2
THE OLD METHODS
NO LONGER WORK
IN TODAY’S ECONOMY
Learn the nasty truth about jobs and wages. American wages
have been declining in purchasing power for more than 20 years.
If the American dream is to do better than your parents, then the
prospects of fulfilling this dream with a job are far slimmer than
they once were.
This chapter offers a brief historical perspective of today’s
economic conditions to inspire you with a sense of urgency.Figure 2.1 presents a startling graph showing the purchasing
power of the average weekly wage income of the American worker,
adjusted for inflation, since 1959.
Here you can see the gradual decline in real wages since 1973.
(Real wages are adjusted for inflation and thus reflect purchasing
power.) Despite the fact that current dollar wages have been in-
creasing, these gains have been outstripped by inflation since 1973,
resulting in a gradual decline of purchasing power of about 1 per-
cent per year. People are earning a little more each year, but each
year it buys a little less.
The growth in the economy in the last few years has been ac-
complished not by higher wages for workers but rather by a signifi-
cant increase in the numberof workers (mostly young mothers), so
that each worker gets a little smaller piece of a much larger pie. On
the graph, you can see that in the last two years, there have been
small increases, but not nearly enough to recover earlier losses. The
recent gains occurred during a time when the overall economy ex-
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