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The Stagnation Era Begins To Bite

John Quiggin notes that the beginning of income stagnation around 1970s was still consistent with rising living standards for a while at least:

The measures mentioned above compare snapshots of incomes at different times. But (as conservatives regularly point out) standards of living are determined mainly by lifetime incomes, not by income in any particular year. Given the pattern described above, lifetime income for someone who worked, say, from 1940 to 1985 was well below that for someone in a similar class position who started work in 1970, just when the long increase in real wages was slowing for most and stopping for some. For every year of their working life, the 1970 starter gets a wage (adjusted for age, education and so on) that’s as high as the maximum attained by the 1940 starter after 30 years of steady growth. Unsurprisingly, that translates into a bigger house, and more of most items that require savings, whether or not their price has risen relative to the CPI.

The upshot is that even though the wage stagnation phenomenon has been happening for decades, it’s only roughly around now that we’re seeing the stagnation on a full cohort level as a group of workers who’ve spent their entire working years in the stagnation era head to retirement.

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