Take a look at this series of thirteen charts on household income since 2007. I think the first chart is particularly telling.
What gripes me about this is that even if you believe wholeheartedly in fiscal stimulus as the way out of our economic problems nothing that’s on the table will remotely compensate for the drop in household income. What’s been proposed is too small, too poorly timed, and too poorly directed.
At best fiscal stimulus is like jump-starting a car. You might make the engine turn over but if the battery is shot, the alternator is busted, and the tires are flat, you haven’t solved your problems by a long shot.
Update
Felix Salmon remarks on the same chart:
More striking still is the huge erosion in incomes over the course of the supposed “recovery†— the most recent two years, since the Great Recession ended. From January 2000 through the end of the recession, household incomes fluctuated, but basically stayed in a band within 2 percentage points either side of the 98 level. Once it had fallen to 96 when the recession ended, it would have been reasonable to assume some mean reversion at that point — that with the recovery it would fight its way back up towards 98 or even 100.
Instead, it fell off a cliff, and is now below 90.
In dollar terms, median household income is now $49,909, down $3,609 — or 6.7% — in the two years since the recession ended. It was as high as $55,309 in December 2007, when the recession began.
It would be interesting to see what had happened to compensation rather than just income.
Most of the decline is due to unemployment: people who were getting paychecks not getting them any more. However, the second punch is the rise in prices on things that people buy—food, gas, and so on. The third punch is that more total compensation is going to healthcare insurance.
Hmmm, which school of thought suggested that the problem in the Great Depression was that wages were too high? With wages dropping, should unemployment be dropping?
Steve
Wages aren’t declining. Personal income is declining. That ‘s a consequence of unemployment.
“Sticky” wages are likely one of the factors accounting for unemployment but they’re a problem that will probably hang on for a good, long time. The people whose wages are stickiest are also nearly immune, at least in the near term, from competition.
I didn’t even finish the graphs. The gist was clear after 3.
I think there are some here who dismiss me and my constant comment that “you can’t hurt the rich/me, with your government interventionist policy prescriptions, you can only hurt The Average Joe.” But its true.
I don’t know about you, but I don’t know someone named “Median.” And if you do, slap his parents in the face.
But I do know people who are unemployed. And this is my point. Aggregate stats are BS. When an economy turns down it is the bottom “X” that get hammered, by and large. And so Dave’s observation may be brilliant to some, obvious to me, but indisputable:
“The people whose wages are stickiest are also nearly immune, at least in the near term, from competition.”
Can you say unionized government workers? Private sector union workers with seniority? Government subsidized sectors like health care, finance or ag? General Electric? “Green” workers? Free beer……..at taxpayer expense.
But what about the Average Joe – my hero? I guess they get the big eff-you, and “bend over, this will only take minute.”
One can only hope that there is still a place in hell for Obama and his sychophants. One can only hope.
.
Yes, I’m sure this situation — like most situations — would be helped by giving Drew another tax cut.
Because that worked so well under Mr. Bush. By cutting taxes we created billions of jobs and joy and happiness reigned. The problems only came after Mr. Obama traveled back in time to force rich people to blow up the economy.
Now, we just need some more cash for Drew and then we need government workers to take salary cuts at which point — I may have some of the details wrong here — Drew will use his tax cut to hire more people in lower-paying government jobs.
I’m a convert. I see it all clearly now. More of what worked so amazingly well under Mr. Bush!
Where’s the popcorn? Looks like another Drew vs Reynolds UFC match is about to start.
Andy –
Nah. Reynolds comment is just too stupid and simple minded.
Wages aren’t declining. Personal income is declining. That ’s a consequence of unemployment.
Wages are certainly declining amongst the EMPLOYED people I know. I have exactly one friend who is making more now than when the recession started. Most are making less in nominal terms, through decreased hours worked for people with wages, by lower bonuses and such (and occasionally lower salary) for salaried workers. 401(k) matching contributions are DOWN. I’ve mentioned this before, but one friend won the Employee of the Year award at his company two years running – his reward was that his salary did not get cut. Actually, make that two friends making more now, as I forgot that the Employee of the Year recently got promoted.
And for those whose income is flat, they’re getting killed by inflation. There are more ways than losing one’s job to get one’s income slashed. And unlike what Reynolds has stated in the past, most people jsut can’t go work harder and expect to get more money. Especially in this employment environment.
Incidentally, Obama is in town today fucking up rush hour traffic. He came to give a speech in support of his “jobs” bill – and go to a fundraiser where he will raise at LEAST $500,000 dollars to keep HIS job. I don’t think anyone at the fundraiser will be worth less than $50,000,000 given the names released so far. Barack Obama, for the people!