Exploring US Economic Power From 1900 to Present
Written by ThatGuy
When was the United States of America at its greatest?
This question seems to be at the root of much political discourse. Therefore, we owe it to ourselves to ask what it means to make the US great again.
To come up with an answer, we first need to define what a ‘good economy’ is. Everyone has a different opinion, but are there common denominators, though, like consumer spending or business expenditures? Is it the price of your house or rent?
Does government spending add to or detract from the economy? Stick with me. We’ll examine some of the data linked to these questions and you can draw your own conclusions.
Let’s start with one of the most universally accepted periods of economic strength:
1965
- There were 4 billionaires, the richest of which was J. Paul Getty, valued at 1.2 billion.
- All billionaires combined owned less than 1% share of the GDP.
- Factory workers made ~$2.65 per hour, about $5,300 a year. Minimum wage was $1.25.
- New houses were $20,000, New cars about $2,600 and a gallon of gas was $0.31. A gallon of milk was $1.00.
Economic Summary:
Frugal factory workers could buy their houses outright with ~5 years of savings. A car cost roughly 6 months of earnings. Unions were strong. GI bills funded housing and education for returning WWII soldiers and their families.
The top tax rate for individuals was 70% while the corporate tax rate was 48%. The highest tax rate on the highest earners was 70%.
These taxation levels were even down from the peak of 94% in 1945, but tax rates on the highest earners remained at 92% until 1963!
Immigration:
The Bracero Era between 1940-1954 existed because we needed temporary labor. Essentially, undocumented workers came into the country, worked for the season and then left. Borders were porous and immigration came primarily from Mexico.
Yet, in 1954, Operation Wetback, (yeah really) shifted the border security to make border transit more difficult. As a result, temporary workers ended up staying year-round since it would be harder to come back to work the next season.
Tariffs:
Average tariffs were between 7-8%. Textiles ranged from 25% to 50%, steel was 7.5% to 12.5% and cars were 7%. There was a retaliatory tariff on trucks of 25% because of a dispute over poultry; the “chicken tax” as it has been called.
Now, let’s look at an earlier time:
Early 1900’s
- Carnagie, Rockefeller, Ford and Vanderbilt each attained “billionaire” status when their wealth is adjusted for inflation.
- Carnagie and Rockefeller alone owned 4.1% of the country’s entire GDP.
- The average worker made $12.98 per week and worked 59 hours. This equated to $675 a year.
- Houses were between $1000 in rural areas and $5000 in a city. It took between 2 and 5 years of savings to buy a home. A draft horse was $100-$200 while a basic wagon was $30-75. A milk cow cost $20-$50 and a gallon of milk was $0.30.
Economic Summary:
Indeed the overall cost of goods was high compared to wages, leading to a very small middle class. The top 1% owned 40% of the wealth in the United States. The top 10% owned 70% of the wealth. Unions were weak or non-existent.
From 1900-1913 the tax rate was 1% on corporations. There was no tax at all on individuals. Yep, you read that correctly, no tax on individuals.
From 1913 to 1917 the top individual tax rate increased to 7% and rose to 67% in 1917. In 1917 the top corporate tax rate was 6%.
Immigration:
“Give me your tired, your poor, your huddled masses yearning to breathe free.”
– Emma Lazarus
Most immigrants came from Europe. The border between Mexico and the United States was porous and vague. Workers came, sold their services as vaqueros or worked on farms. When the season was over, they went home to Mexico.
Tariffs:
Tariffs were at their highest, averaging 40%. Textiles ranged from 50-60% while steel and iron were between 30-40%. This significantly contributed to Carnagie’s wealth, as he nearly had a monopoly in steel. Since it was too expensive for companies to get steel products from overseas, he benefited from a lack of competition.
Jumping ahead:
2023
- 740-760 billionaires in the US.
- They owned roughly 19% of the GDP.
- The average worker made about $66,500.
- The median house price was $419,000. A new car was $47,000, Gas was $3.50. A gallon of milk on average was $4.30.
Economic Summary:
It cost ~6.5 years’ worth of income to buy a home. Cars became stiflingly expensive, rising to nearly 9 months’ salary to afford. Inflation on food and consumables grew at the highest rates in 40 years. The top half of the population held 97% of the wealth while the bottom half held only 3%. It took a household income of $234,000 per year to be considered among the top 10% of earners.
In terms of taxes, top earners paid 37% tax and corporations paid 21%.
Immigration:
Political and economic uncertainty in Central and South America drove asylum seekers north in numbers unheard of in close to 20 years. An estimated 3 million individuals immigrated to the US illegally and another million were seeking asylum legally in 2023.
Tariffs:
The effective tariff rate at 2.3% and specific sectors like textiles at 14%, steel at 25%, cars at 2.5% and light trucks, the “chicken tax” at 25%.
I’ve got one more time period for you:
1995
- 135-150 billionaires
- Combined value of 5-6% of GDP
- Average factory workers made $26,000 a year.
- Median home price was $114,000. It took roughly 4.5 years of income to buy a house in cash. A gallon of gas cost $1.23. A gallon of milk cost $2.70. The average car was ~$20,000.
Summary:
Immigration was a topic of discussion and border enforcement increased. There were about million illegal immigrants in our country.
Taxes: top earners paid 39% tax rates and corporate tax rates maxed out at 35%. During these years corporate tax rates were tiered so lower earning companies were taxed at 15%.
The effective rate of tariffs was 2.86%, and the tariff on textiles was 1.3%. Steel was 0% to 5% depending on product, cars varied by importer from 0% to 10% and light trucks still had the “chicken tax” of 25%.
Conclusion:
With the advancement of technology, robotics and outstanding population growth, it’ll always be hard to compare economic strength over time. But, in a way, that makes the point…
When was America at it’s greatest?
Can this question even be answered? Or does it solely depend on how you perceive your quality of life? Are there certain thing that prove to be empirically true throughout every era in history?
I’d love to hear your thoughts!
References:
https://www.indexmundi.com/facts/united-states/tariff-rate
https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs
https://www.macrotrends.net/global-metrics/countries/USA/united–states/tariff-rates
https://www.everycrsreport.com/files/2025-01-31_R48380_f91ce2c42480f0bd780478a4900a6efd635aabbe.html
https://apnews.com/article/8c21caad30378a28a0798069585d5d9b
https://www.wsj.com/economy/trade/how-global-trade-could-survive-trumps-tariffs-24d74d08
Immigration:
https://www.cbp.gov/newsroom/national-media-release/cbp-releases-february-2025-monthly-update
https://usafacts.org/articles/what-can-the-data-tell-us-about-unauthorized-immigration/
https://pmc.ncbi.nlm.nih.gov/articles/PMC9017686/
https://www.britannica.com/event/Bracero-Program
https://time.com/4048840/us-immigration-policy/
Tax Rates:
https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/
https://www.britannica.com/procon/corporate-tax-rate-debate/Federal-Corporate-Income-Tax-Rates
https://www.everycrsreport.com/reports/RL30469.html
https://www.congressionalresearch.com/RL30469/document.php
https://www.milefoot.com/math/businessmath/taxes/fit.htm
https://www.fxempire.com/macro/united-states/corporate-tax-rate
https://www.congress.gov/crs_external_products/R/HTML/R42111.web.html
Wealth:
http://www.federalreserve.gov/econresdata/scf/scfindex.htm
https://wid.world/country/usa/
https://www.nber.org/papers/w20625
http://www.irs.gov/uac/SOI-Tax-Stats-Domestic-Private-Foundation-and-Charitable-Trust-Statistics
https://www.nasdaq.com/articles/heres-minimum-salary-required-be-considered-top-1-2025
https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html
https://fred.stlouisfed.org/series/MEHOINUSA672N
https://www.epi.org/publication/income-inequality-in-the-us/
https://artofthinkingsmart.com/the-richest-people-of-all-time/
https://www.toptenz.net/richest-people-whove-ever-lived.php
https://countryeconomy.com/gdp/usa?year=1965
https://www.fsa.usda.gov/Internet/FSA_File/mpsp04.pdf
https://www.usinflationcalculator.com/inflation/milk-prices-adjusted-for-inflation/
https://fred.stlouisfed.org/series/APU0000709112
https://eml.berkeley.edu/~saez/
https://libraryguides.missouri.edu/pricesandwages/1900-1909
https://www.jstor.org/stable/3742348
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