The Curious Absence of Class Struggle

Via the Globe and Mail: The curious absence of class struggle. Excerpt:

Statistics Canada reported recently that the earned income of the "average" Canadian — the so-called median income — was the same in 2004 as in 1982.

After we subtract inflation to keep the purchasing power of a dollar roughly constant, it turns out that median income, before taxes, did not rise at all over those 22 years. Yet during that same time the Canadian economy grew, in real per capita terms, by more than half.

But only the very well-paid — those above the 90th percentile of the income distribution — saw any significant increase in earned income; and the higher up the earnings ladder, the greater the growth. What has been going on?

Canada's experience is certainly not unique. We are following the same pattern as the United States — as usual, a bit more mutedly and a few steps behind. In the 30 years after the Second World War, the U.S. income distribution did not vary much, as the average American worker's earnings grew in tandem with a robustly expanding economy.

Things changed abruptly starting about 1973; productivity growth collapsed, and the economy lapsed into a long inflationary stagnation. Eventually, North America recovered, but the fruits of growth no longer flowed in the same proportion into the average worker's pocket.

Between 1975 and 2005, median family income in the U.S. increased by only 28% (with most of that coming in 1993-2000) while the economy overall grew by 86% in per capita terms. Between 2000 and 2005, median U.S. family income actually declined slightly.

Meanwhile, those at the top of the heap have been doing better than ever. The average earnings of the highest 1 per cent of the U.S. income pyramid rose a very healthy 160% between 1975 and 2005, while the income of the rarefied top 10th of 1 per cent soared 350%, in real terms, from $800,000 (U.S.) in 1975 to some $3.6-million by 2005.