Sunday, November 10, 2013

Two-Income Households Earning Median Wages... not enough, and is not a middle-class income.

We hear a lot about "household incomes", but by comparing the nominal values and real values chained in 2013 dollars, we see a very ugly picture. (See the complete post with charts.) Recently the Census Bureau reported that median household income* fell for the fifth straight year in 2012 to $51,017 -- and after being adjusted for inflation, was the lowest annual income since 1995.

* Median household income is the total combined income of all people living in one household -- with median meaning, half of all households in the U.S. earned less and the other half earned more. Using median is a more representative measurement for describing incomes rather than using averages.

A "household income" might include 10 people working part-time minimum-wage jobs and all living under one roof ---- while only one person (who is a multi-millionaire, and whose only income comes from capital gains) might live in another "household". A household income could also include a combination of wages and income from a Social Security benefit (or pension, disability, unemployment benefits, etc). So the median household income between the two aforementioned households won't tell you very much. That's why you have to first consider median wages before you should consider household incomes.

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Usually it feels as though elections are an exercise in futility. We live in a mirage democracy, one in which major party candidates are first vetted by the corporate machine before they can get on the ballot --- whereas third party candidates, who represent the values of real grassroots movements, are always undercut by actions in which the major parties collude against them.

But two recent votes showed progress in the minimum wage battle --- in Washington State and in New Jersey. South Dakota, Alaska and Idaho will likely be voting on raising the minimum wage in upcoming elections. It is urgent that the race to the bottom in wages ends. The U.S. has become a nation of poverty-wage workers, rather than one with a vibrant middle class.

Votes on the minimum wage were empowered by the actions of low wage workers and the highlighting of income inequality by the Occupy Wall Street movement. In Los Angles, Walmart workers went on strike with the support of hundreds of community members standing in solidarity with them. Workers and their allies escalated to nonviolent resistance actions, but nonetheless, resulted in more than 50 arrests.

In Las Vegas, culinary workers also went on strike and were arrested when they held a sit-in at the Cosmopolitan Hotel and Casino. In these insecure economic times, it takes great courage for low-wage workers to stand up to big corporations.

Nearly 40 percent of all workers in the country made less than $20,000 last year, according to data from the Social Security Administration, which doesn’t include figures on benefits such as health insurance or pensions. That’s below the federal poverty threshold for a family of four and close to the line for a family of three. On average, these workers earned just $17,459.55 (that's why so many workers rely on food stamps and Medicaid).

Meanwhile, half of all workers make less than $28,000 a year (which is not that much more to live on). Wider Opportunities for Women has estimated that a two-income family with two children needs to bring in nearly $72,000 a year to simply reach economic security. A two-income household earning median wages can’t achieve a healthy middle-class status.

As David Cay Johnston notes, the median wage is at the lowest level since 1998. That means half of all workers made more and half made less. But the average wage actually grew. “When the average wage grows but the median wage stagnates, it means that, statistically, only workers in the top half of the job market are experiencing increases,” he writes.

His analysis shows that most of the wage growth was for the top quarter of earners, or those who make about $50,000 and up. In fact, things are very good at the top. The number of workers making $5 million a year or more jumped by nearly 27 percent over 2011, and their total wages grew 40 percent, or 13 times the increase for all workers.

This income inequality has been growing since the 1970s, as the richest 20 percent of Americans saw their income grow much, much faster than the bottom 20 percent. But things have greatly accelerated since the economic downturn. For the past three years, those at the top of the income ladder saw their incomes grow by 5 percent while everyone else’s income dropped. The top 10 percent of the country’s earners took home half of the income in 2012, the largest amount on record.

Meanwhile, things at the bottom have been declining. The bottom 60 percent of earners have experienced a “lost decade” of wage growth while seeing their compensation fall or stagnate. Many forces have contributed to this trend (offshoring, automation, guestworker visas, corporate greed, etc), but the growth of low-wage jobs that replaced middle-class jobs during the recovery has helped it along.

And Obama's proposed Trans-Pacific Partnership, if passed, would be a huge corporate power grab, and further drive down wages. A new study shows that the vast majority of U.S. workers would see wage losses as a result of the pending "free trade agreement". Communities are starting to pass resolutions saying that they will not obey if the TPP passed.

* See my older post: Two Income Households, 'Mean' and 'Median' Income Statistics

* Recent Related Post: Wage Theft by Employers is Rampant

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