What the “Mad Men” Economy Can Teach Us About Ours

On last Sunday’s episode of Mad Men, Peggy (played by Elisabeth Moss) got a raise—a big one. Peggy, who clawed her way out of the secretarial pool to become copy chief for the Sterling Cooper advertising agency, was granted a pay increase of an additional $100 per week by her new boss, Lou (Allan Harvey).

There’s no question that 100 1969 dollars—640-something bucks today—is a hefty chunk of change. (I used this inflation calculator.) When last we heard, in an episode set two years before, Peggy was making an annual salary of $19,000, or about $134,000 in today’s money. So if we assume she hasn’t received any pay hikes other than cost-of-living adjustments since then, her raise amounted to about 25 percent.

That’s nothing to sneeze at. But what’s been fascinating to observe is the way that viewers at home have been discussing her raise. Fans of the show are treating the idea of a substantial pay raise as if it were a premise out of science fiction.

Reporter Tamara Gignac tweeted earlier this week, “Last night on #MadMen, Peggy got a $100/week raise in 1969. My immediate thought? So very jealous. #2014 #lifeofajournalist.” Other fans expressed similar sentiments.

Then there was this discussion on a Mad Men forum on Reddit:

keystone1221: I could go for an extra $100 per week in 2014 dollars

Alect0: Yea I saw the pay rise scene and thought, an extra $100 a week was my latest pay rise and it’s 2014! 🙁 I mean any payrise is good but I find I have to find a new job to jump significantly up in salary!

Other commenters in the Reddit thread speculated that the Mad Men creators had forgotten to do the math on inflation, or that Lou had overstepped his bounds in offering the raise and will get into trouble with his bosses, the partners, for doing so. But, this is a show tends to handle such details carefully (it has a full-time historical researcher on staff). And as someone else points out in the thread, in a later scene Peggy (and, therefore, the viewer) is informed that the partners had approved the raise.

It’s poignant to see the feelings of longing, envy, and disbelief viewers express at Peggy’s good fortune. It’s also disconcerting to see the lengths some of them go to try to make the case that the size of her raise was a mistake by the writers or a misstep by her boss. While a pay bump of 25 percent in real dollar terms are rare in any era, only in the context of our current economy does it read like a fantastical scenario.

The sad fact is that for decades, wages have been flat or declining for the vast majority of workers. Between 1979 and 2012, the bottom 90 percent of wage earners earned a real wage increase amounting to only a little over 0.5 percent per year. The top one percent, however, reaped gains that were nine times as large.

A comparison of the American economy today with the American economy of the Mad Men era is particularly instructive. According to the Census Bureau’s Current Population Survey, between 2003 and 2012 (the most recent year for which figures are available), median earnings for full-time, year-round workers declined by 2.7 percent for men and 1.5 percent for women (I am basing my calculations on Table P-38). Figures from the 1960s tell a dramatically different story. Between 1960 and 1969, the years during which Mad Men is set, real median earnings—again, for full-time, year-round workers—increased by a staggering 29 percent for men and 25 percent for women.

What the hell happened? One thing, clearly, is that while the 1960s was a period of unusually fast economic growth, during much of our past decade the economy has been trapped in a period of recession and slow growth—what economists are beginning to refer to as secular stagnation. But even during the 1980s and 1990s, when for the most part the economy was not as crappy as it is now, most workers still were not reaping the greater economy’s benefits in the way they had a few decades before in the post-war era. Worker productivity was increasing dramatically, but wages failed to keep up. This chart and report from Lawrence Mishel and the Economic Policy Institute make the growing disconnect between wages and productivity abundantly clear:

If workers are producing more, why doesn’t compensation reflect this, as it used to? Why have median compensation and productivity diverged so dramatically since the 1970s?

Mishel identified three major culprits: inequality of wages and compensation; the shift of income from labor to capital (which weakens labor’s bargaining position); and trade factors (the faster price growth of stuff that workers buy relative to what they produce). He holds that the first factor, wage and compensation inequality, is the most important of the three. But as far as what explains the rising inequality between wages and compensation—well, that in itself is a complicated story that involves a host of political and economic factors. The decline of organized labor, the financialization of the economy, and steep cuts to top marginal tax rates are among the most important ones.

But in terms of the big picture, the story this data tells us is simple. In the post-war period, the pay of the median American worker was closely tied to the productivity of the overall economy. Rather than being siphoned off by those at the top, gains were far more equitably shared. In that context, a one-time 25 percent pay raise, while unusual, is hardly bizarre. Ordinary workers who showed up and did their job were seeing their average pay rise by that much over a decade. Beginning in the 1970s, all of that started to change.

One criticism that’s been leveled at Mad Men in the past is that it invites us to congratulate ourselves at how far we’ve come as a society: look at how much less sexist we are today, and also, too, how much less we smoke! Good job, America! But as viewer reactions to this week’s episode remind us, the Mad Men era had one important thing we don’t: an economy in which working people were far more likely to prosper.

We need to create an America where economic gains are fairly shared by all. Rising wages for the average worker shouldn’t be viewed as a quaint relic from a time when men wore hats.