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Labor Day – Holding On

This Labor Day is more important than most.  It signals the start of the endgame of the election, the time when everything starts to count even more because everyone is paying attention.  And this year, what people are paying attention to more than anything is labor itself – the state of jobs.

Barataria has dealt with the job market many times over the summer.  While there is a net gain in jobs over the Obama administration the growth in jobs barely absorbs the young people entering the workforce.  It’s not exactly the material for a strong re-election.  But that’s not all there is to the jobs picture.

There’s little doubt that employment has had trouble keeping up since about 2001.  The lack of jobs is more than just growing unemployment, however.  More people asking for jobs puts downward pressure on wages, which has been accelerating over the last decade.  Consider this chart showing the annual increase in compensation in real (inflation adjusted) terms since 2001:

Note the downward trend over the last decade overall – and the net total stagnation over the last four years in particular.  The state of the American worker this Labor Day is “holding on for dear life”.

The trend has been going on for a solid decade, but it has been coming to a head recently.  While the trend towards serious job loss may have reversed lately, the downward trend in real wages has not.

What happened to American jobs?  A year ago it was noted here that the majority of the job loss over the last decade came from manufacturing jobs.  These are the jobs that offer the most opportunity for young people seeking a stable life where they can have a family, be supporting members of the community, and generally have the good life.  Nothing has changed in that time.  We are still a nation that does not make the stuff we consume.

This Labor Day the numbers won’t weigh as heavily as soundbites that describe the economy as either rebounding or receding – and how they play in the guts of voters.  By just about any measure we’re on a long slide and for all our hard work barely holding even.

Labor Day is a day to take stock in how we are doing as individuals and as a nation before we go back to work.  The long, languid summer is over.  What will voters say, and who will they blame?  We find out in two months.

6 thoughts on “Labor Day – Holding On

  1. You should add a regression line to that chart but it is easy to see it. When the regression hits zero real wage growth we can call that the day the electorate really got pissed. My guess is around 2010. Its not getting any better either.

    • I will look into how I can easily add a regression line, but your call of a zero date is not far off, I think. The actual data was right at zero then, too. It does explain a lot.

  2. The chart is not a surprise, but it is still ugly. Could you take this back a few decades to see what it was a long time ago? I’m curious if previous generations did better or worse. Thanks.

    • I did save the graph from 1947 on here:
      https://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=86247
      The last time it went this negative? George HW Bush lost his re-election bid. It was 3-4% consistently through the 50s and 60s, dropped off through the 70s, was pretty anemic in the 80s, but picked up in the 90s only to slide back down as we’ve seen.
      I think we can say that the last generation has not see any significant gains in real (inflation adjusted) wages except for a few years in the late 90s.
      I may have stumbled onto something important here.

  3. Pingback: Tale of Two Reports | Barataria – The work of Erik Hare

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