Median income for young men is declining

A few days ago, I blogged about the fact that more young men were living with their parents.

I found a table at the U.S. Census historical income data website that explains it. The median income for young men (aged 25-34) has been declining. In 2004 dollars (adjusted for inflation using the CPI-U-RS), the median income was $35,126 in 1974, but thirty years later in 2004 the median income declined to $30,984. That's a decline in real income of 12%.

Furthermore, the cost of housing has increased faster than inflation, so relative to housing prices the median income of young men decreased by an amount much greater than 12%. No wonder why more young men are living with their parents!

I know this chart is amazing. It seems contrary to the popular notion that we are better of now than we were thirty years ago during the 1970s, a decade of economic malaise. Well not the case for men aged 25-34! Nearly all of the gains in income have gone to women. Women of all ages have seen their salaries increase subsantially since the 1970s.

This is a topic I will surely blog about more.

Comments

[Scott]

Are you saying women shouldn't be allowed in the workforce because it's causing an income shift from men to women?

[mercurior]

no all he is saying, that women are becoming richer and men poorer. and that has a knock on effect on everyone. it should be equal pay for equal work.

[Glen Raphael]

That's based on /taxable/ income, right? Meaning that health spending and funding 401Ks are excluded from the total? If so, that would mask some significant improvement.

Higher college attendance fairly leaps to mind as a likely explanation. More men go to college than thirty years ago. College is essentially a luxury consumption good for the parents that doesn't improve incomes for the kids proportional to the time and money invested. Due to attending college, men enter the workforce later in life so they have less job experience, productivity, and salary a few years later than their matching cohort of thirty years earlier. It takes longer to achieve peak earnings.

[mercurior]

but there are less men going to college, and more women,how does that fit in, more women are going to college, they are getting more money, is it because the college courses are becoming pro woman rather than pro learning.

http://www.pbs.org/newshour/extra/features/july-dec02/college.html

Women now make up 56 percent of the college population -- and that number continues to rise. Within ten years, three million more women than men could be attending college.

[ryan]

i'm fairly sure going to college is a good investment.

ie the present discounted value of your wage differance between college grad and no grad over a life time of earnings is greater than the cost of attending college (inc. accounting costs and econ. costs such as the 4years of no income while you're in school).

women's income would have to increase faster than men's income just to reach equality because women's wages started out lower. so this doesn't neccessarily mean women are making more then men (as indeed they're not).

more interesting is that real wages per worker hour have not risen for the past 20years or so. increases in income have come from working longer hours. increases in consumption have come from saving less, borrowing more, and rising housing prices.

of course it's impossible to get richer by saving less and selling houses to each other but it doesn't look like that's true in the short run as everyone gets more stuff. eventually of course you'll have to stop borrowing and start paying it back.

[nobody]

HS has blogged about this several times. I suspect he would say that the value of a college education depends on what you end up doing with it. There are no shortage of college graduates with expensive liberal arts degree ending up with jobs that doesn't require that level of education. How are those people better off?

What the college degree is being used for today is a barrier to entry. Many jobs that don't need them use them to screen out applicants.

To take this to another step, going to law school is not always a good investment. Just ask HS - he will tell you that unless you are going to a top tier school, it is probably not a good investment.

Of all the theories HS has presented in this blog, the most insightful one is his observation that the value of labor has decreased while the value of capital has gone up. This is probably true - giving the globalization of the labor market, there is downward pressure on wages. This is probably the primary reason why income for young people has gone down. They are too late to the party and are now forced to compete with others around the world for the less skilled entry level jobs.

So, it looks like for those young people who wishes to really better their situation in life, they need to save every penny they got and invest in capital generating instruments. In the long run, they might see their investment consistantly outpace their wages increases. Of course, this simply piece of advise is rarely understood by the general public.