In what may be the most stark statistical reality announced to date concerning escalating U.S. income inequality, the lead in Monday’s NY Times brings us news of the publishing of a study by John F. Coder and Gordon W. Green, Jr., two former employees of the U.S. Census Bureau, which finds that inflation-adjusted median U.S. household income has fallen more than twice as much during the first two years of our “recovery” than it did during the “recession,” itself.
The study documents how inflation-adjusted median household income fell 3.2% during the formal recession period, between December 2007 and June 2009, as defined by the National Bureau of Economic Research. And, how it’s fallen another 6.7% during the first two years of our so-called “recovery,” through June 2011.
What makes this study unique is that the researchers focused upon monthly Census Bureau surveys, as opposed to the annual data. The article notes, “The monthly figures allow researchers to measure income changes more precisely during a recession or a recovery and provide more current information. The annual report is based on surveys conducted early in the following year, and people sometimes confuse how much money they are making at the time of the survey with how much they made the previous year.” And, as we all know, recessions do not start and stop neatly, in terms of lining up with a calendar year.
Coder is quoted in the article as stating it all amounts to “…a significant reduction in the American standard of living.”
Recession Officially Over, U.S. Incomes Kept Falling
Robert Pear
NY Times
October 10, 2011
WASHINGTON — In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.
Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.
The finding helps explain why Americans’ attitudes toward the economy, the country’s direction and its political leaders have continued to sour even as the economy has been growing. Unhappiness and anger have come to dominate the political scene, including the early stages of the 2012 presidential campaign.
The article points out, “The full 9.8 percent drop in income from the start of the recession to this June…appears to be the largest in several decades, according to other Census Bureau data.’
Pear notes that, “President Obama recently called the economic situation “an emergency.”
Noting that the Senate begins debating the President’s jobs bill this week, the article tells us, “The full bill…is unlikely to pass, but individual parts seem to have a significant chance.”
The study concludes, “Two main forces appear to have held down pay: the number of people outside the labor force — neither working nor looking for work — has risen; and the hourly pay of employed people has failed to keep pace with inflation, as the prices of oil products and many foods have jumped.”
The piece notes that “…during the recession, itself, gains in wages actually outpaced inflation.”
The story continues on to reference another study by Princeton economics professor Henry S. Farber, the findings for which demonstrate a major reason for decline in median household income during this period being due to the fact “…that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.”
…“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”
Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns…
Coder and Green also point to the “…persistently high rate of unemployment and the long duration of unemployment…” as being major contributors to the decline in income during the recovery.
Unfortunately, as it was just noted in this past Friday’s Bureau of Labor Statistics’ September 2011 Employment Situation Report, the average length of time a person who lost a job remained unemployed increased from 16.6 weeks in December 2007 to 40.5 weeks as of last month—breaking the all-time record for that series’ metric.
It’s definitely worth checking out the article, itself, for more key facts and related info from Green’s and Coder’s study. Both authors spent more than 25 years at the Census Bureau prior to going into the private sector.