Average Family Income

During the period 1947 to 1974 the average family income of all income groups adjusted for inflation rose by about 100%. This fast growth in total income was due to a spectacular increase in US productivity of about 3% annually. However, the even distribution of that income among all income groups was due to labor shortage which forced employers to pass on the benefit of productivity increases to both workers and investors.

Beginning in the 1970s, the increase in the labor force due to the baby boom population entering the labor force, and the increase in labor force participation rates of woman and minorities depressed the growth in wage rates. However, this was a temporary phenomenon and by the late 1980s labor rates should have begun increasing again. In fact all things being equal the 60% increase in productivity over the period 1974 to 2001 should have increased real wages by at least that amount. But average weekly earning for the private sector actually declined over this period by about 9%!

The combined effects of the increased competition from cheap immigrant labor coupled with the out-migration of good paying manufacturing jobs to low wage countries resulted in the low growth and unequal distribution of family income shown on the chart. Especially hard hit was the lowest income group who was only able to increase its income by about 15% over the 26 years from 1974 to 2001. Note that this is family income which often includes the second income from women in the labor force – a phenomena which was relatively during the earlier post-war period shown on the chart.

In short, the US has entered a period where investors have generally increased their wealth due to the diversion of the benefits of national productivity growth from those who rely primarily on the wages for their income. Unless this trend is radically altered, the distribution of income and wealth in the US will mirror that of most Third World countries where the middle class disappears and the lion’s share of wealth accrues to a very small number of the super rich. The US will no longer be a democracy but, for all practical purposes, a plutocracy.

So far, the majority of our leadership, whether Democrats or Republicans, could care less. Only 72 members of the House Immigration Caucus led by Tom Tancredo of Colorado have indicated a willingness to step up to the issue. The reason is that not enough Americans are calling and writing their Congressmen demanding that they pass the necessary legislation to regain control of our borders. The responsibility lies entirely in the hands of the voters. If you are not holding your Member of Congress accountable, YOU are part of the problem. Get involved today!