Census Bureau data released last week underlined the difficulties for young workers, showing that median income for families with at least one parent age 25 to 34 fell $3,009 from 2000 to 2005, sliding to $48,405, a 5.9 percent drop, after having jumped 12 percent in the late 1990’s.
The good times rolled in the 1990s. But globalization and the pop of the dot com boom have been hard for many American workers.
Debts for college graduates have soared even as starting salaries have dropped.
In 2004, 50 percent of graduating seniors borrowed some money for college, with their debt load averaging $19,000, Dr. Rouse said. That was a sharp increase from 1993, when 35 percent of seniors borrowed for college and their debt averaged $12,500, in today’s dollars.
Even though the economy has grown strongly in recent years, wages for young workers, especially college graduates, have been depressed by several factors, including the end of the high-tech boom and the trend of sending jobs overseas. From 2001 to 2005, entry-level wages for male college graduates fell by 7.3 percent, to $19.72 an hour, while wages for female graduates declined 3.5 percent, to $17.08, according to the Economic Policy Institute, a liberal research group.
What I wonder: Have students responded to higher college tuition and lower starting salaries by choosing majors which provide more and better job skills? If they have shifted toward better paying training then the drop in college graduate wages understates the decline in demand for people with college degrees.
Health care coverage is down for jobs college graduates take.
In a steep drop over a short time, 64 percent of college graduates received health coverage in entry-level jobs in 2005, down from 71 percent five years earlier.
College has become too expensive. Time to make lectures available on DVDs and automate education.
John Lonski, chief economist at Moody's Investors Service, points to the gross domestic product report, the broadest measure of the economy. Wage and salary costs of nonfinancial corporations were up 9.7 percent from a year ago, according to the GDP report released Wednesday. That's the biggest increase since the fourth quarter of 1984. Total compensation grew by 9.3 percent year over year, also the steepest increase since 1984's fourth quarter.
But this increase in demand is coming years into an economic recovery which probably does not have a lot of time left to run.
Among the most exposed are those who bought into one of the great fads in mortgage lending in recent years -- adjustable rates. Next year, $1 trillion worth of adjustable-rate mortgages -- about 11 percent of all outstanding mortgage debt -- is scheduled to readjust to a higher interest rate for the first time, according to LoanPerformance, a research company. This will come after more than $400 billion of readjustments this year. That means millions of homeowners will either have to refinance or shoulder an increase of perhaps 25 percent in their monthly payments.
The higher payments for mortgages will cut demand for a wide variety of goods and services. The political fallout of wage trends, higher interest rates, and higher fuel costs works against Republican candidates.
"Republicans are worried," added R. Bruce Josten, an executive vice president of the U.S. Chamber of Commerce, a significant backer of pro-business -- and therefore predominantly Republican -- congressional candidates. "You have a portion of the middle class that doesn't believe it's benefiting from good economic news, and, in fact, it's not. . . . All the blame doesn't go to Congress, but voters are going to take it out on Congress anyway."
The Republicans should have hiked the minimum wage and deported all the illegal aliens. Their lower class voters would be more inclined to vote Republican.
|Share |||By Randall Parker at 2006 September 05 09:30 PM Economics Labor|