Posts Tagged ‘wages’

Chart of the day

Posted: 24 October 2014 in Uncategorized
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wages-dcj

As David Cay Johnston explains,

American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth.

Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level. . .

Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services. . .

Which group of lucky duckies didn’t see their pay fall? Workers making more than $50 million, who saw their average pay rise by $12.8 million, to $111.7 million. . .

Overall median pay — half of Americans make more, half make less — rose slightly last year. It was up a scant $109, to $28,031. That was still $320 below the 2000 median. It also was slightly lower than the 1999 median of $28,109, a troubling measure of long-term wage stagnation.

 

Note: here’s a link to the Social Security Administration’s wage statistics for 2013.

 

 

The second part of That Film about Money is even better than the first.

That’s because it explores the connection between money and the crisis of 2007-08, including giving the working-class more debt instead of increasing wages (which is why, as you can see below, household debt service payments as a percent of disposable personal income rose so precipitously from the early-1990s onward, until the crash) and why the banks have recovered since the crash (by taking cheap money from the government and lending it back, to finance the deficit, at higher rates of interest).

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The other day, I reported that Fed chair Janet Yellen said a great deal about existing levels of economic inequality at the Conference on Economic Opportunity and Inequality in Boston.

Neil Irwin [ht: ra] reminds us there’s a great deal Yellen didn’t say. She didn’t, for example, say anything about the aspects of the inequality puzzle that have a close tie-in to the policies of the Federal Reserve.

there is a growing body of evidence — far from proven, but certainly gaining traction — that income inequality could be a significant force behind disappointing overall economic growth over the last 15 years.

The story goes like this: The wealthy tend to save a large proportion of their income, whereas middle and lower-income people spend almost all of what they earn. Because a rising share of income is going to the wealthy, spending — and hence aggregate demand — is rising more slowly than it would if there were more even distribution of income. Skyrocketing debt levels papered over this disconnect in the mid-2000s, but now we could be feeling its effect.

If true, this would help account for why the economy has notched mediocre growth since the turn of the century, with the exception being a brief period of the housing bubble.

Yellen also didn’t have anything to say about the economic opportunities that have allowed the gains of a tiny minority at the top to be captured in the first place. Top 1 percent incomes and corporate profits have to come from somewhere. They’re created during the course of producing goods and services—in the United States and around the world. But the workers who did all that producing only get to keep part of the value they create, in the form of wages and salaries; the rest—call it the surplus—is appropriated by their employers, who keep some in the form of corporate profits and then distribute the rest to their owners and top managers. Those employers, owners, and managers spend some of that income and plow the rest into the ownership of various forms of wealth. It’s no wonder, then, that—given the economic opportunities they’ve been provided within current economic arrangements—the distribution of both income and wealth has been getting more and more unequal.

That’s what Janet Yellen didn’t say.

www.usnews

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