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  • Median Household Income Down Last 15 Years - Why?

    One of the most puzzling questions in economics today is why did median household income peak in 1999 and has yet to recover? Most analysts cite the fact that we had two serious recessions in the space of a decade, including the financial crisis of 2008-2009.

    While the Great Recession ended in June 2009, real median household income (adjusted for inflation) remains well below the peak of around $57,000 in 1999 and has been below $52,000 in each of the last three years. The question is, why?

    The standard answers, especially among progressives, are: 1) the sluggish economic recovery; 2) growing income inequality; 3) the failure to raise the minimum wage; 4) globalization and outsourcing; 5) corporate greed; and other variations of economic pessimism.

    However, there are some other very obvious, but mostly overlooked, factors that can help explain why median household income has declined over the last 15 years that have nothing to do with economic stagnation. The fact is that there have been significant demographic changes in the composition of US households.

    Economists Mark Perry and Alex Pollock, who also are contributors at the American Enterprise Institute, offered a very interesting analysis on median household income last week, and I will summarize their latest work for you today. I think you'll be surprised.

    Also, we'll look at the reasons why the marriage rate in the US is now at a 93-year low, according to the Census Bureau. The marriage rate for those 18 and older has fallen to a new low of only 50.3%, down from the peak of 72.2% in 1960.  And finally, we'll end with an interesting article from Larry Kudlow on the subject of marriage.

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  • Why Household Income Is Down Five Years Straight

    Between 1999 and 2012, the average US household lost over 9% in income. According to the Census Bureau, the median household income was $51,017 in 2012, compared to $55,080 at the peak in 1999. In short, most Americans are working harder but earning less. Today, we’ll look at the data and discuss why this trend continues even though the economy is in a slow recovery.

    In a similar pattern, growth in US worker productivity is also in decline. Productivity grew only 1.5% in 2012 versus 3.3% in 2010. So far this year, productivity is up only 1.9%. While that’s a modest improvement over last year, it’s still quite low. We’ll take a closer look at this problem as we go along today.

    The Bureau of Labor Statistics recently reported that there are over 27 million Americans who are “under-employed.” These Americans include those who are officially considered unemployed, plus involuntary part-time workers and “marginally-attached” workers – those who have not looked for work within the last four weeks. That is a new record high. And you’ll also be saddened to learn that almost half of college graduates work in jobs that do not require a college degree.

    But before we delve into the topics above, I want to alert you to two key economic reports that will be out this week. The second revision of 3Q GDP will be out on Thursday morning, and the November unemployment rate will be announced on Friday. I’ll tell you what to look for below.

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