vanished. Low-wage jobs have disproportionately burgeoned. Employment has become less secure. Benefits have been cut. The dictionary definition of “layoff” has changed, from denoting a temporary severance from one’s job to denoting a permanent severance.
... All the factors that had slowly been eroding Americans’ economic lives over the preceding three decades—globalization, deunionization, financialization, Wal-Martization, robotization, the whole megillah of nefarious –izations—have now descended en masse on the American people. Since 2000, even as the economy has grown by 18 percent, the median income of households headed by people under 65 has declined by 12.4 percent. Since 2001, employment in low-wage occupations has increased by 8.7 percent while employment in middle-wage occupations has decreased by 7.3 percent. Since 2003, the median wage has not grown at all.
The middle has fallen out of the American economy—precipitously since 2008, but it’s been falling out slowly and cumulatively for the past 40 years. Far from a statistical oddity, 1974 marked an epochal turn. The age of economic security ended. The age of anxiety began.
Read more: http://prospect.org/article/40-year-slump
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Wages versus prices aside, the standard of living and quality of life has been in decline since the mid-1970s but there is almost no discussion or acknowledgement of that. Americans are made to feel guilty about being low wage.
All of which fuels the demand for revolving credit (credit cards and pay day loans). On this chart, the birth of revolving credit happens right at the point the OP article cites: 1974. And here we are 39 years later with a trillion dollars on cards that charge 12 to 28%
They have gotten better at goosing the demand for credit and getting people in deep. Every November there is a big mailing of card offers, promos. limit raises, etc designed to make sure people come out of Christmas with as much revolving debt as possible.
Another side of this equation is real ownership. With the introduction of EULAs, disposable personal electronics and licensing agreements, consumer own less and less of what they use. It is a treadmill of consumerism where durable products like, for example, all metal scissors are replaced by plastic handled scissors because a consumer would only need to buy the durable ones once but the "cheaper" ones lead to a lifetime of demand.
