This is from CATO. It compares up to '95:
Fable 9: Workers Had to Work Harder for Smaller Paychecks in the 1980s
Caught between the lawmakers in Washington and the dealmakers on Wall Street have been millions of American workers forced to move from jobs that once paid $15 an hour into jobs that now pay $7. [44]
Barlett and Steele never back up such anecdotal claims with any facts. Here they are: the correct way to measure changes in worker pay from one period to the next is not by examining wages alone, but by tallying the total compensation per hour--a measure that includes wages and benefits--paid to a worker. [45] Nonwage benefits have been an increasing share of total hourly worker compensation. In 1960, 9 percent of worker compensation was in the form of fringe benefits; in 1975, 16 percent of worker compensation was wage supplements; and by 1990, that percentage had risen to 20 percent. [46] So although it is true that average real wages have been falling over the past 20 years, real compensation has been generally rising. The average real wage in 1990 dollars fell from about $11.00 an hour in 1980 to about $10.00 in 1988, a 9 percent decline. But real compensation per hour rose from $15.00 per hour in 1981 to $16.50 an hour in 1988. [47]
Fable 10: In the 1980s the Rich Got Richer and the Poor Got Poorer
During the 1980s the bucket of liberty and economic freedom rose, while the bucket of income equality fell. Upper-tier Americans significantly expanded their share of national wealth, while low-income citizens lost ground. Reagan policies were critical to the shift. [48]
During the Reagan years, the total share of national income tilted toward the wealthiest Americans. From 1980 to 1988 the wealthiest 5 percent of Americans increased their share of total income from 16.5 to 18.3 while the poorest fifth saw their share fall from 4.2 to 3.8 percent. [49]
Yet it is not true that the gains by the wealthiest Americans came at the expense of low-income Americans. From 1981 to 1989, every income quintile--from the richest to the poorest--gained income according to the Census Bureau economic data (see Figure 11). [50] The reason the wealthiest Americans saw their share of total income rise is that they gained income at a faster pace than did the middle class and the poor. But Reaganomics did create a rising tide that lifted nearly all boats.
Table 8 shows that by 1989 there were 5.9 million more Americans whose salaries exceeded $50,000 a year than there were in 1981 (adjusting for inflation). Similarly, there were 2.5 million more Americans earning more than $75,000 a year, an 83 percent increase. And the number of Americans earning less than $10,000 a year fell by 3.4 million workers.
Table 8
Workers' Incomes in the 1980s (millions of workers and billions of 1981 dollars)
Year < $10,000 > $50,000 > $75,000
1981 66.0 9.9 3.0
1989 62.6 15.8 5.5
Difference -3.4 5.9 2.5
% Change -5% 60% 83%
Source: Cato Institute calculations based on Bureau of the Census, U.S. Statistical Abstract, 1996, p. 478, Table 740.
Note: Earning levels are adjusted for inflation between 1981 and 1989.
The gains in incomes of all income groups is all the more impressive when we examine data on income mobility. Tens of millions of Americans moved up the income scale in the 1980s--an economic fact that is obscured when only the static income quintile data from the start of the decade to the end are examined. Figure 12 shows that 86 percent of households that were in the poorest income quintile in 1980 had moved up the economic ladder to a higher income quintile by 1990. Incredibly, a poor household in 1980 was more likely to have moved all the way up to the richest income quintile by 1990 (15 percent) than to still be in the poorest quintile (14 percent).
Fable 11: The Poor and Minorities Lost Ground under Reagan's Economic Policies
The 1980s was the first decade since the 1930s in which large numbers of Americans actually suffered a serious decline in living standard. [51]
The poorest 20 percent of Americans experienced a 6 percent gain in real income in the 1980s and have suffered a 3 percent loss in income in the 1990s. Figure 13, which compares the income trends for the poorest fifth of Americans over the past 20 years, shows that the poor did the best during the Reagan years. Black Americans saw their incomes grow at a slightly faster pace (11.0%) than whites (9.8%) in the Reagan years (see Table 9).
Table 9
Real Household Incomes
1973-81 1981-88 1988-94
Whites -2.2% 9.8% -3.8%
Blacks -4.4% 11.0% 2.0%
Source: Bureau of the Census, "Money Income and Poverty Status in the United States, 1995," Current Population Reports (Washington, D.C.: Bureau of the Census, 1995).
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