Real wages in the US increasing every single decade from 1830 to 1970 (including during great depression), but being flat to down ever since (I am sure there are some demographic explanations). But productivity (adjusted by GDP deflator) since the 1970s due to computers, efficiencies and many other inventions have increased dramatically, and thus so have corporate profits (unless we back out costs for environmental externalities). But remember, we've been on a total fiat system since 1971. So flat real wages in the face of growing overall profits would have resulted in too large of notional wealth disparity which would have lead to social unrest/chaos. There had to be a relief valve, giving the guise that resource limits combined with concentration of wealth had not shut the door on Joe Sixpack. Enter leverage, easy credit, home-equity loans etc.The average person wasn't earning any more, but they were keeping up in positional goods consumption race because of access to debt. Under an fiat system acting only as marker for real capital, a large social wealth transfer (denominated in dollars) was thus camouflaged by leverage and borrowing. As the concentration of wealth got higher, new rules had to be enacted to allow the lower quartiles of social denizens to remain above poverty - low-doc/no-doc loans, further monetary easing, repeal of Glass-Steagal so higher leverage available to wall street, 95%+ LTV mortgages, etc.
Said differently, we have been living well beyond our means not since Peak Oil, but for almost 40 years (and less beyond for longer), - the difference has been made up by borrowing from the future, borrowing from the environment, borrowing from other social classes, and most worrisome, borrowing from thin air.
It is telling that exponential growth in energy production per capita peaked in 1970 (Duncan), US oil peaked in 1970, natural resource backed currency stopped in 1971 and real wages peaked in 1974.
Tuesday, March 31, 2009
Chart of the Day: Hey, What Happened to Our Wages?
Nate Hagens at The Oil Drum provides one of the best one-paragraph descriptions of what has happened to this country economically over the last 40 years. Its based on this chart, which shows that even as worker's productivity has risen, our wages have not. Why? Because energy costs have gone up since the 1970s. So instead of higher wages, we all took on more debt in order to buy the things that we needed in order to feel like we were keeping up with the very rich, whose incomes really were exploding.