Recently, there have been several indicators that the economy has recovered from the Great Recession, and is firing on all cylinders again. After the start of the Great Recession, employment recovered to its “demographically adjusted pre-recession level.” This means that more than 10 million jobs were added in that 10 year period. Also, Income and Poverty in the United States disclosed that household incomes had grown for the second year in a row with the median household income climbing to a record $59,039. In addition to this, a Gallop Poll in June on class identity found that 62 percent of the respondents labeled themselves middle class compared to only 51 percent in 2015. All of this sounds great, right? Although these all sound like positives, there are indicators that tell otherwise. For starters, the overall labor force participation rate has fallen from 66.0 percent to 62.9 percent. Also, men’s median wages for full-time year round work has stagnated. The median income for male year round, full-time workers in 2016 was $51,460. In 1975, the median income was $51,766. On top of this, the upper middle class is flourishing – but not the lower classes. Using a threshold of $100,000 as upper middle class for a household, the share in that cohort has gone up from 19.4 percent in 1990 to 27.7 percent today. One thing that I find interesting from this article is how the media can use these statistics to influence Americans into believing that we are doing well as an economy, when in reality we might not be doing so hot. The article also proposes some potential solutions that should help the economy such as increasing the minimum wage, development of a 3-I (Industry, Innovation and Infrastructure) Bank, and special initiatives and reallocation of resources in metropolitan areas. Do you think that the proposed solutions will reduce the substantial inequality and shrunken incomes that still linger from the great recession? Do you think that there are any other potential solutions that arent listed above?
http://www.huffingtonpost.com/entry/the-changing-and-challenging-nature-of-jobs-the-middle_us_59c3f8bce4b0c87def883628
This is a great article and blog. Ones response to this may depend on their outlook of wealth allocation and what their preferences are. The rebound of the economy since the recession has been great, no matter your beliefs, we got out of a rough patch in the US Economy. Now, looking at nominal statistics such as median income and labor force participation can be a trap. Instead of just seeing the number, we must understand what goes into those numbers and how those can be affected. On the surface, labor force participation should not drop as we saw. Median income should grow to keep up with inflation, and wealth should be better distributed. Not to be a pessimist, but when you think about it, we will never reach utopia. It is extremely hard to make everyone happy, but I do think we can do a better job of it.
ReplyDeleteI don't think having an average median income the same as 1975 is a bad thing. As long as the numbers are real and not nominal.
ReplyDeleteAlso, a decrease in the labor force participation rate could mean a variety of things. Maybe families can afford to have a stay at home parent now, maybe more people are attending college. It doesn't have to be negative.
And if the median income for men is smaller than the overall average, then its likely that women are making more money. A step closer towards income equality.
I agree with Haley. Having the average income the same as it was in 1975 is not a bad thing at all. And Duncan is also correct with saying that the economy has rebounded very well after the recession and it has proven the US economy is something great.
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