This is a graph of real Canadian median family incomes:
What do you think the relevant trend is for current policy?
But that's not how I see it: I see a structural break around 1995 or so. Median incomes fell during the 1980s and during the first part of the 1990s, and have been recovering since then. The recent positive trend has not completely reversed the ravages of the first part of the sample:
Lots of things changed around that time: public finances were gotten under control, inflation went from being high and variable to being low and stable, NAFTA came into force, and the tax system became more growth-friendly with the introduction of the GST. This is not an unanimous view - Miles Corak, for one, disagrees.
But I still think it's the correct way of looking at the data, and I had a counterfactual to illustrate why. Suppose that profile were inverted - would we say that the relevant trend was the positive growth rate over the entire sample, or the decline over the past 15 years of so? I was toying with the idea of writing a post to that effect, but then I saw the US median family income data released last week:
This is almost exactly a mirror image of the Canadian trajectory. A regression line through the entire sample shows a positive trend:
I don't think many people would accept the claim that the relevant trend for US policy-makers is one of sustained growth in median family incomes. I think more would agree that some sort of structural break occurred around 1999:
Here are the two series in one graph:
Which trends do you see? These ones?
Or these ones?
Whatever your choice, Canadian and US median incomes have different trends.