Families ‘Running In Place’ Spouses Work Harder, But Couples Make Less

FOR THE RECORD: September 17, 1996: In a Knight-Ridder Newspapers story about income-trend studies commissioned by the Competitiveness Policy Council, C. Fred Bergsten was misidentified as an economist for the Economic Policy Institute. In fact, Bergsten is director of the Institute for International Economics.

Millions of middle-aged couples, their wages eroding, find themselves in a weaker economic position than their counterparts in 1979, according to a bipartisan study issued Thursday.

Second salaries, with more wives working more hours than ever before, merely have kept family buying power from falling even more sharply, the study said.

“It is as if workers are running in place,” said C. Fred Bergsten, chairman of the Competitiveness Policy Council, a federal advisory commission whose members come from Congress, the business community and labor unions.

“The fact that American families are working more, for less pay, helps explain why they remain anxious about their future.”

As it happens, recent public opinion polls show Americans suddenly are becoming less anxious about their financial future, the result of the lowest unemployment rate in seven years and a reduction in reports of huge corporate layoffs - if not a decline in the layoffs themselves.

That is good news for President Clinton, who takes credit for today’s 5.1 percent jobless rate and the creation of more than 10 million jobs during his presidency.

Bob Dole, his Republican challenger, responds that those accomplishments mean nothing when the buying power of the average worker is falling - an accusation supported by the new study for the Competitiveness Policy Council.

The study, prepared by Massachusetts Institute of Technology economist Frank Levy, a longtime student of income levels, found that most families are working at close to “economic capacity.”

In 1979, Levy reported, a typical 40-year-old high-school graduate who worked full time earned $37,442 (as measured in 1994 dollars). His wife worked 16 hours a week and earned $8,585, for a family income total of $46,027.

In 1994, in contrast, a typical 40-year-old high-school graduate with a full-time job earned only $29,263. His wife’s income was $12,930, but she was working 1,680 hours a year, twice as much as a typical working wife in 1979.

Families of college graduates, about one-quarter of the population, fared better. Although earnings for men slumped, total family income rose modestly thanks to the growing contribution of working wives.

The culprit behind weakening wages is a pattern of slow economic growth since the sudden rise in foreign oil prices in 1973.

The economy has grown by an average of 2 percent a year in the 23 years since then, compared with about 3.4 percent a year from the Civil War until 1973.

ILLUSTRATION: Graphic: Family income growth since 1947

MEMO: Coming Sunday: “America: Who Stole the Dream?” A series of stories by the Philadelphia Inquirer looks at the forces that are driving down American wages and creating an emerging two-class society in the United States of have-mores and have-lesses.