Workers pay going backwards

Half of U.S. workers made less than $27,519 in 2012, about four bucks less than they earned in 2011 -- but nearly $1,000 off median wages' all-time peak in 2007. Meanwhile, total real wages per American were 6 percent off their 2007 levels.

America's median wage has dropped to levels not seen since 1998, according to data from the Social Security Administration released in October.

http://money.msn.com/investing/10-things-disappearing-from-america

Thanks Obama helping the workers. Seems you are helping the corporations more to earn higher incomes.

 

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It is highly misleading to talk about cyclical trends as if they were linear trends. The yellow media does that all the time.

The reality of the claims is that (assuming they are accurate at all - they seem contrived), is that most of the drop was in just a year or two, and the numbers will almost certainly show a rise this year. It isn't a trend from 2007, much less 1998.

 

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That comes with click on 4 of their list. I found 5 & 7 and 11 also interesting and if you don't know the serious problem about bees that page (click on 10) is interesting too.

I suspect that US's median nominal salaries have increased every year for more than 100 years, with a few exceptions during depressions but even the I'm not sure as one should not include "no salary" when calculating the nominal salary. Does anyone know a non-depression (or bad recession) year when the subsequent year's median salary did decline? (except the last six years, which do seem to indicate something entirely new and bad has happened)?

click on 5 tells: "U.S. "is the only advanced economy in the world that does not guarantee its workers paid vacation." While American workers on average do receive 10 paid vacation days and 6 paid holidays, none of that is legally mandated. That compares poorly to most developed European nations and Australia, where a total of at least 20 days of paid holidays and vacation are required. "

It fails to note even worse fact: paid maternity leaves are not required is not required in the USA, but in most European countries 6 months is paid leave and even in Brazil, maternity leave with pay is four months. I think part of US's problems with the younger generation is related to this. Some generations ago, it was not much of a problem as Grandmother lived in the home too.

click on 11 tells: "vehicle registrations and miles driven are both declining on a per capita basis, ... those numbers all peaked at various times between 2001 and 2006. ... miles driven peaked in July 2004, at 900 miles per month -- in the same month last year, that had declined to 820 miles." This decreased fuel demand is large part* of why gasoline prices are roughly static, despite greater average cost of production of oil form new wells.

* another part is US population would not be growing without immigration and most immigrants can't buy cars, for many years, if ever.

 

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So looking at the source in the linked MSN article takes you to an AlJazeera article, which then links a data page at the Social Security Admin. The data page shows the 2012 number, and has a form to get data from earlier years. The problem is that the earlier year data is in "current dollars", which means the dollars of the year they came out, not inflation adjusted dollars. So the claims of AlJazeera can't be verified just by looking at the data, you have to apply the annual inflation adjustment, which isn't provided.

However, since the more commonly cited data (household income), from the Census Bureau seems to follow similar trends, I'm willing to accept it as being realistic. Here's the main page for the Census Bureau's income stats:
http://www.census.gov/hhes/www/income/data/historical/household/
And a direct link to median household income:
http://www.census.gov/hhes/www/income/data/historical/household/2012/H06AR_2012.xls

 

Incomes are heavily tied to unemployment, and together they typically always decrease during a recession are typically always the last major economic indicators to start to recover from the recession. Obviously, with fewer people employed, there is less income to be had. And obviously, companies only start to re-hire after they start seeing their profits rise again.

I've attached a graph of the change in household income over the past 37 years, which shows substantial drops in income in each of the last 3 recessions, including the 2000 recession, which lasted just a few months but saw household income losses for 5 years. As you can see, income losses last much longer than the associated recessions do. View attachment 6735

 

The regular stats inform poorly on this question - household income fails to account for the boomerang children and elderly, multiple jobs, higher taxes, longer hours per job, etc. Individual yearly total income does a little better, but not much - the number one needs for comparison is the median hourly takehome per job differentially corrected for inflation by class, both with and without counting part time work.

The estimates of that I've seen show a declining trend from the early 1980s on.

 

As always, iceaura, unless you show the stats, your speculation is useless.

[edit]
However, the basic idea that household income overstates useful income because household size is going up is very, very wrong. Household size has been dropping for many decades, a trend that did not reverse itself from 2000 to 2010, a very favorable date range for your thesis: http://www.census.gov/prod/cen2010/briefs/c2010br-14.pdf

Average household size dropped from 3.29 people to 2.58 from 1960 to 2010.

 

I agree with your points. Average houshold sizes change with time so that is not an index of the typical salary or "worker's pay" which this thread is about. Likewise it is and error to include zeros, the "salary" of those not working, in statements about "worker's pay."

Russ appears to make both these errors in his post 4; however the second link he gives has some interesting historical data on inflation. For example, 3.5 decades ago, in 1978 the nominal median income was $14,813 and adjusted for inflation, was $50,099 so in these 3.5 decade the purchasing power of the dollar has drop to only 29.57% of what it was.

 

Unfortunately, the necessary "worker pay" data is not readily available, so we work with what we have. But in any case, since household size drops, that skews the data in your favor, not mine. In other words, despite the drop in household size, household incomes still have risen over many decades(current partial cycle notwithstanding).

Perhaps, but since you are so fond of pointing out that the workforce size has dropped over the past few years, I would have expected you to prefer it.

 

In nominal terms, yes, but in purchasing power, you only have less way back in 1994 (From your post 4's second link). I.e. purchasing power as been dropping for nearly two decades, even before speaking about after tax purchasing power. (IRS "bracket creep" is reducing that purchasing power even faster!) I have not seen data, but can easily believe iceaura's "after tax purchasing power has been declining since the early 1980s."

BTW, household size tends to drop with increased prosperity. Fewer kid are born, and more young people can afford a place of their own, move out of their parent's home, etc. So these factors have not been dropping average household size recently, (2008 until now) I think. Do you have any data showing what you claim is still true?

I think the US has entered a new and very bleak era. And as discussed more in the footnote, I think the change is permanent, not cyclic. I'm glad to be old and living in Brazil and hope my grand children come here to work as they graduate from college. Brazil has a terrible shortages of well educated people - many jobs for them here. China also has a great shortage of skilled labor, but China is solving their shortage - graduating nearly ten times more than US is with quality technical degrees.

I'm NOT preferring the fact the work force participation rate is falling rapidly and seems to be in an accelerating fall now. I just think this is a very troublesome fact now that needs to be exposed. At the present rate of participation (4 workers supporting one who is not) we will, in only a few years, have only 3 workers supporting one who is not. This is a huge social problem that can not be ignored, except by an ever smaller fraction of Americans who have the means to migrate from the USA if and when violence comes.

US has the worst GINI, by far, of any so called "advanced nation" and it is rapidly growing worse, not better. I think that to avoid* violent revolution, we need to switch to the Scandinavian model - i.e. high tax rates with all getting good educations, federally paid for, (not terrible educational opportunities in poor schools the poor neighborhood can afford) and socialized medicine with doctors on salaries, not "fee-for service" the AMA keeps high via rejecting state plans to build more medical schools. Americans should be embarrassed that their medial system provides 2 to3 years LESS life expectancy and has more than twice the cost of any Northern European government's system.

* I hope that is still possible, but tend to doubt it is as the per capital debt is growing and interest rates on the existing debt will continue the recent trend to increase. Also reducing Social Security benefits may be very difficult or impossible politically. Until a few years ago, SS lent funds to the government which it used for its general expenses. That has reversed a couple of years ago. Now SS adds to the government's expenses. Same is even more true of medical costs, especially with the US's stupid "fee-for services" instead of salaried doctors and the powerful AMA.
SUMMARY: not much reason to be optimistic that a violent resolution of these problems can be avoided.

 

No, I only deal in inflation adjusted (not nominal). We're not citing different data.

1995 ($50,978 vs 2012's $51,107), but yes.

No. That's the deception the yellow media sells. Again: it isn't a linear trend. It has only been dropping for 5 years, not 17 years. It is lower today than 17 years ago, but that's different from saying it has been dropping for 17 years. After 1995:
-Median income rose for four years (plus 2 years before).
-Then it dropped for five years.
-Then it rose for three years.
-Then it dropped for five years.

If you graph the data (and I can later if you don't want to), you can see the current trough is deeper than the previous trough because the 2001 recession was very mild and the recent recession was very deep.

I recognize that you think the economy is going to decline, but don't pretend it has been declining for decades.

That's a different issue entirely, but in either case given iceaura's history I'm not inclined to believe his imagination. If he posts some stats, we can discuss what they mean.

The data I showed is up to 2010. I'm not sure the census bureau collects that data yearly and it is quite possible that there has been an uptick in the past 4 years. But if you're looking for data for the last 4 years, you've conceded the issue of decades of decline.

 

There is an additional error/deception in the OP that I didn't recognize and it is big: the "half of workers" is not the same group of people from one year to the next. People entered and left the workforce during that time, through becoming of working age, retiring and finding jobs off of unemployment. So as written, the claim is likely to be very wrong: the number of real people who saw income losses is likely very small.

 

I think that is probably true. I believe that as a result of some dispute settlements, especially in the car factories, some new hires get less than half the salary for the same jobs as older workers or those who retire and must be replaced. As these higher paid (and thus higher tax revenue source) retire and become a net cost to the government (Social security collectors and benefit from medical programs) instead of the greatest block of tax payers in US's history, the US debt to revenue problem grows worse. Their "replacement workers," making ~1/2 their salary will pay less than 50% of the taxes they did, due to progressive tax tables.

Also some one should note that part of the problem is jobs are increasing more slowly than workers entering the work force and many who want to retire, planed to by now, can't afford to. So, not only in the US but almost all advanced economies, getting your first job is so tough, as many compete for the same job, if high skills are not required. Most (76% in first half of 2013) new jobs are part time only (E.g. tend bar, wait tables, during rush hours only etc.) and few use the education gained in college. As I said US seems to have entered a new bleak era, especially for those entering the work force. Automation is also making it worse, and many automation machines are not US made now.

I don't. I have at least 30 posts telling the decline began and was caused by GWB, his tax relief for the already rich a big part of the cause for an economy needing 2/3 to buy more each year, but needless wars he stated played a large and continuing drain on the US economy - make nothing the population wants to buy but force debt and taxes higher. Again I say remember to call it GWB's depression when it comes.

 

I'd be the only poster here to show "the stats", if I did - are all your posts, or the OP, none of which contain supporting stats, useless as well? The entire thread?

I mean, this is all you've posted:

which is not at all what the OP is about.

But you let me off the hook:

I did - you haven't, yet.

Here's what that looks like:

We have the known circumstance that a few years ago Americans passed the Japanese as the people who worked the most hours per capita. We have the known proliferation of women in the work force and two or more income households, the known proliferation of part time jobs and shift work, the known effects of tax bracket creep and the Social Security surcharge (Reagan) and a general rise in taxes on wage labor compared with other taxed income, and the known decline in manufacturing and other high wage jobs combined with a growth in "service sector" employment - combine those known circumstances with the tables posted showing uneven,anemic, small percentage growth in median "household income" and it's hard to fit anything in there except a thirty year general decline in median real takehome hourly wages. Try the arithmetic yourself.

Or consider this: http://stateofworkingamerica.org/chart/swa-wages-table-4-1-average-wages-work-hours/ [/quote] It's an "average", and I can't tell whether they meant "median" or not, or how they handled part time stuff (temp agencies are the largest single employers in many US regions), but clearly they haven't corrected for taxes or the class structure of inflation - and even so, we see hourly wages increasing by less than 12% total between 1989 and 2010 - the SS and Medicare boosts alone wiped most of that out of the takehome.

Or look at this - again, no consideration for tax burden, temp work, part time, etc, but it does take care of the "average" problem http://stateofworkingamerica.org/chart/swa-wages-figure-4c-change-real-hourly-wages/ . It looks like a median growth below 0, to me - you?

W's policies were continuations of Reagan's and Bush's, (as were Clinton's overall, with more sanity in the implementation), accelerated and intensified by a lack of Congressional counterbalance including a failure to prevent "unitary executive" launching of war - the apparent decline in median real hourly wages was already long in progress, as can be estimated by the real value of the minimum wage or the multiples of hourly wage paid for housing and other necessities, or any of a number of indicative statistics.

W was a disaster, but he didn't come from nowhere and do stuff nobody had anticipated. His administration pushed a straight ahead continuation of Reaganomics, right down to the same people in charge even, older but not wise.

You've got to be kidding.

Define "small", so you have no way to walk it back, and I'll go find that number.

 

Are you kidding? Every post of mine, including the one you quoted, has either cited stats or critiqued the stats of others, and the OP includes a link to the stats that he wants to discuss. I'm not sure how you could possibly be missing that, unless the forum is malfunctioning and not showing you the links!

I've posted quite a bit more than that. Unless your eyes need to be checked or the forum is malfunctioning, you can't possibly be missing it.

Average and median are not the same thing. In any case, thanks for at least posting something of substance. It of course has the obvious flaw though of only having data points for every 10 years.

20% or less. I suspect it is much less, but we'll go with that as a safe number. I await your finding with bated breath.

 

That isn't true. The only stats included by you et al have been household income and the like, which is only problematically related to the OP topic "worker's pay", and neither you or the OP author included any discussion of those problems. Had I not chimed in, they might not have been addressed - which would invalidate any argument on the thread.

As I noted - which supports my case, not yours.

That's not a flaw - my contention is a thirty year trend, and every ten years including the two end points is fully adequate. I don't care about year to year fluctuations, and neither does the OP.

I edited in a couple more charts and links, btw.

That's a percentage of something - what? If it's a percentage of employed Americans, you appear to be contending that 25-30 million people would be a "small number". Is that your contention?

At any rate, you appear to consider it a safe, cushioned estimate.

If so, you might want to consider this: http://www.statisticbrain.com/home-foreclosure-statistics/ As you can see, there were something on the order of 22 million foreclosures in the US from 2002 until 2012. A moments thought will perhaps indicate the number of losses of income involved in that circumstance.

 

Right. Nice talking at you as usual.

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If you won't respond to what I've said, I won't try to jump through hoops for you.

You didn't note, you asked. And since all of the discussion except yours was focused on median, not average, no, it doesn't support your case to post the wrong type of stats.

That's small as a fraction of total employed people. The contention of the link in the OP is that half of workers saw their wages fall. I'm contenting that they are overstating it by more than a fraction of 2.

 

I agree with most of that post.

 

No, I noted the circumstance, and identified it as a problem.

I have been the one most consistently pointing to that problem, throughout this thread and for years on this forum. It's one of my most often repeated observations. I have been the only voice on this thread distinguishing median real hourly wage from "household income" and the like, which was the ostensible point of the OP but quickly confused - by you, among others.

As I am providing the only directly relevant statistics on the thread, and dealing with their inadequacies myself, you would demonstrate good faith and comprehension by responding to them.

And I fixed part of it, btw, see the edited in links featuring median wages (which I posted before logging in to your response, or they would have been in a later post, sorry about the inconvenience).

You posted this:

And I responded directly by pointing out that household income was not a good stat here, with many problems you failed to address. You dont' need to jump through hoops, you jsut need to post something relevant and supportive of an argument, and then make the argument.

So far, we have from you no relevant evidence, and several unsupported and quite dubious claims like this one:

Again, I have posted the only relevant data, above (22 million foreclosures, declines in median real hourly wage for men, etc). Do you have an actual response?

 

That isn't the claim the OP made.

icearua, you are far too purposely irrational (a troll) to have a useful discussion with. You just aren't worthy of a full response.