Family Income Needs Big Lift

David Blankenhorn, Newsday, 4/28/1986

If we consider families by class instead of age, a similarly distressing picture emerges. The Center on Budget and Policy Priorities has calculated that the poorest 40 percent of America's families (those with incomes below $21,700) received only 15.7 percent of total national income in 1984 – their smallest share since the Census Bureau began collecting these statistics in 1947. The middle 20 percent received about 17 percent of the economic pie – also their lowest share since 1947. Thus, while the wealthiest families have improved their incomes, the bottom 60 percent – the vast middle class and the poor – are losing ground. We are becoming what has been called a "split-level economy," marked by growing inequalities between older and younger, richer and poorer.

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Subjects: Family, Family policy

More by: David Blankenhorn

Like five million New York families, mine recently received an April newsletter from Sen. Alfonse D'Amato (R-N.Y.). In it he defends the Reagan administration's economic policies by stating that "family income is at an all- time high." The same point was made a few weeks earlier by James Miller III, who directs the federal Office of Management and Budget, in testimony before the Senate Budget Committee.

D'Amato and Miller are wrong. According to official government statistics – recorded, among other places, in the "1986 Economic Report of the President" – median family income reached its "all-time high" of $28,167 in 1973. Since then, it has stagnated. In 1984 (the last year for which statistics are available), median family income stood at $26,433 – well below the 1973 level and roughly equal to the median family income of1970.

This long stagnation s one of the central economic facts of the decade. It is all the more remarkable when compared to what preceded it: From 1947 through 1973, the real income of American families doubled. During no other time in our history have we gone so long without an improvement in family income.

A recent study by the Urban Institute on the economic future of the Baby Boom compares the income of today's younger families to the income of earlier generations. For example, the real income of an average 30-year-old man in 1959 increased 49 percent over the next 10 years. If he bought a home, he paid an average of 16 percent of his monthly income in mortgage payments. In contrast, an average 30-year-old man in 1973 saw his income decline slightly over the next 10 years; he spent 21 percent of his income on mortgage payments. By 1983, a 30-year-old man not only earned less than did the average 30-year-old in 1973, but also faced paying 40 percent of his income in mortgage payments.

Women today in the labor force have not generated enough extra family income to offset these declines. According to the Congressional Joint Economic Committee, the real income of families with children declined by 8 percent from 1973 through 1984. Unless these trends are arrested, a generation of young families will see the American dream of rising prosperity pass them by.

If we consider families by class instead of age, a similarly distressing picture emerges. The Center on Budget and Policy Priorities has calculated that the poorest 40 percent of America's families (those with incomes below $21,700) received only 15.7 percent of total national income in 1984 – their smallest share since the Census Bureau began collecting these statistics in 1947. The middle 20 percent received about 17 percent of the economic pie – also their lowest share since 1947. Thus, while the wealthiest families have improved their incomes, the bottom 60 percent – the vast middle class and the poor – are losing ground. We are becoming what has been called a "split-level economy," marked by growing inequalities between older and younger, richer and poorer.

Economists and demographers offer several explanations for these disturbing facts. First, millions of Baby Boomers flooded into the labor force in the 1970s, competing for jobs and depressing the wages of younger workers beginning their careers and families. Second, there is a strong and growing link between family breakdown – teen pregnancies and single-parent homes – and the increasing numbers of children in poverty. Third, structural changes in the U.S. economy – particularly, increased international competition and the resulting stagnation in basic industries – may be the cause of a "shrinking middle class" and growing income inequality.

The Reagan administration's policies, far from confronting these problems, have generally either ignored them or made them worse. For example, thanks to President Ronald Reagan's 1981 tax changes, the number of poor families paying federal taxes tripled from 1981 through 1983. For the first time, the federal government began taxing families into poverty. That is a family policy, hut exactly the wrong kind. In the case of younger families, the administration opposes virtually every proposal to help them at key moments in family life, such as having a child or buying a home.

To reverse these damaging trends in family income is surely one of our most important national challenges. It will not be easy, and the challenge does not seem to place high on the administration's agenda. But one thing is certain: We will never reverse them as long as the public hardly bothers to notice when high officials report that "family income is at an all-time high."

This article originally appeared here.

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