Quite frequently, when I write or talk about how average working class Americans have struggled economically for the past 30+ years, I hear the following response: but unemployment is so low? I just don't understand why people think things are so bad?
There are many different ways to respond to this, but two have been particularly useful.
Point One: Median Household Income
Take a look at the data on median household incomes since 1967. Not the simple real median household data income data, which will obscure the underlying truth we are looking for, but the distribution across various income groups. For roughly half of the population of the United States, household incomes have been flat for 40 years. Let me repeat that: for half of the population, household incomes have not risen for four decades. Moving up the ladder, growth among those in the 50-75 percentile range has been anemic. Only at the top do you see any substantial growth. In other words, although things have been going swimmingly for the very wealthy for the past 40 years, for just about everyone else things have been tough.
Now there's one very important fact to keep in mind as you think about household incomes. It may seem self-evident, but it often is not. Household incomes measure the aggregate income for the entire household. Assuming that the same number of people are working per household over the period of time you are examining, that won't matter much. But during the time period we are examining, that just isn't the case. Because from 1967 to 1996, the proportion of wives working year-round in married couple households with children has increased from 17% to 39%. Or to put it another way, we have more people working more hours than ever before, all to create a society in which income levels have been largely flat.
Looking at the data since 1989, things actually get much worse. For those from the 75th percentile on down, income levels have been basically flat. Above that? Things have been just super, thank you very much.
And just to really help clarify things, since 2000, average wages have actually declined for most Americans. And that's not my interpretation. That data point comes from the US Census Department itself. And depending on which state you live in, they may have fallen as much as 12%. A twelve percent decline in just six years.
But abstract numbers sometimes confuse more than they clarify, so let's try this another way. As Kevin Drum loves to point out, if median incomes had increased at the same rate as those of the top 5%, the median household income in America today would be around $56,000. Instead, its about $42,000. That's $14,000 in "missing" annual income for middle America since the late 1980s.
Point Two: Unemployment Rates
One of the major problems with traditional measures of unemployment is that they are designed to obscure the truth. Like so many other statistics compiled by our government, they are constructed so as to make things look better than they actually are.
In the case of unemployment, the key thing to understand is that "unemployment" is not the same thing as "joblessness." In our bizarre system of measure, only people without jobs who are actively looking for work qualify as unemployed. It does not count people who who like to find a job but who have given up their search for lack of success. Joblessness, by contrast, measures the percentage of a given population that does not have a job. And although it is true that this number will often include people who are neither looking for a job nor hoping to find one, because it provides a second look into the economic fortunes of a specific group, it can often be quite illuminating.
All of which leads to this from the NYT:
From 1960 to roughly 1980, the gap between the two measures remained fairly constant. Beginning in 1980, however, something changed, and since then the gap between the two has been growing larger year by year. And so today, although the unemployment rate for men aged 25 to 54 is somewhere around 4%, the jobless rate in that same population is over 13%. And let's put that in perspective:
In the latest report, for March, the Labor Department reported the jobless rate -- also called the "not employed rate" by some -- at 13.1 percent for men in the prime age group. Only once during a post-World War II recession did the rate ever get that high. It hit 13.3 percent in June 1982, the 12th month of the brutal 1981-82 recession, and continued to rise from there.
To be sure, employment is a lagging economic indicator, and rates higher than this have prevailed after recessions ended. But this rate has arrived at a time when the government still hopes that a recession can be averted.As can be seen in the accompanying chart, there has been a long-term decline in the proportion of prime-age men with jobs. That decline has been masked by rises in the number of older people with jobs and by a steady rise in the proportion of women working outside the home. But even among women there has been some slippage. The proportion of women ages 25 to 54 without jobs was 27.4 percent in March, a figure that is higher than it was during all but one month of the 2001 recession.
The negative trend can also be seen in the other chart, which shows the annual change in the number of working men in the 25 to 54 age range, using a three-month moving average to smooth the figures.
In the last half-century, that figure has turned negative only after recessions have been going on for at least a few months, although it has often stayed negative well after the recession officially ended. The lags have ranged from four months after the start of the 1960-61 and 2001 recessions, to 15 months after the beginning of the 1973-75 downturn, with an average lag of eight months. This year, the figure turned negative in January.
The government breaks down the figures by race, and those figures show that over the last year almost all the jobs lost by men in the 25 to 54 age group have been lost by whites, with most of those losses affecting men ages 35 to 44. There have been just a small number of losses by black men in the 25 to 54 age group, and employment for Hispanic men is still growing, albeit at a much slower pace than it was a few months ago.
The unemployment and jobless rates for white men are still lower than for black or Hispanic men, but this downturn stands in sharp contrast to the 2001 recession, when the number of black men with jobs began to fall months before the employment rate for white men dropped.
Notice the part I've highlighted in bold? That's just one small part of what Obama meant when he was talking about the bitterness he sees in rural Pennsylvania and Indiana. Clinton can call him elitist and out of touch if she wants, but she does so at her own peril. Over the last 40 years, things haven't improved economically for most Americans. The rising tide might be lifting the yachts at the top, but it is doing nothing for the people in more modest circumstances in both the middle and the bottom.
I realize that all of this data is quite inconvenient for people still holding on to their faith in trickle down economics, but that doesn't change the fact that they are an accurate depiction of our shared reality. Only the people at the very top are doing better. For everyone else, not so much.
It doesn't have to be this way. All of this comes as the result of a series of public policy choices over the past 30-40 years. That might be a painful truth, but there it is. But we can undo this. We have done it before.
One final point and then I will let this go.... for now. From Pew:
If that doesn't demonstrate that something very real changed back in 2000, and then again this past year, nothing does.
