John Edwards has been talking about how there are “Two Americas” for almost a year now. But talk is cheap. Let me show you a picture. When Lyndon B. Johnson was President, the top quintile mean household income was $81,883 and the bottom quintile was $7419; in 2002 the top quintile mean household income was $143,743 and the bottom quintile was $9990.
Of course, this chart is meant to show you that the richest Americans made 11 times what the poorest did in 1967, yet 14 times more today. Better yet, you are supposed to notice how the little brown bar for the lowest quintile appears almost unchanged next to the big beige bar soaring above it for the top quintile.
To me one of the most striking features of this data is that the households in the bottom 20% rose a mere $2600. True, that’s a rise of 35%, but we are still talking about less additional money over the course of 35 years than you might spend on a major appliance or a computer. Minimum wage in 1967, where our data begins, was $1.40 per hour. Our theoretical LBJ era full-time minimum wager earned $2912 annually, much higher than the poverty line of $2168 (family of two, any age). Now, minimum wage is $5.15 nationally, with some exceptions. A theoretical modern minimum wage full time employee would earn $10,712, which is 7% more than the average for the bottom quintile, and lower than the poverty line of $11,756. Because this chart expresses everything in “2002 dollars,” the effect of inflation is removed, and the effect of rises in minimum wage are lessened.
In the meantime, inflation keeps prices rising. So far this year, the core rate of inflation is 2.4%.
What does this tell us about the minimum wage? It tells us that raising the minimum wage is not going to cure poverty. Indeed, it seems clear that on average, the lowest earning 20% of households are not even making a full-time minimum wage salary. Whether this is because they are working part-time, or because they are “contractors” doing per-job work ($20 per lawn you mow, $30 per house you clean) does not matter: there are no benefits. Such jobs are of the Don’t Work, Don’t Eat variety.
The point remains that back in the late 60s, a family in the lowest income group could manage to get by. They certainly did not have a luxurious life, and they didn’t have cable TV or internet access — mainly because there was no such thing — but they managed. I can’t honestly say how a family making $9990 manages, particularly once childcare comes into the picture. Tax rhetoric isn’t going to fix that. We can’t honestly put all the blame on the President for this situation, but we can hold him accountable for making it worse while claiming to make it better.