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  Chapter Nine:

  Average Earnings
  Minority Earnings
  Average Incomes
  Personal Consumption
  Philanthropic Donations
  Personal Debt
  Income Distribution



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Average Incomes

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The real incomes of middle-income families at the end of the century were five times greater than those of middle-income families in 1900.
Middle-income families—those in the middle fifth of the aggregate income distribution— saw their average annual incomes, measured in constant dollars, increase from more than $15,000 in 1929 to more than $47,000 in 1998. National data on family or household income were not available before 1929. Fairly reliable estimates of per capita Gross National Product, however, show a rise of about 65 percent from 1900 to 1929, indicating that the mean income of middle-income families had registered significant improvement even before 1929. 

The only major dip in this upward trend occurred during the Depression of the 1930s, but income levels recovered by the end of that decade. Wartime shortages and price controls kept the trend relatively flat during the 1940s. In the almost unbroken prosperity of the 1950s and 1960s, the real incomes of middle-income families nearly doubled. After 1972, they continued to rise, but at a slower rate. 

These calculations do not take into account a variety of factors that affect real income, such as taxes, social services, fringe benefits attached to employment, and the costs of working. If each of these could be accurately calculated, the trend in real income would shift in one direction or another. On the one hand, the tax burdens of middle-income households were distinctly heavier at the end of the century than in earlier years, and the costs of working were much greater for the dual-earner families of the 1990s than for the sole breadwinners of the 1950s. On the other hand, most middle-income families at the close of the century benefited not only from government subsidies (guaranteed mortgages, Social Security payments, Medicare, student loans) that were not available earlier in the century, but also from the fringe benefits attached to full-time jobs, which were far more extensive and valuable than they had been in the past. 

Nor is the quality of available goods factored into calculations of real income. Many of the goods and services that middle-income families purchased at the end of the century, such as cameras or heart surgery, were incomparably superior to those available at the beginning or middle of the century. Others, such as cellular telephones and in vitro fertilization, did not exist until the last decade of the century. When all these criteria are assessed, the vast improvement in the material circumstances of middle-income families during the century is unmistakable.

Chapter 9 chart 3

Source Notes
Source Abbreviations

HS series G 328. See also CB, “Historical Income Tables,” table F3, at (accessed August 31, 2000). For the rise in GNP from 1900 to 1929, see HS series F 1. On the importance of new and improved goods to rising standards of living, see W. Michael Cox and Richard Alm, Myths of Rich and Poor: Why We’re Better Off than We Think (New York: Basic Books, 1999).


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