The Growing Wage Gap

Democratic squabbling is not confined these days to policies regarding torture, terrorism and the Iraq War. To the Republicans' delight, many Democrats, led by organizations like Third Way, which describes itself as a policy center to help progressives connect with moderates, are arguing that middle-class Americans have done just fine economically for a few decades. As one Third Way economist puts it, "What progressives generally say about the economy is unrelentingly pessimistic...[and] simply flat-out wrong." The Third Way and like-minded Democrats argue that the middle-class electorate will only be repelled this November by the pleas of some Democrats for more aggressive economic policies to aid the working and middle classes. Most Americans, they claim, are not experiencing the economic pressure progressives say they are, and want only modest new proposals for help.

Who is simply flat-out wrong? Large pockets of Americans have done poorly over the past thirty years. Typical black families earn only about 60 percent of what white families do, most of the gains of the last generation coming in the late 1990s. Women, whose wages have risen fairly consistently from low levels, still earn only 80 percent of what men do. The recent stagnation of wages may be most disturbing. Despite the nation's rapid economic growth in the past five years, a typical household's income is lower today than it was in 2000.

But the most serious victims of the economy of the past thirty-odd years have been men and high school graduates. The erosion of their economic prospects has been consistent and demoralizing. The median wage of all men, discounted for inflation ("real" median wages), remains lower today than it was in 1973. The median is the typical worker, right in the middle of the pack. This is bad enough. But the median male worker with only a high school diploma earns 14 percent less today, after deducting for inflation, than the median worker did in 1973.

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