What may be most concerning is that the decline in median income does not track a variety of other economic indicators. Corporate profits are way up and the S&P 500 stock index has more than tripled since 2009. The economy is growing but many Americans aren’t sharing in the gains.
It was once a statement of fact that, as Sen. John F. Kennedy argued while running for president in 1960, “A rising tide lifts all boats.” But over the last several decades, the thread sewing together our common fate has begun to fray. During the expansion that spanned from 2002 to 2007, the American economy produced half as many jobs as it had relative to the economy’s growth during the 1990s. Worse still, the high-quality manufacturing jobs that once offered many working- and middle-class Americans a healthy wage have been replaced by low-paying service-sector jobs forcing families down the economic ladder.
The American economy is producing more and more—but the benefits are shifting from labor to capital. During the bulk of the 20th century, two-thirds of every dollar a company accrued in income flowed to workers; ownership pocketed the remaining third. More recently however, labor’s share of profits has dropped several percentage points to below 60 percent.
In other words, since 2000, American economic growth has become exclusive rather than inclusive.