Monday, May 5, 2014

Declining Median Household Income

Sentier Research recently issued its latest calculation for median household income in the US.  It stands at $53,043 as of the end of March, 2014.  Good news:  After adjusting for inflation, that's about $1,500 more than it was three years ago.  Bad news:  It's also about $5,000 less than it was 15 years ago.

Data from the National Employment Law Project provides some insight into these figures.  According to their research, from January of 2008 thought January of 2010 the US economy shed about 2 million low wage jobs (jobs that pay less than $13.33/hour), but since February of 2010 it added about 4 million low wage jobs.  On the other hand, during those same time periods the economy shed nearly 7 million mid-wage (pay up to $20/hour) and high-wage jobs (pay up to $32.62/hr), but has added only about 5 million of those jobs since February of 2010.  Put another way, our economy has shifted 2 million people from mid- and high-wage jobs to low-wage jobs.

Obviously, this is not the way to build a foundation for a stronger U.S. economy.  Not only does it limit economic prospects for those directly involved, but it also limits the ability of businesses to enact price increases.  That in turn has effects upstream and downstream, short term and long term.  The question is, Is this permanent?

Perhaps more importantly, how long are we going to wait to find out the answer?  Remember, we're already 15 years into answering this question.  How many more years of downward-trending median incomes will we need before we conclude that we need to reverse this trend?  How many?

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