American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
February 2010

The Decline and Fall of the Nation’s Peak Earners


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1. Hot Trends 

The Decline and Fall
of the Nation’s Peak Earners

She gets it: Elizabeth Warren, Harvard Law professor and chair of the Congressional Oversight Panel on TARP, is one of the few who knows what is happening to the middle class. On The Daily Show a few weeks ago she implored the politicians–notably the Senate–to reform the financial system to save the nation’s backbone. “This is America’s middle class,” she said. “We’ve hacked at it and chipped at it and pulled at it for thirty years…and now there’s no more to do. Either we fix this problem going forward or the game really is over.”

Thirty years. That’s the key. Our current woes have been a long time in coming, and shortening the unemployment lines and stabilizing 401(k) balances will not bring back our former glory. The nation’s peak earners–the backbone of the middle class–are mortally wounded. The current recession has made things worse for them, but it is not the cause of their wounds. Today’s peak earners–people aged 45 to 54–cannot support their families like peak earners once did. Their weakness is casting a pall over the entire economy, one that will not lift anytime soon because few recognize the problem and those who do–such as Elizabeth Warren–are helpless in the face of the nation’s political paralysis.

Spoiler alert. If you read the next few paragraphs, you will never be able to say you did not know. This is what has happened to the backbone of America.

Household income is down. Household income follows a trajectory, starting low among young adults, rising as people gain experience in their career, peaking in the 45-to-54 age group, then falling as people begin to retire. Householders aged 45 to 54 are still the nation’s peak earners, but they stand atop a much smaller hill than they once did. Here is the thirty-year trend in the median income of householders aged 45 to 54 (in 2008 dollars):

2008  $64,349
1998  $71,429
1988  $66,830
1978  $64,152

That’s right. The median household income of today’s peak earners is only $197 more than the median income of the same age group in 1978. Their median income is $2,481 less than the income of the same age group in 1988. It is $7,080 less than the median income of the same age group in 1998. The stagnation and decline of the household incomes of peak earners has occurred despite growing numbers of working women. In 1978, only 57 percent of women aged 45 to 54 were in the labor force. Today, 76 percent are working.

Men’s income has plummeted. Now take a look at what has happened to men in their peak earning years. Here are the median income statistics for men aged 45 to 54 who work full-time (in 2008 dollars):

2008  $53,331
1998  $57,434
1988  $59,515
1978  $61,698

Today’s peak earners make $8,367 less than men of the same age in 1978. To make the comparison even more dismal, thirty years ago only 20 percent of men aged 45 to 54 had a college degree. Today, a larger 29 percent are college educated.

Is the game really over, as Elizabeth Warren fears? She argues that the post-World War II financial system that nurtured the middle class has been dismantled by deregulation over the past three decades. The Great Recession has only exacerbated an already downward trend. By reforming the system, she argues that we might be able to stem the decline. What is stopping reform? Politicians who are beholden to the financial services industry may be the least of our problems. An even bigger obstacle may be the attitude of peak earners themselves, most being unaware of how poorly they compare to peak earners a generation ago. According to the 2008 General Social Survey, when 45-to-54-year-olds are asked whether their standard of living is better than their parents was at the same age, the 62 percent majority says yes.

By Cheryl Russell, editorial director, New Strategist Publications. For more about the incomes and spending of Americans, see the all new editions of American Incomes, Household Spending, Best Customers, and the Who’s Buying series. If you have questions or comments about the above editorial, e-mail New Strategist at


Biggest spenders on tuition at vocational and technical colleges: households with incomes of $100,000 or more.

Source: Best Customers: The Demographics of Consumer Demand

2. Q & A

What’s Wrong with the Senate?

Everyone knows that the demographics of the nation’s 100 senators do not reflect the multicultural population of the United States. There is only one black senator, for example, although the U.S. population is 14 percent black.

But the skewed demographics of senators are the least of the Senate’s problems. If you wonder why the Senate is so dysfunctional, thank the framers of the Constitution. From our vantage point, they appear to have made a big mistake when they decided that each state would have two Senators, giving equal power to states large and small. Two-hundred and some years later, the problem they created is getting worse.

When the Senate was established by Article I of the Constitution in 1787, the nation was much smaller–a mere 3.9 million people. A senator from the largest state represented only 12 times as many people as a senator from the smallest state. Today, the population is 309 million. A senator from California, the largest state, represents 69 times as many people as a senator from Wyoming, the smallest state (18,378,333 versus 266,334). Over the years, the Senate has become increasingly less representative of the American people.

The 51 percent majority of the population lives in just nine states: California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Michigan, and Georgia. Those nine states account for 55 percent of the urban population, 63 percent of Asians, 53 percent of blacks, and 71 percent of Hispanics. Only 18 senators are fighting for them.

By Cheryl Russell, editorial director, New Strategist Publications. If you have any questions or comments about the above Q & A, e-mail New Strategist at


Householders aged 65 to 74 spend twice as much as the average household on vitamins.

Source: Household Spending: Who Spends How Much on What

3. Cool Research Links

To keep up-to-date on ever-changing demographics and lifestyles, check out these useful links.

Student Debt
Everyone knows that many, if not most, of today’s college students graduate with debt. According to latest annual report from the Project on Student Debt, the amount owed by recent college graduates is growing. For the class of 2008, those with loans owed an average of $23,200 upon graduation, up from $18,650 in 2004. The Project on Student Debt is an initiative of The Institute for College Access & Success, an independent, nonprofit organization whose supporters include The Pew Charitable Trusts and the Bill and Melinda Gates Foundation. The report shows student debt levels by state and by institution.

Newspapers vs. the Internet
At this link you can access a brief, interesting analysis of household spending on newspapers and magazines versus the Internet over the past decade. Based on data from the 1999 and 2008 Consumer Expenditure Surveys, the results show plummeting spending on print, falling from $97 in 1999 to $61 in 2008–and that is without any adjustment for inflation. The amount spent on the Internet climbed from $49 to $222 during those years. The trends are shown by age.

Every year the Bureau of Labor Statistics collects data on who volunteers. The latest numbers are available at this link. They show fewer people willing to volunteer as times get tough. In 2009, 27 percent of the population aged 16 or older had volunteered in the past 12 months, down from 29 percent in 2005. Declines have occurred among both men and women and in everyage group. Volunteering still peaks among 35-to-44-year-olds (many of them volunteering for activities involving their children), but the percentage fell from 34 to 31 percent between 2005 and 2009.


Change in the median income of men living in the Midwest, 1980 to 2008 (in 2008 dollars): $76.

Source: American Incomes

4. Find Out How American Consumers Spend Their Money

Consumers are slashing their spending, making it vital to get the answers to Who buys? What do they buy? How much do they spend? And, most important, what will they cut as their incomes fall and expenses rise?

Now you can get accurate and reliable answers to these questions from the following just-published resources from New Strategist. Much of the data in New Strategist’s book you cannot get anywhere else–including online!

  • Starting a new business? Repositioning your products? The new 14th edition of the annually updated Household Spending: Who Spends How Much on What, is your exclusive guide to dollar-for-dollar answers to who is buying hundreds of products and services ranging from laundry detergent and phone cards to motorcycles, wine, and restaurant meals.
  • Best Customers: Demographics of Consumer Demand, 6th ed., is a unique guide to how changing demographics are reshaping the consumer marketplace. Find out who spends the most and who controls market share–often surprisingly different–for over 300 products and services.
  • The 14 volumes in the Who’s Buying Series, which can be purchased individually or as a set, give you the big picture about consumer spending by age, income, household type, race, Hispanic origin, region of residence, and education. Each volume focuses on an individual product category, ranging from apparel and beverages to restaurants, consumer electronics, and travel.
  • The new 7th edition of American Incomes is your one-stop resource for understanding the economic status of Americans. The United States is experiencing the worst economic downturn in a generation. Incomes are falling, poverty is rising, and net worth has declined. As the country adjusts to the new economic reality, it is vital to stay on top of these socioeconomic trends

For your convenience, New Strategist’s titles are available as searchable single- and multiple-user pdfs that are linked to spreadsheets of all the data tables in each book so you can do your own analysis and create PowerPoint presentations.


Percentage of wives who earn more than their husbands: 27%.

Source: American Incomes