Euphoria about the economic boom is nearly universal, and for good
reason. We are living through a record economic expansion, brought on by
factors both real (technological improvements and the opening of new
international markets) and unreal (the Fed’s loose money policy and
regulatory subsidies to the stock market). How long it will last, no one
But it will need to last much longer if the American economy is going
to catch up to its levels of prosperity enjoyed before the US went off
the gold standard in 1973. It is not very well known that due to the
resulting inflation, median household income remained stagnant
throughout the ’80s and the early nineties, despite the economic boom,
and has only recently begun to recover.
A remarkable pattern emerges when you break down the data by sexual
demographics. Compared with 20 years ago, the median earnings of working
men between the ages of 25 and 34 have fallen 17 percent. That means
that these young men (of all races) are earning less than their fathers,
out. The same pattern exists for men ages 35-44, while the older
generation has experienced a 3 percent loss.
Figuring the increase of taxes into the data makes the picture look
even worse. From 1957, taxes as a percentage of median family income
have increased from 27 percent to 37 percent. Adjusting the data to take
that into account, median male income in real terms sits only slightly
above its level in 1957. The gains made by men from 1957 to 1977 have
been almost entirely wiped out.
In contrast, the wages of women have increased proportionately. Does
this mean that women’s gains are coming at the expense of men’s? Not
necessarily. The crucial difference is found in dramatic demographic
changes. Over the past 40 years, female labor participation rates have
increased from one third to two thirds, with the crucial 50 percent
turning point coming in
1984. It is now more likely that women with young children are working
than not — a complete reversal of a long-established pattern.
What fed the boom in women’s employment was not feminism but the
dramatic real decline in the income of men, particularly husbands. With
the onset of double-digit inflation in the late 1970s, no longer could a
family maintain its income with only the husband working. Married women
elected to enter the labor force to supplement the family income. Hence,
the much-touted job machine of the 1980s owed more to the Carter
inflation than most people realized.
Alongside this has come dramatic cultural change. Women no longer
expect to purchase financial security with marriage. Instead, they
prepare for careers on the assumption that they must be a breadwinner,
and the financial demands of child care mandate that they seek to
maximize their earning power.
The feminist dream of career-minded women throwing themselves into
work, bearing fewer children, and being less engaged in a rich domestic
culture, has come true, thanks to economic insecurities created by bad
economic policy. The question of whether this actually constitutes a
gain for society is something else entirely.
Family income overall has not improved measurably. And contrary to
the propaganda, women today feel they have fewer choices than they once
did, because the option to be a full-time mom is less available.
Families that could once take advantage of the division of labor between
husband and wife now find they have had to redouble their efforts —
professional and domestic — just to keep up. The economic insecurities
fed by this reality have been effectively exploited by statist
politicians who seek further regulation of the workforce and ever more
If the current economic boom continues long enough, we could begin to
see a reversal of the decline in men’s wages that led to the forced
professionalization of women. The more economic security the family has,
the more likely wives and mothers will elect to purchase more time to
spend on domestic affairs. There are already signs of this happening, as
prominent women lawyers and executives announce that it is impossible to
high-flying career and raise a family.
In recent years, families have benefited enormously from the relative
decline in inflation. American consumers have even been rewarded with
falling prices in a wide array of goods from gasoline to computers. The
decline in steel prices, for example, has been reflected in cheaper cars
and lower costs of production in the industrial sector.
Several factors threaten to reverse this. Oil prices are creeping up
again, and so long as the Clinton administration keeps Iraqi oil off the
market, Opec can be somewhat successful in holding down production.
Car-hating liberals rejoice in this trend, but it is awful for the
American consumer. Similarly, with the Congress’ tariffs and the White
House’s bullying, the U.S. government seems determined to bring about a
trade war with Europe — a surefire fast track to recession.
The scariest piece of data has received virtually no attention from
the press. The Federal Reserve is stepping on the monetary gas at levels
not seen since the 1980s. As charted by M2 (a broad measure that
encompasses not just cash and checking but also money markets and
savings), the money supply is growing at a 9 percent pace. Neither is
this a statistical aberration (the effects of financial deregulation
having been factored in long ago). It is a direct consequence of the
Fed’s interest-rate interventions last year to keep the bull market from
turning to bust.
The biggest enemy that prosperity has is war, and both political
parties are determined to keep the U.S. the bully boy of the world. Is
it any coincidence that the stock market plunged the moment that the
Clinton administration announced its intention to aggress against
The combination of protectionism, inflation, and war is a
prescription for total economic wreckage. How tragic if this combination
— all forms of government intrusion in the free market — were to
thwart the recovery of American prosperity just when it is beginning to
benefit the average American family.