Earnings going down down down for everyone without professional degrees as illustrated by the chart on the left. One major factor here is the rise in health insurance premium costs. As we saw yesterday the employee side of insurance premiums is rising quickly and reducing disposable income. But the employer side of the premium ledger is also rising rapidly, so employees are getting more-and-more of their compensation in the form of employer health care costs and less-and-less in the form of money.
There are other factors in play here, especially for workers near the low-end of the skill gradient, but that health care angle is the one with the most immediate policy relevance and underscores the need for meaningful reform of the system. More broadly, the fact that this sort of thing is happening underscores the need for a broader conversation in American society about where the gains from economic growth are going, why they’re going their, and what can be changed. The conservative habit of seeking to shut any such conversation down by shouting “class warfare!” isn’t going to cut it any more. That’s why it was good to see David Frum trying to tackle the issue even if I don’t think his diagnosis of the problem is quite on the mark.