An Economic Snapshot
Since 2004, the economy has been growing at a healthy clip, the unemployment rate is low and productivity growth has accelerated from the already elevated levels of the late 1990s. But very little of the resulting prosperity is finding its way into the pockets of America’s workers.
Income and wages are not keeping up with inflation, the household debt burden is growing, health insurance coverage continues to decline and poverty rates remain higher than before the last recession. Wages and salaries now account for the smallest percentage of GDP on record, while corporate profits are at their highest level since the 1960s.
The economic recovery that began in November 2001 has been the worst on record in terms of job creation, real income growth and poverty reduction. Private-sector jobs are up by only 1.5 percent since March 2001 (the start of the last recession). In previous business cycles, jobs grew by an average of 8.8 percent and never less than 6.0 percent.1
In every other recession since 1970, median income grew by an average of 5.5 percent. Since 2001, real median household income has fallen by 0.5 percent, or $243 per year.2 Four years since the recovery from the 2001 recession, real median household incomes still have not reached their pre-recession level. Both the poverty rate and the number of people in poverty are significantly higher today than at the trough of the last recession—the first time in 40 years that poverty has actually increased during an economic recovery.
Meanwhile, real median earnings for full-time, year-round workers continued to decline in 2005 (by 1.8 percent for men and 1.3 percent for women). Male median earnings were actually lower in 2005 than in 1973, despite tremendous productivity growth during that period.
1Lawrence Mishel and Ross Eisenbrey. "What’s Wrong with the Economy?" Economic Policy Institute Policy Memorandum. June 12, 2006.
2Center on Budget and Policy Priorities. "Median Income Remains Lower and Poverty Higher Than When Recession Hit Bottom." Aug. 29, 2006.
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