The History of American Income

by Meryl Baer ; Updated September 26, 2017
The Industrial Revolution improved living standards and wages.

The fall of the Roman Empire ushered in a thousand years of what today would be called a very long recession. Life was difficult, and basic living standards changed little for a millennium. Europe slowly came out of the Dark Ages and the Middle Ages, but the lives of most people did not improve greatly for hundreds of years. Per capita income was no more than $500. The Renaissance and Age of Discovery began a series of changes leading to the Industrial Revolution and the advanced standard of living the Western world enjoys today.

The 18th and Early 19th Century

Settlers moved across the continent, the majority engaging in farming. Most people lived in rural areas and small towns. Skilled workers staffed shops that supported the farmers: blacksmiths, innkeepers, teachers, silversmiths, salespeople and storekeepers, soldiers, carpenters. Cities were no more than large towns. After the Revolutionary War trade and traffic increased. The steamship and the railroad cut travel time immensely, and towns grew as commerce and manufacturing increased. By 1820 per capita income improved to $1,149. The steady rise in per capita income continues today.

The Industrial Revolution and the Rise of Cities

Increased manufacturing, mass production and the growth of cities characterized the latter half of the 19th century. These phenomena caused social upheaval, unrest and disorder. Men and women left farms and small villages to take jobs in the growing cities. Tight living quarters coupled with massive immigration sparked social turmoil. Immigrants supplanted locals in factories and mines. Factory jobs were labor-intensive and entailed long hours and low pay. During the century textile workers in Massachusetts, mine workers in Pennsylvania, and other workers throughout the country went on strike protesting wage cuts, working conditions and demanding union recognition. The strikes overwhelmingly failed. The Homestead Strike in the Pennsylvania steel mills in 1892 resulted in workers returning to work after three months. No union, no improved wages or working conditions. There was no steelworkers union for another 40 years. Two years later railroad workers protested wage cuts. Pullman porters made $70 a month, but most of the wages paid for uniforms and meals on the road. The men depended on tips to support their families. The Pullman strike failed; after two months workers returned to their jobs. Only 45 percent of American workers earned yearly wages above the poverty line of $500 by 1890.

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The Early 20th Century

The average American worker earned approximately $12.98 per week for 59 hours of work in 1900—$674.96 a year. Most workers did not earn that much money. There were no paid vacations, holidays or sick leave. A laborer worked and got paid, or did not work and did not get paid. During the decade 1910-1919 the average worker’s salary increased to $750 a year. There were always workers earning more, and those making a great deal less. Ziegfried girls—burlesque dancers in New York City—grossed $75 a week, a lot of money in those days. Immigrants and blacks brought home well below the average, accepting the least desirable employment opportunities. Average salaries increased to $1,236 a year during the prosperous decade of the 1920s.

The Depression and War Years

Unemployment spiked to 25 percent during the Depression years of the 1930s. Average salaries were $1,368, but millions were unemployed for at least a part of the decade. Government created services to help alleviate the poverty and severe unemployment. The minimum wage was introduced in 1938. It was 25 cents an hour. Salaries decreased slightly during the 1940s as the war years produced rationing, thousands of men went to war, and women went to work in the factories. As the war ended the men returned to begin jobs and careers and most women retired, married and began raising families as another prosperous era was about to begin.

Years of Prosperity and Affluence

Salaries rose quickly during the next few decades. The average salary was $2,992 during the 1950s; by the 1970s average salaries increased to $7,564, and $15,757 by the 1980s. Wages averaged $27,000 by 1999. Great disparity exists among workers on both sides of the earnings curve. The national minimum wage was raised to $7.25 per hour in 2009; four states set minimums slightly higher. The minimum wage equals approximately $15,000 a year. Corporate moguls and financial gurus make millions of dollars a year. Most Americans earn around the current national average of $45,831 (2009 figures). Education, age, location and experience are all important factors in today’s salary equation.

About the Author

Meryl Baer worked at a financial firm for 15 years, researching investments and writing newsletters and marketing materials. She also worked at two business schools as an English/business writing instructor, department head and placement director. Baer holds a master's degree in American studies from Pennsylvania State University and a master's degree in business administration from Robert Morris University.

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