Wednesday, September 24, 2014

The Recovery That Left Out Almost Everybody

The Recovery That Left Out Almost Everybody - WSJ -Yahoo Finance

According to a Pew Research
Center report released this month, only 21% rate current conditions as
excellent or good, versus 79% fair or poor. Only 33% say that jobs are
readily available in their communities; when asked about good jobs, that
figure falls to 26%. Only 22% believe the economy will be better a year
from now; 22% think it will be worse, while fully 54% think it will be
the same.

More than five years after the
official end of the recession, the Public Religion Research Institute
finds, only 21% of Americans believe the recession has ended.
Two recent reports help explain
the disconnect between the official jobs numbers and the economic
experience of most Americans. Every fall, the U.S. Commerce Department
issues a detailed analysis of trends in income, poverty and health
insurance. Although economists have some technical quibbles with the
Commerce data, the broad trends are unmistakable.
This year's report found that
median household income was $51,939 in 2013, 8% lower than in 2007, the
last year before the recession. Households in the middle of the income
distribution earned about $4,500 less last year than they had six years
earlier. No wonder 56% of Americans told the Pew Research Center that
their incomes were falling behind the cost of living.
The Federal Reserve's triennial
Survey of Consumer Finances confirms these findings. Between 2010 and
2013, the Fed reports, median family income fell by 5%, even though
average family income rose by 4%. This is, note the authors, "consistent
with increasing income concentration during this period." Only families
in the top 10%, with annual incomes averaging nearly $400,000, saw
gains during these three years. Families headed by college graduates
eked out a gain of 1%, while those with a high-school diploma or less
saw declines of about 7%. Those in the middle—with some postsecondary
education—did the worst: From 2010 to 2013, their annual incomes
declined to less than $41,000 from $46,000—an 11% plunge. Families
headed by workers under age 35 have done especially badly—even when the
heads of those young families have college degrees. The economic
struggles of the millennials are more than anecdotal.
What's going on? The Census
report offers a clue. The median earnings for Americans working
full-time year round haven't changed much since 2007. But more than five
years into the recovery, there are fewer such workers than before the
recession. In 2007, 108.6 million Americans were working full time,
year-round; in 2013 only 105.9 million were doing so. Although jobs are
being created, too many of them are part-time to maintain growth in
household incomes.
This is not by choice. About
the same number of Americans were employed last month as in December
2007. But during that period, according to the Bureau of Labor
Statistics, the number of Americans working part time who wanted a
full-time job jumped to 7.2 million from 4.6 million. Not only are
hourly wages stagnating; America's families want more hours of work than
the economy is providing.
Although the Great Recession
was the most severe since World War II, in many ways it underscored
trends that have been under way for decades. Adjusted for inflation,
median earnings of men working full time, year-round are no higher than
they were in 1980. Median household income is almost $5,000 lower than
it was in 1999, and no higher than it was it 1989.
The modest income increases of
the past two generations have occurred because women have surged into
the paid workforce—and because their real wages have grown at a compound
annual rate of 0.8%. But both these trends peaked in 2000. Not
surprisingly, the years after the 2001 recession witnessed the only
postwar recovery in which median incomes failed to regain their previous

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