Dec 1, 2016 - 2010. 2015. Bachelor's degree or higher. Some college or associate degree. The Percentage of Young Adults
December 2016
Chartbook: Portrait of a Changing Economy Over the last several decades, there have been significant economic changes in the United States – many for the better. Our nation is more prosperous overall, more diverse and more productive than ever before. The U.S. economy remains the world’s largest and among the most innovative. For many Americans, economic growth has led to increased opportunity and prosperity. They earn higher incomes, live in larger homes and are able to purchase cheaper, high-quality goods. More young people are getting a college education than at any time in history. Americans live longer, on average, and enjoy more leisure time. Women have many more opportunities than they did a generation ago and now make up half of the labor force. Millions of African Americans have achieved a level of success that had previously been denied them. Communities of color have become key sources of entrepreneurship and economic growth. But not everyone has shared in the gains of our growing economy. For workers whose education ended with high school, it is harder to achieve the success of their parents. In the 1950s and 60s, a person without a college education could get a well-paying job, own a home, support a family on one income while one parent stayed at home to care for the children, send their children to college and retire with a reasonably comfortable pension that paid benefits for life. Some can still achieve a less certain version of that lifestyle when two parents work full time. But for many others that American Dream is out of reach. The attached charts highlight some of the ways that life has become more difficult for many Americans. Average hourly earnings are no higher than they were forty years ago. A typical worker’s wages, which once moved higher with productivity gains, now lag significantly behind overall productivity increases. A full-time worker earning the minimum wage took home over $7,000 more in 1968 than today, after adjusting for inflation. Fewer now have defined-benefit pensions while many people have no retirement plan at all. At the same time, the gap between most Americans and those at the very top has become a chasm. Average incomes for the top one percent more than tripled since 1970, while those of the bottom 90 percent have been flat. The typical large-company CEO, who fifty years ago earned 20 times more than the average worker, now earns 300 times more. These dozen charts are meant to be an illustrative but not exhaustive portrait of the changes that have caused many Americans to struggle to get ahead. These changes are unsettling to many Americans – even those who currently are succeeding by most measures. These graphs hopefully will spark a broader discussion of both the good and the bad of the new American economy.
Average Hourly Earnings Are No Higher Than 40 Years Ago Inflation adjusted to current dollars
$24 $23
$22.83 (Jan. 1973)
$22
$21.71 (Oct. 2016)
Current level
$21 $20 $19 $18
$18.42 (Apr. 1995)
$17 $16 $15 1964
1969
1974
1979
1984
1989
1994
Source: JEC Democratic staff calculations using data from the Bureau of Labor Statistics Notes: Data are for Jan. 1964 to Oct. 2016; private-sector production and nonsupervisory employees; adjusted for inflation using the Consumer Price Index; seasonally adjusted
1999
2004
2009
2014
The Share of Families With Two Earners Rose Dramatically Percent of married-couple families with children under 18
80% 72% 70% 60%
61%
One Parent Employed
Both Parents Employed
50% 40%
36%
30% 20% 10%
25%
One Parent Employed
Both Parents Employed
0% 1960 Source: JEC Democratic staff calculations based on data from the Pew Research Center and the Bureau of Labor Statistics
2015
Women Surged into the Labor Force; Men Gradually Withdrew Prime-age labor force participation rate
100% 90%
97%
Men
88%
80% 74%
70% 60% Women
50% 40% 30%
35%
20% 10% 0% 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 Source: JEC Democratic staff calculations using data from the Bureau of Labor Statistics and the Census Bureau Notes: Data are for 1948 to 2015; prime-age is defined as 25- to 54-year-olds
Earnings Power Increased for College Graduates, Decreased for High School Graduates Percentage change in real median weekly earnings since 1979
15%
Bachelor's degree holders
10%
+9.5%
5% 0% -5%
High school graduates, did not attend college
-10%
-16.6%
-15% -20% -25% 1979
1984
1989
1994
1999
Source: JEC Democratic staff calculations based on data from the Bureau of Labor Statistics Note: Data are for 1979 to 2015; full-time wage and salary workers ages 25 and older; adjusted for inflation using the Consumer Price Index for all urban consumers (CPI-U)
2004
2009
2014
The Percentage of Young Adults Pursuing Higher Education More Than Doubled Educational attainment for 25- to 34-year-olds
70% 60% 50%
29%
40%
Some college or associate degree
30% 20% 10%
12%
36% Bachelor's degree or higher
13%
0% 1965
1970
1975
1980
1985
1990
1995
Source: U.S. Census Bureau Notes: Data are for 1965 to 2015; prior to 1992, the Census Bureau only reported on years of education, not degree attainment; years of higher education are used as a proxy for degree obtainment on this chart - 4 years or more are categorized as bachelor's degree or higher and 1 to 3 years are categorized as some college or associate degree
2000
2005
2010
2015
The Price of a College Education Soared Average tuition and fees for a four-year institution
$35,000
$32,400
2015 dollars
$30,000 $25,600
$25,000 $19,100
$20,000
Private $15,000
$13,600 $10,100
$10,000 $5,000 $0
Private
$2,400
Private
Public 1975-76
Private Private $2,900 Public 1985-86
$9,400 $6,700
$4,400 Public 1995-96
Source: JEC Democratic staff calculations based on College Board, Trends in College Pricing 2015 Notes: Average tuition and fee prices exclude room and board; prices reflect in-state charges for public four-year institutions; prices are rounded to nearest one hundred dollars
Public 2005-06
Public
2015-16
Workers Face a Less Secure Retirement
Employees at medium and large private-sector establishments 90% 80%
84%
Share with Defined Benefit Plan
70% 60%
Share with Defined Contribution Plan
50% 40%
41%
35%
30%
25%
20% 10% 0% 1980
56%
9% 1985
Share with No Retirement Plan
1990
1995
2000
Source: JEC Democratic staff calculations based on data from the Employee Benefit Research Institute Notes: Data are for 1980 to 2015; chart overstates the share of all workers with retirement plans since medium and large establishments (those with 100 or more employees) are more likely than small establishments to offer plans; data for small establishments are only available starting with 1990; data are interpolated for years with missing data
2005
2010
2015
The Value of the Minimum Wage Dropped Precipitously Annual earnings of a full-time minimum wage worker
$25,000
1968 Peak: $22,666 (2015 dollars)
$20,000
$15,000
2015: $15,080
$10,000
$5,000
$0 1961
1968
1975
1982
1989
Sources: JEC Democratic staff calculations using data from the U.S. Department of Labor and the U.S. Census Bureau Notes: Real minimum wage is expressed in 2015 dollars using the CPI-U; assumes a fulltime worker is subject to the federal minimum wage and works 40 hours per week for 52 weeks a year
1996
2003
2010
The Typical Worker Did Not Share in Productivity Gains Cumulative growth since 1948
300% 250% 200%
Real output per hour
150% 100% Real average hourly compensation
50% 0% 1948
1956
1964
1972
1980
1988
Source: Economic Policy Institute, "Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay" Notes: Data are for 1948 to 2014; real average hourly compensation shows the average hourly compensation for production and nonsupervisory workers in the private sector; real output per hour shows the growth of output of goods and services minus depreciation per hour worked.
1996
2004
2012
Gap Between Top Earners and Most Americans Grew Average household income, 2015 dollars
$1,800,000 $1,600,000 $1.36 million
$1,400,000 $1,200,000 $1,000,000
Top 1%
$800,000 $600,000
$417,000
$400,000 $200,000
Bottom 90%
$34,600
$0 1970
1975
1980
1985
1990
1995
Source: JEC Democratic staff calculations based on data from the World Wealth and Income Database Note: Data are for 1970 to 2015; income data include capital gains earnings; household defined as an individual, or a married couple that files jointly, and their dependents
$34,100 2000
2005
2010
2015
CEO Pay Skyrocketed
Average ratio of CEO to worker compensation, largest 350 companies 400
376x
303x
300
200
100 20x 0 1965
59x 1970
1975
1980
1985
1990
1995
Source: Economic Policy Institute, "Top CEOs Make 300 Times More than Typical Worker" Notes: Data are for 1965 to 2014; CEO pay includes salary, bonuses, restricted stock grants, options exercised and long-term payouts for the largest 350 U.S. firms by sales; worker compensation is annual compensation for workers in the CEO's industry (for years prior to 1995, the annual earnings of all production and nonsupervisory workers is used).
2000
2005
2010
Share of Wealth Held by Top 1 Percent Took Off, Share Held by Bottom 90 Percent Plummeted As share of total household wealth
45%
42% 40% Bottom 90% 35%
30%
30% Top 1%
28% 25%
23% 20% 1970
1974
1978
1982
1986
1990
1994
Source: JEC Democratic staff calculations based on data from Emmanuel Saez and Gabriel Zucman, The Quarterly Journal of Economics (May 2016) Note: Data are for 1970 to 2012; shares refer to the share of total household wealth held by these groups, as estimated by capitalizing income tax returns
1998
2002
2006
2010
