It has been said often that today’s young adults have a harder time of it, economically (and probably in other ways), than the young adults of yesteryear. Is that true? If so, is a new phenomenon?
To shed some light on those questions, I turned to the Census Bureau and found Table P-10. Age–All People (Both Sexes Combined) by Median and Mean Income: 1974 to 2022. I plotted mean income by year for six age groups, with this result:
You can readily see that the rate of income growth for the youngest workers (15 to 24-year-olds) has been slower than that of the older age groups. In fact, the rate of income growth is inversely related to age group. Here are the coefficients of the linear fits to each of the lines in the graph:
- 15 – 24: 132
- 25 – 34: 346
- 35 – 44: 539
- 45 – 54: 625
- 55 – 64: 683
- 65 – 74: 750
Thus, for example, the mean income for the 15 – 24 age group increased, on average, by $132 per year, and so on for each group. (The r2 values are — from the youngest to oldest age group — 0.69, 0.76, 0.88, 0.87, 0.92, 0.95.)
In sum, the incomes of younger workers — on average and most of the time — have lagged further and further behind the incomes of older workers since at least 1974.
I am unsurprised by that. It has often been remarked that those of us who entered the labor force around 1960 had it better than those who followed us. I am certain that the observation would be borne out if there were data going back to 1960 or earlier.
Why is this so? An important reason, but not the only one, is the “law of supply and demand”. Economic growth in the U.S. has long been positive (though at a declining rate in the 20th and 21st centuries). Yes, there have been brief episodes of negative growth during recessions and longer episodes during the Great Recession and Great Depression. But the demand for labor of various kinds has grown over the long haul.
The supply of labor, on the other hand, hasn’t grown consistently (see table here). The population of the U.S. grew by only 7.3 percent from 1930 to 1940, as against 16.2 percent in the preceding decade, 15.0 percent in the decade before that, and much higher percentages before that.
The Great Depression of the 1930s was the main cause of slow population growth in that decade. World War II was the main cause of slow population growth from 1940 to 1950 — only 14.5 percent (slower than all preceding decades but one). Ant the growth in the 1940s came mainly in the latter half of the decade, when the post-war “baby boom” started.
The short of it is that younger persons who entered the labor force during, say, 1955 to 1965 didn’t face as much competition from their peers as did earlier generations. That happenstance served most of them well all the way to retirement.
Younger workers of later years have had it tougher — despite declining population growth since 1960 — because of the sharply declining rate of economic growth after 1970. Each regression line in the graph below reflects the rate of growth for the associated business cycle (the flatter the slope the lower the rate of growth). The 1949-1954 and 1960-1970 cycles generated much higher growth rates than those that followed. Further, the growth rates have generally declined over time; the rate for the 2009-2020 cycle (and beyond) is the lowest of the lot.
Today’s young adults, and those who follow them will be up against a lethargic economy — which will be made even more lethargic by the continued piling-on of regulations and the growth of government. The full amount of damage due to higher energy costs — because of the senseless war on “climate change” — is yet to be felt.
Youngsters should be leading the charge for regime change. But too many of them have been brainwashed in the belief that government (under Democrats) knows best. What it knows best is how to impoverish Americans and make nice to our worst enemies.
Politics and Prosperity 