Power, Lost and Found: America At Century’s End 527next 20 percent of income earners saw a small rise in wealth during the 1980s,
while the rest, 60 percent of Americans, saw no rise at all or, in the case of
the lowest two-fifths, actually saw a decline in income and savings. In fact,
income inequality rose each year of the Reagan administration, while taxes
were lowered and the national debt grew. Adding to the economic burden of
working Americans, public services were deeply cut at federal, state and
municipal levels, and, because of the tight-money policies pursued by the
administration and Fed, wages remained low, if not falling. In fact, weekly per
worker income dropped substantially during the 1980s. Where the average
American might take home a paycheck for $366 in 1972, he or she would
earn $312 in 1987. Median family income, about $31,000 a year in 1973,
plummeted in the early 1980s until recovering to 1973 levels in the late 1980s.
After-tax median income, however, remained well below 1970s-era levels
because of the redistribution of wealth caused by the tax cuts and debts
regimen of the Reagan years.
The data on family income is likewise striking. Only the top 20 percent
of American families saw an increase in income between 1977 and 1988,
with the top 10th gaining an increase of about $17,000, the top 5 percent
seeing an extra $31,000, and the top 1 percent with a whopping $134,000
more. Middle-class and working Americans, however, saw declines in real
income ranging from about $600 to $1,600 in the Reagan era. Real wages
fell also. Where the median pay for working men in 1973 was a little over
$10 an hour in 1973, it fell to $8.85 by 1987. The average worker without
an advanced degree might have made about $24,000 a year in the early
1970s, but by the end of the Reagan years, that was down to around
$18,000. Worsening such economic problems, millions of jobs were “down-
sized” or sent overseas by companies looking for cheaper labor, while
unions, traditionally the source of better wages and working conditions,
were further crushed. “Reaganomics,” then, took wealth and income from
working people and gave it to the wealthy via huge tax cuts, job losses, and
debts. It caused a reduction in wages for the majority of Americans. Reagan
spent trillions on the Pentagon but cut services to the average American.
For the ruling class, the economy was soaring, and corporate and banking
profits were immense. For the typical American, it became harder to pay
the rent and put food on the table.