Lots of end-zone dancing last week re: the economy.
The President says that all indicators are good, and that folks who aren’t feelin’ it just “don’t get it” because they’re watching FoxNews too much.
Let’s look at the ultimate measure: household income.
Adjusted for inflation, median household income dropped 8% during the recession … and has been flat after bottoming out a couple of years ago.
That means that the median real household income is still down 8% from the pre-recession peak.
Hard to get excited about that, right?
The drop in median household income has come despite a steady increase in average hourly wages … they’re up about 10% since the official end of the recession.
That’s before inflation, but the Feds keep telling us that inflation is negligible, that shouldn’t matter, right?
Let’s see, average wages are going up, but median household income is stalled at a depressed level.
What’s going on?
Here are some stats to ponder
The number of households and working age population has continued to grow roughly 1% annually …
The labor force participation rate has continued to drop and drop and drop.
About 1/3 of the drop is attributable to baby-boomers retiring, but the bulk is true working age folks who have dropped out of the labor force.
Note: when somebody drops out of the labor force, they’re no longer counted as unemployed.
The employment to population ratio dropped sharply during the recession, and has been essentially flat since bottoming out.
English translation: the jobs added in the past couple of years have just kept up with population growth.
Still, the question: why the drop in median household income?
Above, we showed that it’s not wage rates … which have continued to go up.
Obviously, it must be the number and mix of folks who are employed.
While full-time employment has shown steady and significant gains, the full-time employment level is still about 3 million jobs shy of pre-recession levels.
Conclusion: At least 3 million folks probable answer the “are you better” question, nope … since their full-time jobs are still gone.
Filling the gap, part-time jobs quickly jumped about 2 million during the recession … added another million since the recession ended … and, appears to continue tracking upwards.
Companies are trying to stay flexible (in case the economy falters again) … and don’t want to lock into benefits-loaded (think ObamaCare) full-time employees.
Putting it all together …
It’s not a wages problem per se … wages are holding up or increasing.
Rather, it looks simply like fewer members of each household are working full-time … some are unemployed (but looking), some are working part-time, some have just stopped working.
Simple arithmetic, right?
Not yet time to spike the ball …