cross-posted from CEPR Blog
The basic trajectory of income growth since World War II is now pretty familiar. The Economic Policy Institute’s State of Working America series has tirelessly underscored the sharp divide between shared prosperity before 1979 and skewed prosperity since 1979. And a recent report from the Pew Research charts this out decade by decade to make the same point. This graphic runs those same numbers, charting income growth by quintile, for four different chronological metrics.
Arranged by decade, the results are stark and unsurprising. Two decades of shared prosperity—followed by a decade of slow income growth, two decades of skewed income growth, and a decade (the most recent) of unrelenting recessionary losses.
Arranged by Presidential Administration, we see a similar picture. Again it is striking how strong the income growth is across the board through the end of the Johnson Administration, and how dramatically that collapses into either uneven growth or net losses. The sole exception here is the two Clinton Administrations, in which we see broad, Eisenhower-like income growth. It is easy to make too much of the patterns by Administration, since occupancy of the White House doesn’t necessarily translate into control over policy. But the summary “by party” numbers are revealing. Incomes for the poorest 20 percent grew 80 percent across seven Democratic Administration, and just 7 percent across nine Republican terms.
Arranged by business cycle, the pattern is especially striking. Most of the postwar gains for low- to median-income families are crammed into the single long cycle from April 1960 to December 1969. The pattern of growth across the Reagan (July 1981 to July 1990) and Clinton (July 1990 to March 2001) cycles are essentially similar—as are the pattern of losses across the last two business cycles.