Over the past century, the global economy and the American economy in particular have increased rapidly in productivity. Heightened levels of output have translated into more prosperity for individuals through higher wages.
A solid measure of this phenomenon is real disposable income per capita. Adjusted for inflation and population growth, it measures personal income minus taxes.
During the presidency of Ronald Reagan, Americans saw a solid increase in the pay they took home. In the first 41 months of the Reagan presidency, the after-tax income of the average American worker increased by $2977, which represented a 15.62 percent increase over the period of less than three and a half years.
Similarly, real disposable income per capita rose by $2195 in the first three years of the recovery from the 1980s recession, an increase of 11.28 percent.
As with other key economic indicators, the data from the Obama administration tell a different story entirely. Through May, President Obama has actually overseen a decrease in real disposable income per capita. In inflation-adjusted terms, the average American is taking home less pay than he did at the end of President George W. Bush’s second term.
Even across the Obama recovery, real per capita income growth has been paltry. After-tax income for the typical American worker has risen from $32,179 to $32,716, a paltry 1.67 percent increase.
It is common for ordinary citizens to feel as though their purchasing power is diminishing during tough times. What is not normal is for that purchasing power to actually be decreasing and for the hard times to linger for the entirety of a president’s term. Americans are dearly missing the thousands of dollars that would be in their wallets this year if the Obama recovery were comparable to the one overseen by President Reagan.