Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 27, 1992 TAG: 9203270179
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
In recent years, some reports have indicated the average American is poorer now than a decade ago and structural changes in the economy have made the rich richer and the poor poorer. These reports said the disparity will grow even worse in the decade ahead.
But a study released Thursday by The Conference Board, a New York-based independent, non-profit business research group, says that analysis is all wrong.
"There is no validity in that whatsoever," said Fabian Linden, director of the group's consumer research center and author of the study.
In fact, Linden said, all that happened in the 1980s was that demographics were against us. That will change in the decade ahead, when the nation's real income should rise by 25 percent and average household income by 15 percent, he said.
One of the gloomy reports came last year from the non-profit Washington-based Center on Budget and Policy Priorities. It said household incomes in the 1980s jumped 122 percent after taxes for the top 1 percent of households but fell 10 percent for the bottom-fifth.
But, the Conference Board said, the bleak outlook of such studies was inconsistent with many of the nation's principal economic indicators.
And demographic changes over the next few years will break the trend, Linden said. Baby boomers will enter their peak earning years, there will be more two-income households and labor force growth rates will drop, he said.
Over the past 10 years, baby boomers - people born between 1947 and 1964 - left home or started careers. Many remained single, as shown by a sharp increase in the marriage age, Linden said.
Now they're in their 30s or 40s and income levels are reaching peak. They're marrying and more often than before wives are college-educated and working, he said.
In the past decade, married couples accounted for 25.5 percent of the jump in U.S. household population, the study said. In the next decade, they will account for 62.1 percent, it said.
Meanwhile, more women than ever before are entering the job market in higher-paying, professional positions, Linden said.
The third factor leading to greater affluence, Linden said, is that between 1965 and 1975 there was a sharp drop in births. That means fewer people competing for jobs, which should prop up salaries.
Between 1975 and 1980 the labor force grew by 2.7 percent, between 1980 and 1985 by 1.5 percent and between 1985 and 1990 by the same amount, he said.
Between 1990 and 1995 the labor force growth rate is projected to fall to 1.2 percent and continue that way through the 1990s, he said.
"Total personal income flowing to the nation's consumers will be growing a lot more quickly than the population, making for a sturdy increase in the living standards of the average American," Linden said.
by CNB