A new study by Northwestern University economists, called The “Jobless and Wageless” Recovery from the Great Recession of 2007-2009,” found that the economic recovery is highly uneven: corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than one percent. In other words, the average American worker has been left behind by the recovery, which officially began in June 2009. “The economic recovery through 2011 I has failed to create any net new jobs since the quarter marking the end of the recession in 2009 II.
“The absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented. The lack of any net job growth in the current recovery combined with stagnant real hourly and weekly wages is responsible for this unique, devastating outcome,” wrote the report’s authors. Indeed the share of wealth generated in the recovery period since June 2009 going to salaries was a measly $7 billion in comparison to the $464 billion going to corporate profits. “The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders.”
America’s Economy Shrinking
While the current wage and profit numbers are without precedent, the trend of the jobless, wageless recovery has been a feature of the American economy since the 1980s: for three decades, the share of wages in national income growth declined after each recession.
Another trend is the decline of economic growth since the 1950s, when it was over 12 percent, to slightly over eight percent in the 1980s and less than four percent in the three decades since. The chart below illustrates the decline of GDP growth in the last five decades.
Another aspect of the chart is the deeper recessions since 1950. The last recession saw a decline in GDP of four percent, a record fall, but well in keeping with a trend of greater and greater contractions.
Phantom Economic Booms Obscure Economic Realities
But all of this has been recently obscured by two speculative bubbles—the dot com boom and the housing boom—making it appear that things were going great in America in the last decade when, in fact, things were going badly for the average person.
Much of the reason had to do with the prolonged destruction of the industrial sector—where as many as six million jobs had been exported abroad. Writes Karl Smith in Manufacturing collapse, “…[the] real manufacturing recession began in 1999 and simply never stopped. What’s amazing is that we had any recovery at all.”