The recession officially ended more than five years ago and ought to be a distant memory. These should be boom times with widespread optimism and robust spending. Yet consumers are gloomyand the economy is limping along at subpar levels of growth. It’s becoming clear why: While jobs have returned, incomes have not. The latest evidence is a study by the U.S. Conference of Mayors that highlights stark disparities between the jobs lost during the recession and jobs gained since. The types of jobs lost paid nearly $62,000 per year, on average. The jobs gained during the past six years pay only about $47,000. That 23% shortfall adds up to about $93 billion in lost wages per year — money not being spent because it vanished from the economy. That startling wage gap reflects the demise of well-paying jobs that don’t require a college degree, which may be the single-biggest challenge facing families trying to uphold a middle-class lifestyle. The two sectors that lost the most jobs during the recession are manufacturing, with average pay of about $63,000, and construction, at about $58,000. Employment in those two fields is still about 3 million workers short of where it was at the start of 2008. Employers, meanwhile, have hired more hotel and restaurant staff (average pay $21,000), healthcare workers ($47,000) and administrative professionals ($37,000). So while jobs have returned, many Americans are working for considerably less than they used to, as Aaron Task and I discuss in the video above. This is a pernicious problem that can’t be easily fixed by policy prescriptions or Federal Reserve maneuvers. The Fed has said repeatedly it sees “slack” in the economy, and the income shortfall could be a prime example of what the Fed means by slack. Yet even if the Fed continues to hold interest rates at super-low levels, it’s not clear that would help boost pay or living standards for ordinary people. Workers who lose jobs in one sector don’t necessarily go to work in another. It’s not as if there are a lot of former assembly-line workers now manning the registers in stores or waiting tables. Many workers who lose decent-paying jobs basically wait for those jobs to return, drawing unemployment insurance as long as they can and then pulling out of the labor force. This could help explain why the labor-force participation rate — the portion of adult Americans either working or looking for work — has hit the lowest levels since the 1970s. Many of today’s economic dropouts are men, because the two most devastated sectors — construction and manufacturing — are both male-dominated. Hiring is picking up in those sectors, but total employment might never reach the levels it was at before the recession. The process of adjusting to an economy with fewer high-paying jobs is a long one that could permanently lower living standards for some families. Many workers with skills no longer in demand eventually find something more productive to do. That’s how the economy revives itself amid financial turmoil and technological disruption. The process of adjustment, however, can be painful and even cruel. And when the available jobs pay considerably less than what you earned a few years ago, it’s hard to have much confidence in a so-called recovery. Rick Newman
And . . . Sounding a somber note even as the economic outlook in the United States brightens, the Federal Reserve’s No. 2 official acknowledged on Monday that global growth had been “disappointing” and warned of fundamental headwinds that might temper future gains. The official, Stanley Fischer, who took over as vice chairman of the Fed in June, noted that although the weak recovery might simply be fallout from the financial crisis and the recession, “it is also possible that the underperformance reflects a more structural, longer-term shift in the global economy.” In a speech delivered on Monday in Stockholm at a conference organized by the Swedish Ministry of Finance, Mr. Fischer also conceded that economists and policy makers had been repeatedly disappointed as the expected level of growth failed to materialize. “Year after year, we have had to explain from midyear on why the global growth rate has been lower than predicted as little as two quarters back,” he said. “This slowing is broad-based, with performance in emerging Asia, importantly China, stepping down sharply from the postcrisis surge, to rates significantly below the average pace in the decade before the crisis.” Mr. Fischer said it was difficult to determine how much of the slackness was because of cyclical factors and how much represented a more fundamental, structural change in advanced economies. But he warned of three pronounced headwinds that have held back growth in the United States: a still anemic housing market, cuts in federal government spending and weaker global growth that reduced demand for American exports. more . . .
Without being too political, I'm not sure there are a lot of easy answers to fix the problems we're experiencing in the US. I really think 1940-2000 (roughly) was an unusual economic period for this country and we "were in the right place, at the right time" so to speak. There is likely plenty of blame to go around, with both major parties doing their part in damaging our economy.
The recession in the UK didn't end, it hit a low and moved up off this low, but we are still and will be for some years in a long term downtrend, higher low and lower low expected, not talking market values, but in real terms. Average wage has decreased recently in the UK, first time that's happened in 30years.
For a man who writes so much both Newman and you DbPheonix don't know crap. JOB NUMBERS ARE FAKE, those who gave up search are not counted, and their numbers are large and growing. Everyone and their grandma knows this by now. Make believe economy of FED pump the market is simply not reaching the average man, This article like so many are just collection of excuses for Government and FED. This is one of those please hold on folks, please hold on, its gonna get better. Mainstream Articles disgust me,
More like 1940-1970, which would represent the tail end of the effects of the US industrial revolution, which began around 1870. Once WWII was over and our output returned to normal, there really was little to drive our industrial engine, particularly when manufacturing moved offshore (there was of course the rebuilding of Europe, our war engine, and the space program). It's a long story, but, in brief, we have a lot more people and a lot fewer ways for them to earn a living. This leads to a lot more despair, a lot more resentment, a lot more bitterness. This can be seen not only in how our government has more or less stopped functioning but also in the extent to which we turn on each other. All of this can be fixed, but whether or not we can survive until we get to that point remains to be seen. Aside from everything else, the planet is not just sitting by, drumming its fingers, waiting for us to grow up.
I find this graph missing the bigger picture...it seems we entered some sort of golden age of technology right around 1980. It makes sense that productivity would continue to rise sharply and there would be an unknown effect on workers compensation during such a technological transition. Technology cuts costs in many ways and it would make sense that would include labor costs as well. One could also speculate that if it wasn't for technology the productivity line could of gone flat starting in 1980 to the present. In the 1970's debt and inflation got out of control and changed our economy significantly...eventually the tech boom bailed us out! It's still bailing us out... but for how long? With our government and it's people so backed up in debt... maybe not very long.
This is a pretty good movie about what is happening by someone that might understand the subject. Inequality for All