The Employment-Population Ratio (measures the portion of the working age population which is employed, from the BLS):
Median Household Income:
All of the blather about how the unemployment rate has decreased, the stock market is up, and so on, conceals the fact that there are less jobs for ordinary people, and they pay less. Yes, the rich are doing great, but that’s all.
Why are Democrats losing the Senate? I won’t say it’s just this, it’s not. But if the economy was actually good for most people, they probably would be holding it.
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Celsius 233
I have no idea what you’re first graph purports to show; incomprehensible.
Please clarify…
Ian Welsh
The percentage of the working age population which is employed.
Pelham
Thanks for the charts.
When people refer to median household income and wages over the past 40 years, we’re often told they’ve been flat. But that may (I’m not sure) understate the case. The key number would be something like discretionary income — or what workers and households have left over after they pay for modern necessities.
I’m guessing that number would show a sharp decline. USA Today (of all publications!) calculated a few weeks ago that the average US household of four would need $130,000 a year pre-tax just to maintain a very, very minimal, basic middle-class standard of living. Compare that with the $52,000 actual household median income. Of course, that includes smaller households, so the median for households of four would be slightly higher. Still, USA Today concluded that 7 out of 8 U.S. households cannot afford even a minimally secure and decent living standard.
My question is: How does today’s situation compare with the situation 30, 40 or 50 years ago? Were real median incomes back then closer to the rock-bottom middle-class standard?
What we need, seriously, is a minimum nationally guaranteed income. The government would simply print the money and hand it out to households (instead of banks, as it’s now doing) to supplement their incomes from the private sector and get them up to a decent standard. Then if the corporate/financial/political geniuses were worried about inflation or moral hazard or whatever other gremlins they might dream up, the pressure would be on them to come up with trade, economic, regulatory, immigration and other policies that would have the result of raising real private incomes so the government handouts would no longer be needed.
This would reverse the horrid situation we have now, in which all the pressure is on utterly powerless working people to scrape buy on less and less while working harder and longer with fewer and fewer options and rights as workers. This is completely backward.
Stirling Newberry
we are not going to get the jobs back. be our going to get those jobs back. we are not going to get jobs back. how many times do you want to repeat that? the first priority is to change the basis of the economy. then we can worry about paying ourselves money. oh yes, you can fire about half of the people running our current economy, because there basically useless.
then we can talk about that your only passing through this economy. relies that there is an entire world that is unknown to you. and when you grip on to this, then finally you’ll realize, you’re not part of the system. little people talk about how their part of the economy, but they don’t mean it. the people who do mean it barely even register has having been here.
Duncan Kinder
Of course, two years from now the economy will still suck; and the Republicans will need to answer that.
At issue is why anyone would want a piece of this.
Cujo359
You can add this chart to that list.
It doesn’t show the human cost as well, but there’s ten million jobs or so difference between those squiggly lines.
chris
Pelham is right. My family of five has an income around 130K year. While we are doing fine, we are not living high on the hog by any means, (moderatly priced home, eight year old cars, no expensive cell contracts, cable, eat out twice a month. We take one decent vacation a year. We have no idea how we are going to pay for our kids college educations, and it is not a surprise most voters won’t support the democratic party in these circumstances.
retiree
embedded in the first chart is that the large number of baby boomers are now in retirement. They are leaving the worforce and thus the employment to population charts are supressed.
ALN23
Retiree: That chart tracks the ratio of the number of employed to people of working age only, not to the population as a whole. Children and retirement-age people are excluded from the count.
Ian Welsh
In other words, because baby boomers are retiring, the chart may actually understate the situation. 🙂
That said, I do not know that retirees outnumber new entrants. It doesn’t really matter, anyway, an economy is expected to expand as population increases. Failure to do so is a very profound failure.
Trixie
The government would simply print the money and hand it out to households (instead of banks, as it’s now doing) to supplement their incomes from the private sector and get them up to a decent standard.
Terrible idea, if your goal is to increase living standards. Money doesn’t disappear into a black hole when it’s spent. All money comes from somewhere (‘out of thin air’ via private sector banks or the gov) and ends up somewhere. The ‘where’ it ends up is important. Hint: at the top of the income scale, for eternal safekeeping (hoarding) or speculative activities. And soaring inequality. So what’s your exit strategy for money printing?
Keep in mind that when we ran $1T+ deficits for the years after the financial crash, almost all that spending (including the tax cuts) went directly to corporate profits, breaking records year after year. Wherein, CEOs promptly cashed out via their own pay, stock buybacks (increases stock price), and dividends (rich people swapping income between themselves). And broke records in all three of those categories as well: CEO pay, stock buybacks, and dividend payouts. Little was reinvested productively into the real economy.
Labor? They saw wage/pension freezes, either directly or indirectly, and the vast majority of new job creation has been in low-wage industries. In 2013, the US ranked #1 in its share of low paying jobs among developed countries. And by a wide margin. Even more impressive, US ranks #1 in the lowest pay, among low paying industries. The aggregate effect is declining household income for the bottom 80% as profits and markets boom.
http://www.morganstanleyfa.com/public/projectfiles/02386f9f-409c-4cc9-bc6b-13574637ec1d.pdf
As for the gov (specifically, the Fed) printing money (QE) and handing it out to banks? What you’re talking about is the accumulation of excess bank reserves. This is money banks use between themselves, that does not — and in fact, cannot in aggregate — enter the real economy in any meaningful way. What you’re missing is the new deposit creation that offsets those bank reserves when the Fed purchases bonds from private investors. This is what causes asset price inflation through simple supply and demand (for financial assets) mechanics. And any effect on the real economy comes via the “wealth effect” (an actual stated goal of the Fed), which is essentially trickle-down (on steroids) policy. That is, you have to throw 30 gallons of water at rich people, just so that you can get a sip.
Seems legit.
If you want to increase living standards without addressing decades of stagnant median wages (now on the decline), you’re just playing pretend. Specifically, the continued declining share of nat’l income going to labor (now at an all-time low) vs. share going to capital (all-time high). And money printing won’t resolve it. At least not without a targeted exit strategy that alters perverse incentives. Or another crash. In fact, as we’ve seen in the last few years, activist monetary/fiscal policy has only accelerated the problem you’re trying to solve.
Pelham
@chris
Thanks for the comment. And for revealing your income to make a good point. (I mention this only because of the extreme reluctance of Americans to talk about incomes, even anonymously.) Our household comes in a bit below yours at $125,000 a year, but we have only one child. She’ll be going off to college next year, and while it will be quite a strain, we think we’ll be able to pay for it if she gets the scholarships we expect.
Otherwise, our situation is this: We eat out about once a month, go to a movie 2 or 3 times a year and have no cable, though we do have fast Internet as my wife and I both work from home. My wife and daughter have taken vacations over the past 3 years, but this year college visits are all they’ll be able to manage. (I haven’t had a vacation in 7 years due to the expense and loss in income I would incur.) We have 2 cars — one is 18 years old and on its last legs, the other is 5 years old, a rental car we bought used.
Even with these economies, we see our debt levels creeping up. Meanwhile, we’re a few years from retirement and have about half the minimum recommended amount saved — and most of that due to an extraordinary circumstance I won’t bore you with. This means one or both of us will have to work at least part-time until we’re dead — if we can hold on to our jobs or find work.
Getting back to college, I suggest you check out CollegeConfidential.com, a site that has proved invaluable to us as we seek good college deals.
funnyfunnyhaha
There will be NO NEW JOBS. Robots are going to make 50%-75% of all jobs obsolete. The low hanging fruit will go first, i.e. retail ad construction jobs, but then as AI becomes more sophisticated, white collar jobs will become obsolete as well. You’re going to need to create a new economy based on this. Good luck with that, with the clowns and psychopaths that moron America keeps voting in.
guest
With the R’s in charge of both houses, and a DINO in the White House, that means get ready for 3+ years of austerity budgets (even though the last 2 years have been more austere than the one proposed by the Rejected Randroid Ryan). After the current continuing resolution expires in 5 weeks, the civil service will get eviscerated (i.e. retirements stripped down and delayed to age 70. And since the Dems haven’t given a cost of living raise in 5 years, look for wage cuts, vacation cuts, reduced sick leave, etc). And somehow American (at least the ones who don’t work for government) will think that is a great victory for them personally).
It should be interesting to see how our new austerity agenda plays out against the tottering EU, China’s bursting bubbles, OPECs divisions, Ukrainian/Russian pipeline drama, and whatever the hell Japan has been up to lately.
S Brennan
“retiree” is just repeating the echo chamber he hears on TEE-VEE when he says:
“embedded in the first chart is that the large number of baby boomers are now in retirement. They are leaving the worforce and thus the employment to population charts are suppressed.”
Of course both he and his source are full of it…as shown by this graph:
http://www.advisorperspectives.com/dshort/charts/employment/LFPR-growth.html?LFPR-Growth-since-2000-six-age-cohorts.gif
16-24yo account for the decline…
Formerly T-Bear
After the Tuesday carry-on (or is that election carrion), things have gotten much, much worse. What in doG’s name were Duhmericans thinking about? At least the gormless democrats got what they deserve, they are not to be trusted with governing after failing to do so for the last six years. Maybe it is time for that party to die and make way for others not so integrally or maturity challenged. Live in interesting times – indeed.
kj1313
The Democrats repudiated the progressive wing of the party and we returned the favor. You can not tell me if we ran 7 or 8 Elizabeth Warren like candidates the outcome would not be vastly different. But then again we would have to change the Democrats core leadership.
Celsius 233
@ kj1313
You can not tell me if we ran 7 or 8 Elizabeth Warren like candidates the outcome would not be vastly different.
~~~~~~~~~~~~~~~
Oh yeah, it may well have been different.
But, do you know who Warren is, in fact? I doubt it. She’s a hawk, supported Israel’s attack on Gaza. Supported war crimes committed by Israel. She’s a bought populist with a one trick pony, economics. Warren is just another Potemkin progressive who’ll fuck you just like all the other dems. Believe it!
Americans are just fools looking for a savior. The problem is, they wouldn’t recognize the real deal…
Ian Welsh
Other than economic policy, the one thing Obama could have done (and done unilaterally) is stop the huge deportations of Hispanics. That’s ENTIRELY at executive discretion – a chart of deportations will show you the massive increase under Bush around 06 and that Obama kept on deporting. In fact, he was even harsher than Bush.
As usual, Democrats are reaping what they have sowed.
kj1313
@Celsius
I agree wholeheartedly but as our previous snake oil salemens stated famously “It’s the economy stupid” that most care about.
S Brennan
“Other than economic policy, the one thing Obama could have done (and done unilaterally) is stop [funding “insurgencies” in Libya, Syria & Ukraine…]”
…and in the case of Libya, bombing the living shit out of the place…because it’s hard too overthrow a leader with an 80-90% approval rating using the local KKK chapter & Al Qaeda terrorists.
jemand
Pelham & chris,
It’s interesting to hear from older people, particularly just the way they phrase things in their expectations. I’m not judging, I’m just going to share my current situation as a 28 year old, living alone, on a 25k per year salary. I live in an apartment. I finally bought a 7 year old car, after 4 years of saving while living without any car (lots of biking). I will be delaying marrying & having any children for awhile yet. I “eat out” several times a month, because I grab lunch near where I work at a sort of healthy fast food joint. If eating out is a sit down restaurant that costs more than 10$ a plate, then that happens every few months. One of my hobbies literally is foraging wild foods, and some of my meals have a fair contribution from wild jams, greens, mushrooms etc to get relatively gourmet foods for nearly nothing.
I have no debt, because of just an absolute aversion to it, plus having become accustomed to doing with just what I currently have, and extreme luck & hard work leading to tuition scholarship, and staying home for dorm cost reduction. And that situation I just described? Makes me fabulously wealthy compared to my age group. Many of whom still live with their parents and have no savings, and tens of thousands of student loan debt. I know it will be tough if I ever decide to have children, but still, I do think there is a basic differences in expectation for what “middle class” looks like, even just the idea of it is slipping. And looking at what my grandparents assume, and how they describe *their* situation, it is your situation which has “slipped.”
Pelham
@jemand
I completely sympathize. I believe mine was the last generation to have a shot at living better than our parents — though in my case I’m falling short. Unfortunately, your generation is doomed to something worse unless we do something about it. And that’s entirely possible, I believe, but I’ll leave that for another discussion.
Still, I hate to frame the situation in terms of “generations.” This tends to obscure larger forces at work — including the natural progression of capitalism over a period of decades. I recommend books by Costas Lapavitsas and Giovanni Arrighi to get a better handle on what’s happening to us and what needs to be done to counter these destructive trends.
The more-than-century-long pattern in which the US is now in the final stages repeats what the world has seen before since at least the 14th century, beginning with the city-states of northern Italy handing off hegemonic capitalist status to the United Provinces, which then handed off to the United Kingdom, which then passed the baton to the US, which is now outsourcing that status (including jobs, technology, productive capacity and capabilities) to China. This all happens in successive waves of “globalization,” which always end badly for the majorities of working people in globalization’s chief sovereign proponents.
The mechanics of this is all a bit complex, but the broad view obtained is not all that hard to understand. And the immediate (and entirely reversible) effects are even simpler to grasp. The message that needs to reach the electorate, therefore, is one that can be readily communicated. The difficulty lies in the fact that the great majority of people have absolutely no influence over or representation in their government, as a Princeton study earlier this year proved.
jemand
@pelham,
thanks for the suggestions! I just finished reading A Distant Mirror earlier this year, which focused more on England / France and the black death in the 14th century, but there were enough excursions into the northern Italian states the idea of handed-off hegemonic status that was there at the time period makes some sense. Also very interesting was reading Utopia, and seeing how much the results of “enclosure” influenced the common people in similar ways to modern regulatory capture, and union decimation. Even down to the talking points in an imagined political debate being completely familiar! Everything happening now has happened before, at least as an echo / analogy, and we ought to learn from the history.
There are of course multiple trend lines, capitalism back then was utterly different than modern economic practices, and I’m also a big fan of John Michael Greer, of the archdruid report, who is convinced technological civilization is slowly collapsing for lack of cheap resources, particularly oil.
We have yet to see how it will really pan out, with so many forces pushing so many different ways, but I’m interested in the hegemonic progression you mentioned, so I’ll definitely find those books soon.
Still, just on a personal level, I think I will be doing better in a couple years, but only because of having more work experience, more age, and not really that the economy will be better in general, or that I would be better off than someone my age decades ago.
Formerly T-Bear
@ jemand ; @ Pelham,
As a member of a much earlier generation than the ones you refer, I’m on the fast track to winning the death bet. As such, my view of the future is quite limited, it is nearly impossible for me to make out what tomorrow’s terrain or weather conditions will be or any minutia of the challenges facing people then. I have no valid prescriptions to offer on how specifically those challenges can be met. However, in just over the traditional allotted years, maybe this idea may be of service: be as buoyant as you possibly can make yourself. By buoyant I refer to becoming as valuable as you can make yourselves, knowledgable, skilled, creative, learned, experienced or any other attribute that makes you of value to others. If you are not buoyant by being of value to others, the only other condition is to become, as most will become, sediment, inert, an indistinguishable part of humanity’s path through time, much like the chalk cliffs of Dover mark the passing of countless sea creatures. Jemand’s description shows the makings of that buoyancy, there is a balance there that most others do not share. Although by probable modest means, the direction to an unencumbered state of living is an act of buoyancy, the fetters of servicing debt and unrestrained desire for every whim that passes will not likely be a drag into the wage slavery which condemns most of humanity into perpetual servitude. You may find in attaining some semblance of buoyancy that time and the ability to command and use time is the greatest asset there can be. But then, maybe not. That is what the future is for, to find out. Whatever, don’t waste your time in trying to change those things you cannot, or become attached to anything that does not help being buoyant; those things are for those destined to be sediment. Be other.