The Typical American Family Makes Less Than It Did in 1989

1989. The Russian newpaper Izvestia accepted its first paid advertisement. Akihito became Emperor of Japan. Michael Jordan scored his 10,000th NBA point. George H.W. Bush was inaugurated President. And that was just in January.

Yes, back to the future. 

As the accompanying chart illustrates, the US has had some good times since then, but not recently. Those two mountains of record household income collapsed under the pressure of profligacy, deregulation, overoptimism and misjudgement that characterized the ensuing years. So most American families are back where they were almost 25 years ago. A generation's worth of difference. Prices of household necessities, meanwhile, have in some cases doubled.

There are those who will look at the arc of these cycles and believe that the good times are sure to return. Others, however, will note that the world is a very different place: more economically competitive, less secure and less likely to provide opportunities for those not already in a position to avail themselves of their advantages and influence.

Whether the next phase turns up, trends down or plateaus will depend, to some degree, on the willingness of those negatively affected by this to take action in their own behalf. JL

Neil Irwin reports in the Washington Post:

This isn't a lost decade for economic gains for Americans. It is a lost generation.

The Census Bureau is out with the annual report on incomes and poverty. And while you might think that after years of stagnant incomes and elevated poverty rates, we would be inured to the depressing facts contained therein, it still somehow has the power to shock.

For my money, the most depressing fact about the economy is not the fact that household incomes were basically flat in 2012 (the real median household income was down to $51,017 from $51,100 in 2011, a statistically insignificant change). It wasn't even the fact that 15 percent of the U.S. population was living in poverty, according to the official, flawed definition of the term.
Nah, the most depressing result comes when you look at the longer view of household incomes in the United States. This chart shows real median household income over the past 25 years; that is, the money earned, in inflation-adjusted dollars, by the family at the exact middle of the income distribution.

Source: Census Bureau

Headlines about these numbers tend to focus on how we have now experienced a lost decade for the middle-class American family, with incomes back to their late 1990s level. But as the chart shows it's really worse than that.
In 1989, the median American household made $51,681 in current dollars (the 2012 number, again, was $51,017). That means that 24 years ago, a middle class American family was making more than the a middle class family was making one year ago.