Does Growth Equal Progress? The Myth of GDP
GDP measures economic growth, but is it an accurate measure of progress?
While GDP has been steadily increasing, indicating a growing economy, other metrics of progress show a very different picture. Demos’ report, Beyond GDP, makes the case for why GDP is an incomplete measure and explains in depth what is missing from GDP that prevents it from measuring progress. Demos is also releasing a set of infographics that charts important social measures against GDP growth. One chart shows how inequality is rising even as GDP is rising, which shows that fewer people are benefitting from the economic growth.
Personal Income Lags Behind Growth
Over the last 30 years, personal income lagged far behind GDP growth, and the gap between them grew steadily. GDP per capita—the amount of income potentially available for every person—more than doubled, while actual income gains were much smaller.
The Economy Grows but Households Work More
Family income has grown modestly in recent
decades, but mainly due to working more, not higher wages—an average of roughly 700 more annual work hours per household in 2000 compared to 1975, and still roughly 500 more in 2009, even with the financial crisis and downturn of that period. This contrasts sharply with the previous pattern from the late nineteenth century through the mid-twentieth century, as growth and productivity gains were channeled into steadily reducing working hours.
The Economy Doubled but Pension Coverage Shrank
Across the last thirty years of steady GDP growth, essentially half of the working age population had no pension coverage beyond Social Security. After a steep decline in the 2000s, the pension coverage rate was approximately 45 percent in 2010, the lowest level since 1988 and 6 percent lower than in 1980.
Growing Our Way into Bankruptcy
Growth financed by rising debt, not middle class earnings (which have been relatively flat), may be the defining trend of the economy that ran aground in 2008.
A Growing Economy but No Progress on Poverty