Previous posts in this series:
The Breakdown
The Breakdown: The Young Aren’t Getting Enough Education
The Breakdown: Education Is More Necessary Than Ever
You see something interesting when you compare the incomes of those in particular age cohorts today with those in the comparable cohorts years ago, i.e. 18 year olds today to 18 year olds 30 years ago. Consider this information from the Census Bureau:
| Real median income by cohort 1978-2008 (2008 dollars) | |||||
| Age | 1978 | 1988 | 1998 | 2008 | |
| 15 to 24 | 11,061 | 10,219 | 10,804 | 10,778 | |
| 25 to 34 | 40,615 | 36,346 | 37,091 | 33,415 | |
| 35 to 44 | 50,192 | 49,222 | 46,204 | 44,189 | |
I won’t go any farther than that because I’m focusing on the group that was born 1946-1964, the Baby Boomers. The observant will notice that median real incomes have been falling for some time. That’s true but it’s irrelevant to the point I’m making.
Note that I’m not merely saying that workers with more seniority have higher incomes than younger ones. That’s true since so many personnel systems use seniority as the basis for pay increases. I’m saying that at the age they were 30 years ago older people had higher real median incomes than people of that age today. The older generation, Baby Boomers, have had higher incomes throughout their productive careers than those who came after them.
There are all sorts of possible explanations for this including race, ethnicity, class, different composition of the workforce, and so on. Or that it’s simply a product of generally declining median real incomes. The fact remains and it has implications for the economy going forward.
For a slightly different reference on this phenomenon see here.
Next in the series: Baby Boomers Drove the Housing Bubble
Most likely answer, IMO, rising health care costs. Try using total compensation vs. median income.
Since there’s no real prospect at this point for lowering healthcare costs it won’t make much difference to my final conclusions in the series. Indeed, since ACA will probably increase healthcare costs substantially it will probably aggravate the trends I see.
There might also be an effect from the greater inclusion of women, minorities, and immigrants in the overall work force from the 1970s onward. How big was each cohort?
Dave,
While I would agree that devoting ever increasing shares of our economy towards providing health care is problematic, it is different than simply having incomes decline. So, I find the claim of irrelevance somewhat strained.