Despite Economic Growth, Middle-Income Americans Have Less Than They Did 40 Years Ago

Over the past 40 years, the US economy has boomed. But what does that mean for the “American dream”? While the top 1% has had enormous gains, average US households aren’t any better off today. In fact, they’re falling further behind.

We crunched numbers from the US Bureau of Labor Statistics, adjusting them for inflation, and found that during the past 40 years, middle-income households have seen their income decrease 13 percent, and the number that really matters — discretionary income — has decreased even more, by almost 30 percent. This was true for all households, not just married households.

While pre-tax income is an interesting metric, the number that really matters for Americans’ well-being is discretionary income — the money left over after taking out income taxes and paying for necessary expenses such as food, clothing, shelter, housing, transportation and health care. We factored these expenditures into our calculation, and the data is clear: Middle income Americans are worse off than they were 40 years ago.

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