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Median household income
The red line shows nominal dollars while the blue shows inflation-adjusted—"real"—dollars.
Every month, Sentier Research evaluates median (and annual) monthly household income and Doug Short posts a summary and some charts for visual reference on the subject. From June to July, the real (that is, inflation-adjusted) median household income rose 0.20 percent, and the real annual median rose 1.70 percent. It was the third consecutive rise after two months of decline. Despite that improvement, the median household income is $3,700 below what it was in January 2008 when the Great Recession was just getting underway.

Sentier Research spokesman Gordon Green summarizes these data:

The lack of significant change in real median annual household income between June and July 2014 underscores the uneven trend in the series since the low-point reached in August 2011. Our time series charts clearly illustrate that although the economic recovery officially began in June 2009, the recovery in household income did not begin to emerge until after August 2011. While many of the month-to-month changes in median income since the low-point in August 2011 have not been statistically significant, an overall upward trend is still clearly evident.

Short explains why he would rather use a different way to present the data:

The next chart is my preferred way to show the nominal and real household income—the percent change over time. Essentially I have taken the monthly series for both the nominal and real household incomes and divided them by their respective values at the beginning of 2000. The advantage to this approach is that it clearly quantifies the changes in both series and avoids a common distraction of using dollar amounts ("How does my household stack up?").
median household income
The stunning reality illustrated here is that the real median household income series spent most of the first nine years of the 21st century struggling slightly below its purchasing power at the turn of the century. Real incomes (the blue line) hit an interim peak at a fractional 0.7% in early 2008, far below the nominal illusionary peak (as in money illusion) of 27.2% six months later and now at 32.5%, a record high. In contrast, the real recovery from the trough has been depressingly slight. [My emphasis—MB]

The July 2014 real median annual income is 5.7% below our turn-of-the-century starting point and 6.4% below its interim high in January 2008. Note, however, that the Sentier calculations are based on pre-tax data. The expiration of the 2% FICA tax cut in December of 2012 put an additional hit on disposable incomes, especially for those households on tight budgets. [...]

As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are in worse shape than they were four years ago when the recession ended.

More analysis below the fold.

And finally, here's one more way to view the median household income:

One caveat: Median household income, a measure which includes the earnings of everyone in a household, is not the same as median wages, which measures what individuals earn.

[UPDATE: New Deal democrat at the Bonddad blog points out an obvious error in the above sentence. Household income includes more than just earnings, but pension and interest payments as well.]

What we're seeing here, not that it's news to anyone who has followed the trend over the past few years, is how marginal the recovery has been on the wage end of things even though job growth itself has improved significantly. A report by the National Employment Law Project makes the situation clear:

• Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.

• Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.

• Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.

Today, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries.

Not a good trend, to say the least.

Originally posted to Meteor Blades on Wed Sep 03, 2014 at 02:36 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Tipped & rec'ed (4+ / 0-)

    I voted Tuesday, May 6, 2014 because it is my right, my responsibility and because my parents moved from Alabama to Ohio to vote. Unfortunately, the republicons want to turn Ohio into Alabama.

    by a2nite on Wed Sep 03, 2014 at 02:55:30 PM PDT

  •  This shows how middle classes die (5+ / 0-)

    A five percent fall in income for the median household in this country over fourteen years.  And this doesn't even account for how the CPI adjuster has been gamed over the years to save the government COLA adjustment money and create a Potemkin economy of stability.  The things poorer Americans spend their money on, in the main, have been rising in price more than the CPI number would indicate.  Looking at real buying power for what people purchase, there would probably be a steeper fall.

    Median household income should become the headline economy number every month.  It's more important than the unemployment rate, the inflation rate, GDP growth, or the stock market.  It tells us how the economy is working for most of us.  No wonder it gets ignored.

    The opposite of poverty is not wealth. The opposite of poverty is justice. ---Bryan Stevenson

    by Dallasdoc on Wed Sep 03, 2014 at 04:55:05 PM PDT

  •  I had an exchange with Brad Delong (2+ / 0-)
    Recommended by:
    Meteor Blades, HeyMikey

    about a month ago.  The period from 2000 to 2008 was the first time that unemployment fell and labor share of GDP fell AT THE SAME TIME.

    What was interesting about the exchange is Delong didn't really have an answer.  It is an article of faith among liberal economists that the best way to boost middle and lower incomes is to reduce unemployment.  

    If that doesn't work conventional Keynesian economics doesn't have much of an answer.  Keynesian economics regard stimulus as a TEMPORARY solution.

    As I have written here for over 11 years, globalization and automation simply have re-written the rules of the game.  

    The world has outrun our theory of it - and left with few real  answers.

    Politicians - "You can't be a pimp and a prostitute too"

    by fladem on Wed Sep 03, 2014 at 05:19:56 PM PDT

    •  oh, there are answers ... (3+ / 0-)
      Recommended by:
      Meteor Blades, leftneckgirl, David54

      ... and, infuriatingly, the GOP seems to be addressing them more forthrightly than the Dems.

      Think about it this way:

      (1) Someday automated systems will be able to do 100% of the work necessary for all people to live decent lives ... and to make a lot of luxuries, too. At that point, people will need a universal basic income, right? Because nobody will be working?

      (2) This will not happen all at once. There will be a transition period, during which automated systems will gradually take over more and more production of the goods and services people need and want. During this transition period, there will be less and less work for humans to do—not enough to keep all of the population working full-time. So during the transition period, more and more of the population will need income from a source other than work.

      (3) The transition period is now.

      Switzerland to vote this year on universal basic income: http://www.bbc.com/...

      The Atlantic, last month,"The Conservative Case for a Guaranteed Basic Income":

      The idea isn’t new. As [conservative pundit David] Frum notes, Friederich Hayek endorsed it. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.” In 1967, Martin Luther King Jr. said, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income.

      More recently, in a 2006 book, conservative intellectual Charles Murray proposed eliminating all welfare transfer programs, including Social Security and Medicare, and substituting an annual $10,000 cash grant to everyone 21 years and older. The Alaska Permanent Fund, funded by investments from state oil revenues, sends annual dividend checks to the state’s residents ...

      Apart from lifting millions out of poverty, the plans promote efficiency and a shrinking of the federal bureaucracy. No more “79 means-tested programs.” Creating a single point of access would also make many recipients’ lives easier. If they knew they had something to fall back on, workers could negotiate better wages and conditions, or go back to school, or quit a low-paying job to care for a child or aging relative. And with an unconditional basic income, workers wouldn’t have to worry about how making more money might lead to the loss of crucial benefits. In the Financial Times, Martin Wolf has contemplated a guaranteed income’s ability to help society adjust to the disappearance of low-skill, low-wage jobs.

      If the Dems continue to let the GOP take the lead on this, the GOP will structure it in such a way as to keep people destitute, instead of to keep them living decently. It has really been disheartening to me how the Dems' timidity and incompetence the last 6 years have kept their heads so far up their asses on a range of issues.

      In the last few days we have seen Democrats in Kansas and Alaska effectively form coalitions with conservative ndependents, in an effort to defeat even more conservative  GOPers. Perhaps Dems will realize—the sooner the better—that they might do the same thing with Greens instead, win elections, and lead the country leftward.

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals."—Barack Obama

      by HeyMikey on Thu Sep 04, 2014 at 08:17:21 AM PDT

      [ Parent ]

      •  I agree with this. (0+ / 0-)
        It has really been disheartening to me how the Dems' timidity and incompetence the last 6 years have kept their heads so far up their asses on a range of issues.
        The original vision put forth by OFA in 2008-9 was a big move toward clean energy,climate change mitigation and 21st cent. infrastructure, that would create unexportable private and public jobs and opportunities for entrepeneurship, etc. (I'm still partial to small scale "rooftop" solar which would create a lot of unexportable middle and working class jobs that would penetrate to the inner cities.)

        I think this revolution is bursting at the seams, and the gop knows it and is trying to obstruct long enough to get their people in control so they can make sure it is managed in such a way as to keep the status quo (income inequality/investment class first, screw the rest of you). It's going to happen.

        You can't make this stuff up.

        by David54 on Fri Sep 05, 2014 at 05:22:08 AM PDT

        [ Parent ]

  •  Top graph looks wrong (0+ / 0-)

    Shouldn't the blue line be inflation-adjusted and the red line be nominal.

    Or maybe I'm having a brain fart....

  •  Interesting -- but how in the world do they know? (1+ / 0-)
    Recommended by:
    David54

    All of this assumes a level of knowledge about individual incomes that boggles my mind. How in the world do they know, month by month, what everyone's household income is, presumably including earned income (wages and free-lance, net of business expenses), interest and dividends and capital gains, child support and alimony, and cash income such as tips and off-the-books transactions?

    Annual income as reported on tax returns, I get that -- that the IRS releases gross numbers, not individual returns. But month by month? Really? Has anyone out there in Kosland ever gotten phone-polled? No one has ever asked me about my income, so I know I'm not included in the pool.

    I'm very wary of putting much into explaining or analyzing these statistics, without knowing where the raw data comes from.

    •  One reason we need comprehensive immigration (0+ / 0-)

      reform is that billions of dollars are going to a "dark" part of the economy, and going untaxed out of the country every Friday evening.
      Skews the data and deprives our gov. of needed revenue.

      You can't make this stuff up.

      by David54 on Fri Sep 05, 2014 at 05:12:41 AM PDT

      [ Parent ]

  •  The report I featured yesterday re ongoing (1+ / 0-)
    Recommended by:
    Meteor Blades

    economic struggles in Michigan here covers similar ground, though with an eye to analyzing just how badly people are doing, county-by-county.
    We all know that the official poverty guidelines are a crock; with this initiative sponsored by the United Way (of all agencies) there's an effort to quantify the shortfall. At least 40% of all MI households do not earn enough to survive. That's a pretty staggering statistic, fully in keeping with the inadequate recovery described here.
    Thanks, MB, as always.

    Support Small Business: Shop Kos Katalogue If you'd like to join the Motor City Kossacks, send me a Kosmail.

    by peregrine kate on Thu Sep 04, 2014 at 09:43:51 PM PDT

  •  These graphs are really stunning (0+ / 0-)

    Even though we KNOW and FEEL it every day, it is stunning to see it.

    Stunning.

    For me this has been the "it can't possibly be happening" decade.

    Everyone always said, "Oh, there is plenty of time before you retire. The economy goes in cycles." Well, the period before I retire has been the worst economy we've ever seen, pretty much. I've had to spend my savings to live, I couldn't sell my house, the maintenance has been killing me and my RE taxes have tripled. Our small business is barely hanging on (but we refused to lay anyone off and I'm proud of that).

    I know I am better off than a lot of people (heck I'm better off than most of my friends), but after being careful and conservative and sensible and moderate, I've been royally screwed. I used to be comfortable. Now I am worried, really worried if I will have enough money to live on until I die.

  •  And, as I began pointing out here in 2004, (0+ / 0-)

    The middle vote and median income co-reside along that graph, tossed one way or the other by events or manipulation, but averaging along that center line like riders on a water slide. The success of any strategy has been to appeal to the insecurities of the median income voter.

    and I wait for them to interrupt my drinking from this broken cup

    by le sequoit on Fri Sep 05, 2014 at 04:53:45 AM PDT

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