According to the U.S. Census Bureau, "real median household income in the United States fell between the 2008 and 2009 ACS -- decreasing by 2.9 percent from $51,726 to $50,221." And to bench mark these figures, The Federal Register pegs the average 2009 poverty line at $22,050/yr. for a family of four. Now without getting into a discussion about precise methodology -- or income distribution for that matter -- it becomes rather clear that continual upward mobility for the vast majority of U.S. citizens is tending toward the mythical. This is especially relevant in terms of the general consensus that consumer spending will need to be restored to pre-recession levels in order for the U.S. economy to regain sustained momentum.
This week's WSJ elucidates an even more profound reality check in discussing how U.S. sustained high, and long term, unemployment is leading toward a "Steep, Lasting Drop in Wages." The Journal states that "Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as "sticky." To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall ... Between 2007 and 2009, more than half the full-time workers who lost jobs that they had held for at least three years and then found new full-time work by early last year reported wage declines, according to the Labor Department. Thirty-six percent reported the new job paid at least 20% less than the one they lost."
But of the "48.8 %" of "long-tenured displaced workers" who are now re-employed "54.9% are earning less [and] 45.1% are earning more." In attempting to maintain an optimistic tone, The Journal also claims that "While difficult for individual workers, lower wages can make U.S. industries and companies overall more competitive and allow employers to hire more workers than they would otherwise. In the long run, that may make the nation more prosperous."
Tragically, as with most downward economic shifts, those whose economic lives are most marginal suffer disproportionately. And in the following cited circumstance, very unfairly: "Research shows that children of workers who lose jobs and go back to work at lower wages appear to suffer from lower wages, too. In a 2008 study, a group of economists tracked the wages of 60,000 father-child pairs from 1978 to 1999. Children whose fathers went through mass layoffs in the 1982 recession ended up with 9% lower earnings than similar children whose fathers didn't experience the job cuts ... The impact was concentrated in children from lower-income families. 'When someone at the bottom of the income distribution loses their job, the loss of income is much more likely to involve losing things that matter for the family to sustain itself,' says Marianne Page of the University of California, Davis, one of the researchers."
While these are sobering realities indeed, the American Dream and its ingrained optimism is also a national treasure so long as our heads are not in the clouds or buried in sand. The past years of economic reality contain a silver lining. We need to get smarter as a nation -- literally -- and invest far more strategically in our human infrastructure on two essential fronts: Primary, secondary and continuing education and -- as last weekend's tragedy in Phoenix further elucidated -- mental health. Rugged individuality can still be a bellwether, but not without an adequate and sustained foundation. Everyone does better when everyone does better.
- William Busch