Wednesday, April 18, 2012

U.S. Standard of Living Has Fallen More Than 50%

One of the few places I have seen statistics on individual, rather than household, income, much less a discussion of the differing measures of inflation. Giving statistics for households hides the decline in wages because of the increasing number of two-wager earner families, made necessary by the decline in wages.

http://www.thestreet.com/story/11480568/1/us-standard-of-living-has-fallen-more-than-50-opinion.html

By Jeff Nielson 04/03/12 - 06:00 AM EDt

In writing about the relentless collapse of Western economies, I frequently point to "40 years of plummeting wages" for Western workers, in real dollars. However, where I have been remiss is in quantifying the magnitude of this collapse in Western wages.

On several occasions, I have glibly referred to how it now takes two spouses working to equal the wages of a one-income family of 40 years ago. Unfortunately, that is now an understatement. In fact, Western wages have plummeted so low that a two-income family is now (on average) 15% poorer than a one-income family of 40 years ago.

Regular readers will recognize the chart below on U.S. average wages.

Using the year 2000 as the numerical base from which to "zero" all of the numbers, real wages peaked in 1970 at around $20/hour. Today the average worker makes $8.50/hour -- more than 57% less than in 1970. And since the average wage directly determines the standard of living of our society, we can see that the average standard of living in the U.S. has plummeted by over 57% over a span of 40 years.

[...]

Then we have the blue line: showing wage data discounted with our "official" inflation rate. The problem? The methodology used by our governments to calculate inflation in 1975 was different from the method they used in 1985, which was different than the method they used in 1995, which was different than the method they used in 2005.

Two obvious points flow from this observation. First, it is tautological that the only way in which data can be compared meaningfully is to use a consistent methodology. If the government thinks it has improved upon its inflation methodology, then all it had to do was take all of its old data and re-calculate it with their "improved" methodology. Since 1970 there is this invention called "computers" which makes such calculations rather simple.

This brings us to the second point: the refusal of our governments to adopt a consistent methodology in reporting inflation statistics can only imply a deliberate attempt to deceive, since it is 100% logically/statistically invalid to simply string together disconnected series of data -- and present it as if it represents a consistent picture. More specifically, we can see precisely what lie our government was attempting to get us to believe.

...

The causes of that economic rape are equally obvious in terms of categories, although the actual analysis of those causes is somewhat more complex.

1) Taxation oppression. .....

2) Systemic/structural unemployment. Technology always eliminates jobs faster than it creates new opportunities. .....

3) Oligopolies/monopolies. .....

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