The Jobs Crisis Is About Much More than Unemployment
March 1, 2013
President Obama has positioned himself as champion of the middle class. Repeatedly, he has appealed to the middle class as a means of justifying tax increases, rolling back the sequester, or expanding government programs. But how have middle class workers fared since the start of the recession in 2007, ask Aparna Mathur, a resident scholar, and Daniel Hanson, an economics researcher, at the American Enterprise Institute.
- A typical measure of middle class labor market health is the unemployment rate, which currently stands at 7.8 percent.
- But even for those who are fortunate enough to have jobs, the labor market has exacted a toll on their standards of living.
- Since 2007, the real median income of American families has dropped by over $5,000 per family, while the U.S. Bureau of Labor Statistics reports that the average employed person spends 8.3 hours per day working, up from 7.6 hours per day in 2007.
- In other words, American employees are working more and earning less.
Meanwhile, median household wealth has dropped. According to the Federal Reserve's Survey of Consumer Finances, American families have experienced a significant drop in net worth since the start of the crisis.
For workers at either end of the income distribution, the movements have been even more extreme.
- Workers in the lowest quintile are far more likely to be working longer hours than their middle quintile counterparts, though wages have held constant.
- For workers in the highest quintile, income has fallen most drastically, but hours worked have remained approximately the same.
The trade-off between work and hours across income classes demonstrates that despite drifting downward, the unemployment rate obscures the real pain in the American workforce. Despite the recovery beginning in June 2009, Americans in general still feel the malaise of sluggish growth and stagnant wages.
A major reason for the persistence of falling wages and rising hours since the Great Recession is the tremendous uncertainty attached to investment decisions.
Source: Aparna Mathur and Daniel Hanson, "The Jobs Crisis Is About Much More than Unemployment," Real Clear Markets, February 27, 2013.
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