More evidence that American companies are doing well and American workers are not. This time from an insightful study by Andrew Sum and colleagues at the Center for Labor Market Studies at Northeastern University. Its title says it all: The “Jobless and Wageless” Recovery from the Great Recession of 2007-2009. Highly recommended!
What the researchers found is that: … through the first quarter of 2011, the nation’s recovery from the 2007-2009 recession is both a jobless and a wageless recovery. Aggregate employment still has not increased above the trough quarter of 2009, and real hourly and weekly wages have been flat to modestly negative. The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders. The data: from the 2nd quarter of 2009 (as the Great Recession officially ended) through the 1st quarter of 2011 corporate profits were up 39.6% and the S&P 500 44.3% while payroll employment fell by 0.4% and median earnings (corrected for inflation) down 1.0%.
Maybe most worrisome for the long term is the finding that productivity (output per hours worked) grew 5.5% in the first seven quarters of the recovery. The researchers conclude: … substantial improvements in labor productivity over the past few years have not yielded any increase in the real hourly or weekly earnings of the average U.S. worker. These gains in labor productivity have primarily been used to boost aggregate corporate profits to a degree not seen before in the nation since before World War II.
Growing productivity has been assumed to be the engine of shared gain by companies and workers. It has worked that way in the past. That it is not working that way now is quite ominous. If productivity gains don’t lead to job and income gains for American workers it is not clear what does.