Shocking Revelation: American Families Are Making Less Money Now Than They Did In 1989

Despite the fact that the giant jobs crater left by the Great Recession has been significantly filled and American families now have better and steadier jobs, the American dream seems to be a case of smoke and mirrors.

The U.S. Census Bureau has just published its annual update on income and poverty in the U.S. It is essentially a first-hand, bare-it-all report on the economic health of the most vital of all classes as per the earning capabilities, the American middle class.

The American middle class has supposedly gotten better after the great recession. The job market has once again opened up and educated professionals have been offered better work opportunities, which also offer good money. Simply put, the American middle class has been seeing better days, but when you dig deeper, the rabbit hole reveals the ugly underbelly of economic trickery and the true horrors of inflation.

The Average Household Income Largely Remain Unchanged If Inflation Isn't Considered

The report begins well and attempts to downplay the inflation. Inflation-adjusted U.S median household incomes were essentially flat 2013. The average American household earned $51,939 in 2013. A year earlier, the same family made $51,758. The keyword here is “median.” Median income is exact midpoint of the U.S. income distribution. In other words, half the U.S. households have incomes that are higher, and half have incomes that are lower.

The Average American Middle Class Makes Lesser Money Than It Did In 1989

However, the bigger picture is actually not that great or truth be told, is bleak. Effectively, inflation-adjusted US median household incomes are still about 1% below where they were in 1989, reported Five Thirty-Eight. That’s over 25 years ago! Moreover, median household incomes are still 9% below the all-time peak back in 1999. Speaking in numbers, in 1999 an American middle class family managed to earn $56,895. If that’s not all, the just-reported values for last year are 8% below their recent high water mark in 2007, when they hit $56,436.

The Rich Have Gotten Richer, While The Poor Have Stagnated

However, what’s shocking and rather more depressing is the fact that while the American middle class is earning less, the stiff upper lip brigade, those who comprise the upper-end of the job market, have been earning more. The report reveals that salaries on the high end of the spectrum have rebounded quite nicely.

Today’s census data shows that the bar for entry into the top 5 percent of income rose to $196,000, up 2.5 percent. Moreover, those who are in the executive lane took home more than 22 percent of U.S aggregate income.

The great American divide: the inequality debate has been a hot one in the U.S in recent years. The degree of inequality in the developed world is flirting with extremes, not seen since the late 19th century.

But despite the bleak picture, the American middle class hasn’t stopped buying cars, fueled by easy-to-get consumer loans, which is further driving up inflation. Since the average family won’t have the income to spend, the market will have to extend debt to people who have poor financial credibility. Isn’t this a recipe for a full-blown financial crisis?

[Image Credit | Getty Images, U.S Census Bureau, Nikhil Sonnad]