And if you consider that modern times has far more necessary expenses that often involve rent (internet, computing devices, etc) then it's quite likely that real median wages are down since 1979 in terms of how much money the average person has left to themselves at the end of each month. Even without these adjustments it's likely that real wages today are lower in absolute terms than they were in the 50s as by 1979 inflation had already started getting out of control.
The point of this all is that I don't think the numbers mean much of anything. And that's assuming you could even reliably measure them - you cannot. Go back into reconstructing 19th century data and earlier and you're going to rely on assumptions where the degree of uncertainty is much higher than the differences over time you're trying to assess. So I think far more informative than numbers are personal accounts. How did people live? Of course there's a literacy bias there, but even such accounts will shed light on the illiterate.
You imply there some something different around that date, but only show data prior to that date for one of those lines. WTF.
Dig a little deeper and the median wage is calculated by literally asking people roughly what they make and changing the methodology in 1994. Health insurance alone is a big difference in the ratio of people’s nominal wages and their actual incomes between those dates.
Real wages started becoming grossly detached from other metrics in society once inflation started going wild, and I don't think it's just a coincidence. In any case this is why it's very reasonable to think that real wages were even higher prior to 1979.
Making it at best absolutely worthless for your argument which I used to think was accurate. Congrats you helped change my mind.
> just give people a 2% 'raise' and they're content enough.
2% annual wage growth is well below average. https://fred.stlouisfed.org/series/FRBATLWGTUMHWG83O
Looking for the actual causes after seeing your post the death of the US union had an incredibly strong effect on median wages. The wage distribution vs 20th or 80th percentile is quite different, plus a much larger percentage of median wage earners shows up as heath insurance. https://www.bls.gov/opub/mlr/1986/09/art1full.pdf
Also, 1979 isn’t the inflection point on the graph on that page instead 1970 is. Worse inflation slowed down in 1979.
If a historian is going to uncover personal accounts from 2026, then they’ll be full of people who are struggling to make ends meet but are still drowning in a sea of inexpensive consumer electronics.
Of course inflation measurements are also flawed but that once again gets back into the broad point about how the reality of people is so much more relevant than any given number, especially once those numbers become seen as a goal to maximize, at any cost.
A while ago the Economist pointed out that one of the Rothschilds died of an illness that would today be easily curable with antibiotics, but at that time the cure could not be bought at any price.
No offense intended but The Economist is very low-quality.
*edited year of death
No offence intended but wavefunction is very low-quality.
I do not agree with their political views, but I can say the same about most papers. To a large degree this site is also beginning to be troublesome politically.
TB is "just" a bacterial infection. Today, in a wealthy industrialized country with universal healthcare, if I caught TB they'd "just" cure it here. Cures are possible, often even relatively easy.
But all three of the famous Bronte sisters probably died from it (TB == "consumption"), not far from where my mother lives today in that same industrialized country. And most years today it is still the leading cause of infectious disease deaths because even though we could cure it we just leave poor people to die instead.
You can avoid this problem, by plotting nominal values and looking at their ratios. The price level will naturally cancel out.
https://fred.stlouisfed.org/graph/?g=1QI7c is a graph of the ratio of your two deflators (arbitrarily normalised to 1980 Jan 1 equal 100.)
As you can see, it trends up over time. Meaning that CPI grows faster than the GDP price deflator.
The growth of this ratio explains some of the widening gap between your two graphs over time.
https://fred.stlouisfed.org/graph/?g=1QJtv is my attempt at putting both time series on the same measure of inflation. Some gap remains.
Btw, https://fred.stlouisfed.org/series/LABSHPUSA156NRUG# is what you might actually be interested in: it's the labour share of GDP. As you can see it's rather stable. Most of the action is in the difference between mean vs median labour compensation.
> The reason that graph is so stable is because labor compensation includes all forms of compensation for all 'workers'. So for instance Elon hitting his milestones will result in direct stock compensation in the ballpark of $1 trillion - those 22 million years of median income (not even wages) are then counted as 'labor compensation.' That's obviously an extreme example, but there are countless smaller scale examples that collectively distort the figure even more than Elon.
> This is a big part of the reason why I think lifestyle descriptions are so much more useful than numbers. The stories of the boomer generation sound like fairy tales now a days - somebody putting themselves through college, buying the first car, and even having enough squirreled away for the down payment on their first house - all on the back of a part time job that didn't even require a college degree. It sounds impossible, but you can indeed work out the math from wage and cost data at the time (okay kind of backtracking on the numbers don't matter aren't I?). It's real. But the fact it sounds impossible goes a long way towards demonstrating the soundness of the data I've shown.
If you use price levels measures that grow at different rates, indexing to set them equal at one point in time doesn't save you.
You are weakening your own point by screwing up the stats: even after we correct for the difference in inflation measures, there _is_ a widening gap between mean and median worker income. (Where, yes, worker includes Elon Musk as CEO of Tesla.)
> This is a big part of the reason why I think lifestyle descriptions are so much more useful than numbers. The stories of the boomer generation sound like fairy tales now a days - somebody putting themselves through college, buying the first car, and even having enough squirreled away for the down payment on their first house - all on the back of a part time job that didn't even require a college degree.
Well, see Caplan's Case Against Education (https://www.amazon.sg/Case-against-Education-System-Waste/dp...).
Of course, the kind of crappy cars that boomers were driving aren't legal to buy anymore. Their houses were also much smaller, etc. It's a separate discussion of whether we should legalise crappy cars and small houses again. (I'm against the former but in favour of the latter.)
You'd want to correct for these quality differences to make your point stronger.
Also keep in mind that the boomer's "Golden Age" was the pinnacle of inequality. In the decades since, inequality has drastically shrunken. Mostly thanks to people in India and China moving from dirt poor and starving to merely poor (for India) and medium income (for China).
I would not want to go back to that supposed Golden Age, just because super-rich Americans were slightly less well off comparatively than today. Median and average Americans are still better off in absolute terms; and approximately everyone else on the globe is massively better off in absolute terms today.
The reason your graph of labor compensation is stable is because it includes all forms of compensation for all 'workers'. So for instance Elon hitting his milestones will result in direct stock compensation in the ballpark of $1 trillion - those 22 million years of median income (not even wages) are then counted as 'labor compensation.' That's obviously an extreme example, but there are countless smaller scale examples that collectively distort the figure even more than Elon. Compensation, and even direct wages, at the top have skyrocketed while the majority of society has stagnated or declined. So we are set to become the first country with a trillionaire, and a country with 42 million people who can't afford food without government handouts. A tale of two cities?
In any case this is a big part of the reason why I think lifestyle descriptions are so much more useful than numbers. The stories of the boomer generation sound like fairy tales now a days - somebody putting themselves through college, buying the first car, and even having enough squirreled away for the down payment on their first house - all on the back of a part time job that didn't even require a college degree. It simply doesn't sound real, yet you can verify that it was fully viable by looking at wage and cost data at the time - it's real. But the fact that it doesn't sound real, even from a relatively very recent perspective - our own, rather emphasizes the point of stories being more useful than numbers.
To give a really silly example to explain: just because I can scale f(n) = n^2 and g(n) = n^3 to give the same value at n=1 (or any other arbitrary n), doesn't mean they will forever grow at the same rate.
You are weakening your own point by screwing up the stats: even after we correct for the difference in inflation measures, there _is_ a widening gap between mean and median worker income. (Where, yes, worker includes Elon Musk as CEO of Tesla.)
> This is a big part of the reason why I think lifestyle descriptions are so much more useful than numbers. The stories of the boomer generation sound like fairy tales now a days - somebody putting themselves through college, buying the first car, and even having enough squirreled away for the down payment on their first house - all on the back of a part time job that didn't even require a college degree.
Well, see Caplan's Case Against Education (https://www.amazon.sg/Case-against-Education-System-Waste/dp...).
Of course, the kind of crappy cars that boomers were driving aren't legal to buy anymore. Their houses were also much smaller, etc. It's a separate discussion of whether we should legalise crappy cars and small houses again. (I'm against the former but in favour of the latter.)
You'd want to correct for these quality differences to make your point stronger.
Also keep in mind that the boomer's "Golden Age" was the pinnacle of inequality. In the decades since, inequality has drastically shrunken. Mostly thanks to people in India and China moving from dirt poor and starving to merely poor (for India) and medium income (for China).
I would not want to go back to that supposed Golden Age, just because super-rich Americans were slightly less well off comparatively than today. Median and average Americans are still better off in absolute terms; and approximately everyone else on the globe is massively better off in absolute terms today.
Boomers weren't driving crappy cars. Even today things like the classic Dodge Charger is a car enthusiast favorite. It's a beast of a muscle car, and retailed for about as much as you pay for a Honda Civic now a days. Similarly the stuff about smaller houses is misleading. Lot sizes over time have actually decreased. In the past you might have had a larger yard, gazebo, shed, and outdoor work area - now you have some walk in closets primarily motivated by selling the house for more, based on square footage, than meaningful utility. And of course now far more people now live in apartments and other non-housing domiciles than in the past.
And yes, obviously education is completely broken. America's greatest intellectual achievement was likely putting men in the Moon that happened, unsurprisingly, in the 60s - as we now struggle to try to just send a man around the Moon. And they did this on the back of a far more limited educational system, with costs a small fraction of what they are today. We pay far more, and get far less, in just about every single way.
Even in very cheap local housing you usually still have heating, a fridge and more then enough food (to much more often then to little even for the poorest people).
It was extremely unevenly distributed though.