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Incomes Decreased More After Recession Than During Recession

This article was written by in Career and Work. 15 comments.

A new analysis of household income reveals some statistics that might be counter-intuitive. The study, authored by former Census Bureau economists Gordon W. Green Jr. and John F. Coder and published by Sentier Research, shows that median income for Americans has decreased more sharply during the economic recovery than during the recession.

The survey that presented these results focuses on monthly income data, which the study’s authors believe are more accurate than the popular annual data. The monthly data is more recent, helping to contribute to more potentially accurate results. Also, the annual data is subject to a “telescoping” effect, wherein respondents are more likely unable to correctly identify the timing of financial changes.

When the recession began in December 2007, the median salary was $55,309. This figure was down to $49,909 by June 2011, the most recent period with monthly data available.

It’s always interesting to look at data reflecting the economy as a whole, but most of the time, the only data points that matter are the specific conditions that affect your household. While the economy is slowing down, if a family has been able to increase income through negotiation, a strategic carer move, excellent performance, or picking up extra work on the side, the overall economy’s failure doesn’t matter.

It’s probably because I’m paying more attention now, but it seems like the economy is a significantly bigger piece of the news cycle than it ever has been. The economy has been the primary issue for politicians as well, replacing war and social issues. As someone who writes about personal finances, I can’t complain about this trend, but I often need to remind myself that macroeconomic issues aren’t that connected to people’s day-to-day experiences. It does trickle down. For example, the economy suffers and the financial industry suffers with it. With a sluggish industry, financial companies are less likely to hire or offer competitive salaries and benefits, protecting profits as much as possible for shareholders. Financial firms increase fees, fire customers, and make life difficult for employees.

At the individual level, these changes might not matter. I can move my money to an account that doesn’t charge fees. I can find a new job or find ways to supplement my income.

You can either be a victim of the economy or you can take control of your finances and increase your human capital so you can thrive regardless of the state of the economy.

Reuters, New York Times

Published or updated October 10, 2011.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 15 comments… read them below or add one }

avatar 1 Ceecee

This seems true in my experience. Almost everyone I know is making less now than they were a few years ago.

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avatar 2 lynn

Most of the people I know are making more, as I am. I just have never been on the same plane as the main stream. Our small area is constant. This time saving us from a lot that is going on out there.

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avatar 3 qixx

I’m in the same boat as lynn. My income is about $22,000 higher now than at the start of the recession. It is about $10,000 higher than at the “end” of the recession.

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avatar 4 Anonymous

“You can either be a victim of the economy or you can take control of your finances and increase your human capital so you can thrive regardless of the state of the economy.”

You are right on the money with this. It will be a long time until jobs and incomes get better, so we all have to learn to be much more entrepreneurial and self sufficient than in the past. There is no such thing as a “secure” job anymore.

When you begin taking control of your destiny and find ways to add to your income and add value to the work you do, your work becomes more valuable to others and your income will eventually rise. It’s up to us to make recovery in our own lives.

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avatar 5 tbork84

Very eloquent point in your last statement. I couldn’t agree more.

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avatar 6 shellye

Well said, Dr. I think your last point speaks to why there continue to be so many people out of work.

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avatar 7 lynn

Your thoughts are right on, sir – for some of us.

However- There are some people who don’t know how to accomplish this. Not everyone has been gifted with the same skill set.

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avatar 8 Anonymous

I think a lot of economic data lags between when it actually happens and when it gets reported, so my hunch tells me that this could be somewhat attributable to a reporting issue. The big issue I’ve seen is that even if you did keep your job, raises and bonuses have been non-existant, so ‘real’ purchasing power has shrunk year over year.

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avatar 9 Anonymous

I wonder if it is because of reduction in hours? Loss of jobs would also reduce earnings in that year.

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avatar 10 Anonymous

It’s nice to have some numbers that back the reality of many Americans! We keep hearing that that we are in a recovery but I think a lot of us were wondering if we were the only ones who weren’t noticing a dramatic improvement. Thanks for the post.

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avatar 11 Anonymous

What I’m wondering about is where the median salary will level off. Have we as a society just been overpaid all these years and is the “market” adjusting the way it needs to?

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avatar 12 Anonymous

That is interesting data, but not surprising now that I think of it. This jobless recovery has been supported primarily by federal stimulus dollars (basically stealing from our children) to articficially prop up GDP. So, without flooding the system with borrowed/printed money, we’d probably still be in the throws of Recession. The job market is pretty reflective of a lousy/stagnant economy. Inflation is relatively low and companies have increased productivity BIGTIME, eliminating the need to hire workers even though GDP has ticked up a bit. So, that translates into continually declining wages – there’s just very little pent-up demand for MOST workers. There are actually millions of unfilled jobs in America right now. But most of them entail skill sets or locations that Americans aren’t matched with.

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avatar 13 Anonymous

Everything is localized. Take the real estate market for example; many people watch CNN and other national news broadcasts, and assume what is being said as the nation as a whole, must be true about their local real estate market. This couldn’t be further from the truth, their are strong local markets, and weak markets, it all depends on where you are.

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avatar 14 Cejay

In my neck of the woods, Bartow County, Georgia, we are seeing no sign of the economy improving. If anything it is getting worse as more and more businesses close. Lately, I have the feeling that my once “secure” job is no longer secure. I have been racking my brain trying to think of what I can do in the event I lose my job. We have an emergency fund and our monthly bills are very lean. But still I am having trouble thinking of what I could do to help my family. But since necessity is the mother of invention I know that the ideas will come.

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avatar 15 lynn

There are variables in life that we have no control over. I TRY not to worry about what could happen. It makes me tired. I need my energy for the things that are happening at the moment. I have found that everything has a solution – with the exception of death.

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