2014 September 04 Thursday
2007 Incomes: The Good Old Days For 90+ Percent Of Americans

A report from the US Federal Reserve, Survey of Consumer Finance, finds that only the top end have recovered their incomes back to levels they had before the big recession and financial crisis took hold in 2008.

“Families defined as middle to upper-middle class (which fall between the 40th and 90th income percentiles) “saw little change in average real incomes” between 2010 and 2013 and consequently have failed to recover the losses experienced between 2007 and 2010, the report said..

Do not be complacent about your career. Find a way up or you are going to go down.

Sharply declining incomes for those on the lower cognitive rungs.

The always observed correlation between education and income were as pronounced as ever, with median income for those with a high school diploma or less falling between 6% and 9%, and for those without a high-school diploma falling 17%. Those with a college degree saw income improve, but not much, just 1%.

The US middle class peaked in the late 1990s,

Median household income in 2012 was $51,017, meaning that half of all households make less than that number. Adjusted for inflation, that number is about $7,000 below where it stood in the late 1990s.

The full report is here.

People who lose their jobs get back into the economy at a lower rung.

New York -- Jobs gained during the economic recovery from the Great Recession pay an average 23% less than the jobs lost during the recession according to a new report released today by The U.S. Conference of Mayors (USCM) under the leadership of President Sacramento Mayor Kevin Johnson. The annual wage in sectors where jobs were lost during the downturn was $61,637, but new jobs gained through the second quarter of 2014 showed average wages of only $47,171. This wage gap represents $93 billion in lost wages.

Under a similar analysis conducted by the Conference of Mayors during the 2001-2002 recession, the wage gap was only 12% compared to the current 23% -- meaning the wage gap has nearly doubled from one recession to the next.

If you lost your job could you get another one that pays as well? If the answer No then think hard about how to change that.

Share |      By Randall Parker at 2014 September 04 08:57 PM 


Comments
Jim said at September 5, 2014 6:09 AM:

"Sharply declining incomes for those on the lower cognitive rungs." So our elites want to bring in millions of unskilled workers with average IQ's below 90.

Wolf-Dog said at September 5, 2014 12:53 PM:

Randall Parker said: If you lost your job could you get another one that pays as well? If the answer No then think hard about how to change that.

-----

In 2013 the overall US trade deficit was -$476 billion, which represents approximately 3 % of the GDP.

But if we break down the deficit according to countries, the 2013 US trading deficits (goods only) were as follows. Against China the 2013 US trade deficit (goods only) was -$318 billion, against Japan the deficit (goods only without services) was -$73 billion, and against the European Union the trade deficit (goods only) was -$125 billion. Thus, most of the US trading deficit is against China, Japan and the EU.

This seems to explain most Americans have declining salaries. But in China, the salaries and prosperity in general are actually increasing because they have a trade surplus.

Lot said at September 6, 2014 5:11 PM:

"In 2013 the overall US trade deficit was -$476 billion"

And we have an equal capital account surplus. Because our financial and legal system is the most secure in the world and economy is relatively good, foreigners want US assets like bonds, stocks, and real estate, which they need dollars to buy. And they need to sell us goods and services to get those dollars.

Australia, another large safe haven, also has a trade deficit.

Switzerland would be the same, but they decided to peg their currency to the Euro when demand for Francs got so high, bidding it way up, that it would have destroyed their international competitiveness.

Wolf_Dog said at September 6, 2014 8:48 PM:

Lot said: And we have an equal capital account surplus. Because our financial and legal system is the most secure in the world and economy is relatively good, foreigners want US assets like bonds, stocks, and real estate, which they need dollars to buy. And they need to sell us goods and services to get those dollars.


--------------------

True, but it seems that you are omitting the main point that I was trying to make. The capital account surplus, or the general term "current account", is just a numerical measure of the geographic location of where the money migrated: it does not take into account the change of ownership of that money. Within the context of this thread, the trade deficit is more relevant because it measures the rate at which the US is getting impoverished internally. The fact that foreigners send their new money that they made from us thanks to our trade deficit back to the US as investment, does not change the fact that the money that they sent is still owned by them. In addition, the trade deficit separately measures the rate at which American jobs are being lost and American jobs are paying less and less.

Check it out said at September 8, 2014 4:43 PM:

"In 2013 the overall US trade deficit was -$476 billion"

There's no such a thing as "trade deficit." The term is meaningless.

Wolf-Dog said at September 8, 2014 6:11 PM:

Quantitatively, one way to define the trade balance is the formula:
TB = [Dollar value of exports] - [Dollar value of imports].

When TB is greater than 0, then it is called trade surplus. For you, this number is meaningless,but when the US has negative TB year after year, it compensates by printing money and giving that printed money in exchange for the imports, but this is masked by borrowing the same money equal to TB (with a change of sign) from the countries that have made that money. Thus, if TB is negative for the US, then TB (with a change of sign) equals the amount borrowed from foreigners in order to spend now and pay later. The trouble is that usually, the value of the imported goods declines much faster than the rate of inflation on the US dollar: with the exception of imported diamonds, Picasso paintings, etc, that do not lose their values, most imported items such as cars, refrigerators, computers, clothes, toothpaste, etc, lose their values at rates faster than the buying power of the US dollar, which means that the value of the imported goods cannot be used as a collateral against the incurred debt that is equal TB. This means that the countries that run a negative TB are intrinsically impoverished by that measure, although they temporarily mask it by borrowing more. Those countries like Argentina that do not have the political power to print money and give it to foreigners without deprecating the value of their currencies, end up defaulting like Argentina, leading to economic collapses. For the moment, the US is not incurring the fate of Argentina.


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