Advanced Personal Finance

There’s an interesting, but not very surprising, article in the Wall Street Journal today entitled “Not Your Father’s Pay: Why Wages Today Are Weaker.” Although the article doesn’t actually answer the question, it does present more evidence that my Generation X male cohort is losing ground relative to their parents. It’s based on a study written principally by John Morton of the Pew Charitable Trusts in conjunction with the Brookings Institution, American Enterprise Institute, Heritage Foundation, and the Urban Institute.

From the article:

“In 2004, the median income for a man in his 30s, a good predictor of his lifetime earnings, was $35,010, the study says, 12% less than for men in their 30s in 1974 - their fathers’ generation - adjusted for inflation” [italics mine]

“Between 1974 and 2000, productivity rose 56% while income rose 29%. Between 2000 and 2005, productivity rose 16% while median income fell 2%, challenging ‘the notion that a rising tide will life all boats,’ the report says.” [italics mine]

So where’s the money going if not to workers? I have an idea. How about dramatically higher wages for the executives? The article also suggests two other possibilities - fewer wage earners per family and increased cost of benefits like health care.

I don’t think there’s any doubt Generation X is worse off than their parents. What’s worse is that with the U.S.’s unfunded liabilities (for Medicare and Social Security, for example) in the double-digit trillions, it’s going to get worse.

Share This