Real Median Household Income
Median household income in 2023 dollars
“Middle class incomes stagnated after 1971 when the dollar lost its gold backing.”
Real median household income roughly doubled from 1950 to 2000, but growth slowed significantly after 2000. The stagnation correlates more with globalization, the China shock, and the 2001/2008 recessions than with the 1971 gold standard change. Income reached a new high of $80,610 in 2023.
Perspectives
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Growth slowed but didn't stop
Real median household income has grown more slowly since the 1970s, driven by globalization, technology, and labor market changes, with monetary policy playing an indirect role.
The data shows genuine slowdown in median income growth, but the timing doesn't cleanly match 1971. The 1970s saw solid income growth despite high inflation. The real deceleration came in the 2000s. Multiple factors converged to reduce the middle class's share of economic gains.
Causal Factors
Globalization & trade competition
25%Competition from lower-wage countries displaced middle-income manufacturing jobs, suppressing wage growth for non-college workers.
Technological change & skill premium
25%Technology increased demand for high-skill workers while automating middle-skill jobs, widening the income gap between education levels.
Declining union membership
20%Union membership fell from 35% in the 1950s to 10% by 2023, reducing collective bargaining power and wage growth for median workers.
Rising benefits costs absorbing compensation
15%Employer spending on healthcare benefits grew dramatically, absorbing compensation gains that would otherwise have appeared as wages.
Household composition changes
15%Rising single-person households and demographic shifts changed the 'typical household,' making comparisons over time less straightforward.
Data Source
Key Events
Nixon Shock
Dollar decoupled from gold; income growth continued through the 1970s
Reagan era begins
Tax cuts and deregulation reshape income distribution
Dot-com peak
Median income reaches then-record before two recessions erode gains
Great Recession
Financial crisis causes steepest income decline since the Depression
New record
Median income reaches all-time high of $80,610 in 2023 dollars