News & Politics

Men's Earnings Haven't Just Stagnated Over Past 40 Years--They've Fallen

A new report shows that full-time male workers in the United States were making less in real, that is, inflation-adjusted, dollars in 2009 than they were in 1969.

Catherine Crampell at The New York Times Economix blog pointed to a disturbing article Thursday. It shows that full-time male workers in the United States were making less in real, that is, inflation-adjusted, dollars in 2009 than they were in 1969.

But the picture is even worse than that. When you take into account all men aged 25-64, whether they are working full time or not, they are making far less in real dollars in 2009 than they were four decades ago. Unsurprisingly, the less education they have, the worse off they are. The chart above shows just how bad it is.

The bottom-line: Wages for men have not just stagnated over the past four decades, they've slipped. And this is true regardless of education.

These data come from an article by Michael Greenstone and Adam Looney, both of the Brookings Institution and the Hamilton Project, the latter founded in 2006 by Robert Rubin to set forth an agenda of centrist economics for Democratic administrations to adopt. They write:

Over the past 40 years, a period in which U.S. GDP per capita more than doubled after adjusting for inflation, the annual earnings of the median prime-aged male has actually fallen by 28 percent. Indeed, males at the middle of the wage distribution now earn about the same as their counterparts in the 1950s! This decline reflects both stagnant wages for men on the job, and the fact that, compared with 1969, three times as many men of working age don’t work at all. [...]

Standard economic theory tells us that it is a consequence of reduced earnings opportunities and/or a greater desire to spend time out, broadening global markets brought opportunities that increasingly educated American workers raced to embrace. This resulted in steadily rising living standards, generations of children who out-earned their parents, and a thriving middle class.

While some say that the change could be from people—men, in this case—changing their life-styles out of a desire for more leisure or because they prefer to have their spouse bring in the cash while they take care of the kids or watch day-time television and eat bon-bons, Greenstone and Looney say the evidence points to the "primary cause" as being lost opportunity.

That loss is far greater for men with less education. Forty years ago, a college degree bought a man, on average, a lifetime income 55 percent higher than for his counterpart with only a high school diploma. Forty years later, the gap had more than doubled to 116 percent. We're familiar with many of the reasons for this. Technological change, globalization that has shifted jobs requiring less skills to emerging economies overseas, higher productivity from automation and the arrival of the "knowledge age" have all made it tougher on men without a degree. Those without a high school diploma? Well, they're paddle-less up the proverbial creek. And it seems to be getting worse.

Labor-market dropouts are more likely to be low skilled and less educated: nonemployment among men without high school diplomas increased by 23 percentage points (from 11 to 34 percent) and among those with only a high school degree by 18 percentage points (from 4 to 22 percent). Thus, the biggest declines in employment occurred among those groups that also had the biggest declines in market wages, suggesting the same economic forces may be at work. [...]  What appeared as stagnant earnings for workers is really an outright decline in wages for the median men of working age. The median wage of the American male has declined by almost $13,000 after accounting for inflation in the four decades since 1969. (Using a different measure of inflation suggests a smaller, but still substantial, drop in earnings.) Indeed, earnings haven’t been this low since Ike was president and Marshal Dillon was keeping the peace in Dodge City.

(Greenstone & Looney/The Hamilton Project)

For the high school drop-out, the plunge in real-dollar earnings between now and 1969 is a horrific 66 percent. For the man with a high-school diploma it's 47 percent. And yet, despite these astonishing numbers, the percentage of men graduating from college is nearly unchanged for the past 35 years.

While the magnitude of such statistics may leap out at you, it's no real surprise that lower-skilled Americans have seen this drop in their earnings abilities as many of the kinds of jobs they could have gotten 40 years ago no longer exist in the United States. Chalk that up to all those factors already mentioned and add to it an emphasis on a free-trade policy that many observers consider to be a wrong-headed and unfair approach. It gives away American jobs and kills small and medium-sized businesses while enriching the more flexible U.S.-based corporations and their foreign subsidiaries as well as the financial industry where so much gross domestic product has shifted. It's what some dare to call the natural order of things that cannot be stopped.

Then there's that other disturbing bit of data in the numbers. Median income even for college-educated, full-time workers is down 2 percent since 1969, 7 percent down for all college-educated workers and 12 percent down for all working-age men with a college degree, including those who, for whatever reason, aren't working.

What's that about? Too many visas handed out to highly skilled foreigners who will work for less than their citizen counterparts? Decades of union-busting as well as outright disdain for unions by well-educated professionals in the private sector? Greed on the part of those who are determined to continue transferring wealth ever upward at the expense of a middle-class earners even when killing off the middle-class weakens the economy and ultimately the underpinnings of what made the wealthy wealthy? Creative destruction that is much more destructive than creative?

Greenstone and Looney don't have an answer. For the less skilled workers, they offer the usual nostrums to improve things. These are reasonable if pedestrian. Most people should finish high school, they say. Getting there means more emphasis on educational attainment at every level, from pre-school on. And after that, there should be more training for people who are not college bound at places such as career academies, and community colleges, which, they explain "can play a vital role in improving the earnings of transitioning workers."

Well, yes, they can play such a role. And for many they still do. But, no offense intended, have the authors looked recently at what's happening to many community colleges these days? Increased tuition, increased class sizes, fewer class offerings, and the hiring of more adjunct professors making less money are not exactly conducive to raising skills.

Clearly, having more and better skills is a good thing, an investment in the future as the cliché would have it. But there's a real world out here that needs to be remembered. And in that world, as the earnings statistics for college-educated men show, just getting more education and more training doesn't solve all the problems. Particularly the problem of where to actuallyget a job. Centrist solutions don't help with that. They never have.