Extra people being born "steal" a lot of the growth, but they create a lot of it too. The GDP per capita figure, according to the Wikipedia article linked to your graphic, grew by only 1.35% per year over the same period.
That's something like 1.2% GDP growth per household, while median household income is going up at 0.5%.
On one hand, there might be less dependents per household, but on the other hand, there's a lot more women working. Despite all the housewives burning their bras, forgoing large families, putting their kids in childcare and getting a job, household income still hasn't risen.
Maybe there's a lot of low-payed single women, dragging the median down. That doesn't convince me that everything is OK though.
Let's look at incomes of income-earning over 15s:
Between 1960 and 2004, the salaries of white males went up 0.068% a year. White women's salaries grew at 2%, probably because they were working much greater hours. Black men did well, and black women did even better. But overall, it was a 0.74% per year increase. http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...
People are better off, but mostly because the women are working longer hours, they don't have kids. Soon, they will also be working more years, as the boomer realize they can't retire. It's a lot better if you're black, but not because of productivity growth trickling down to median workers.
I could track down the numbers, to find how many workers over 15 there are (or maybe how many people there are over 15, or between 15 and 65), but I just don't think productivity growth is <1%, like median income growth. If productivity growth is <1%, then we have another problem altogether.
OK, here we go, real growth by percentile (1960 to 2007):
Arguably (as pg says), this is a good thing, because risk-takers and innovators are being rewarded, driving growth. But it's not as simple as high inequality = high growth, and that doesn't explain why inequality is growing. pg says it's because corporate structures are becoming more efficient, cutting out deadwood managers. Whatever. If this is the case, why isn't GDP growing at a higher rate than the 60s? Has our society simply reached the point where technology no longer drives growth? That's scarier than greedy executives, compliant governments, self-serving boards of directors looting society; but I don't think it's happened yet.
China had huge inequality in the from 1750 to 1950, and stagnent growth, low inequality and moderate growth from 1950 to 1990 (with a few hiccups, notably the Great Leap Forward, and Cultural Revolution, but communism worked a lot better than their previous system of capitalism + corrupt feudalism), then high inequality and high growth from 1990. While inequality might be a requirement for high growth, it's not always a good sign. It can just mean that the rich and powerful are screwing the poor, which makes it harder for a poor innovator to take their idea from rags to riches.
Since 1967, US population increased from 198,712,056 to 310,000,000, a growth of about 1% a year.
Per person income has risen about 1.2%/yr.
Per person GDP has risen about 1.6% over per person income.
BTW: nobody stole your growth. You get what you agree to in exchange for your efforts. If you work the same menial job year after year, don't expect much income growth. If you take risks and innovate and work hard, you can see huge income growth. This, of course, is the purpose of this discussion board: to take opportunities and profit from them. A lot of people are content with not much income growth; they're quite comfortable where they are. Those of us frequenting ycombinator.com are interested in doing a lot better than "comfortable where we are", and the numbers show there is a lot of money to be made by taking the marvelous opportunities this nation affords us.
>> You get what you agree to in exchange for your efforts. If you work the same menial job year after year, don't expect much income growth.
This just isn't true. A menial worker makes a little more than they would have in 1960, and a lot more than they would have in 1920. Innovation trickles down. Rich bankers riding a bubble on the way up, and bailouts on the way down does not.
"The system" isn't totally broken, but it's a little rigged. It always has been. The more corrupt the system is, the more certain people get paid for not innovating, taking risks, and working hard; which doesn't create a lot of real growth.
I'd say a lot of the corrupt growth is the result of bubbles at the moment - making short term gains at the cost of long-term gains. Tactics include dodgy financialization, creative accounting, ripping off customers at the cost of goodwill, mistreating employees then being screwed when talented staff abandon the company, outsourcing cost centers then getting hit by bait-and-switch prices (Chinese and Indian wages will rise), and so on.
People who are already rich benefit (due to good dividends, higher stock prices, and performance bonuses), but will lose in the long run (unless they get bailed out). Nobody complained when the rich were making money, because they though the benefits would trickle down; but now that a lot of the benefits have proved to be illusionary, people are pissed.
Name one person (not a left-wing nut-job) who bagged the Enron execs when everyone thought they were actually making money ;)
My point is, I don't see any good reason for relative difference between the rich and poor to change over time (past a certain point, say, what it was in the 60s). If it does, it might be because something is broken.
Since 1967, real GDP of the USA rose from 4T to 13T, a 320% increase (2005 dollars), or a growth of about 2.8% a year. (http://www.data360.org/dataset.aspx?Data_Set_Id=354)
This would be my sign:
US household income growth: 0.5% a year since the 60s.
US GDP growth: 2.8% a year since the 60s.
Who is stealing our growth?