U.S Median Income Rises, But Still Below 2007 Rate. Low Wages Drag Down Retail Sales.

More jobs are opening up in the auto industry, but they don’t pay what they used to.

N.Y. TIMES

Median household income has begun to recover over the last two years, but households still have not come close to regaining the purchasing power they had before the financial crisis began, a new study says.

Although median annual household income rose to $52,100 in June, from its recent inflation-adjusted trough of $50,700 in August 2011, it remained $2,400 lower — a 4.4 percent decline — than in June 2009, when the recession ended. This drop, combined with the 1.8 percent decline that occurred during the recession, leaves median household income 6.1 percent — or $3,400 — below its level in December 2007, when the economic slump began.

Since the end of the recession, the study said, household income has declined for all but a few population groups. Some of the largest percentage declines occurred for groups whose income was already well below the median, like African-Americans, Southerners, people who did not attend college, and households headed by people under age 25.

Households headed by people with only a high school diploma have seen their post-recession income decline by 9.3 percent, to $39,300 in June of this year, the report said. For households headed by people with an associate degree, median income declined by 8.6 percent in those four years, to $56,400. And among households headed by people with a bachelor’s degree or more, median income declined by 6.5 percent, to $84,700.

Since the end of the recession, the report said, income has declined by 3.6 percent for non-Hispanic white households, to $58,000, and by 4.5 percent for Hispanic households, to $41,000. Those changes were smaller than the 10.9 percent decline, to $33,500, for non-Hispanic black households.

 

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 Walmart Supercenter in Rogers, Ark. Several large retail chains this week dialed back their annual earnings forecasts.

 

HAROLD MEYERSON WASHINGTON POST

This Wal-Mart low-prices, low-wages thing isn’t working out so well — even for Wal-Mart.
The company released its quarterly numbers last week, and they weren’t pretty. Same-store sales declined by 0.3 percent, and the company lowered its earnings-per-share forecast. Bad news wasn’t limited to Wal-Mart. At the low end of the retail consumer market, Kohl’s reported similarly bad news; Macy’s, a little higher up the food chain, lowered its earnings forecast as well.

While Americans with money are boosting both the housing and auto markets, the growing number of Americans without are curtailing their shopping. As Douglas McMillon, chief executive of Wal-Mart International, noted last week, “When we do see good things in the economy, sometimes they don’t immediately flow through to a paycheck. Remember how the average American lives.”
And who signs more paychecks than any private-sector employer on the planet? Ah, yes: Wal-Mart.




But let’s not single out the Bentonville, Ark., behemoth unduly. The good things in the economy aren’t flowing through to paychecks anyplace else in the U.S. economy, either. Corporate profits — which comprise a larger share of the nation’s economy than at any time since World War II — are being plowed into share buybacks or dividend payments, but decidedly not into wage increases. Worse yet, a steadily higher share of the jobs created in the current “recovery” are low-wage positions in retail and restaurants, while wages for the new generation of auto workers are half that of their predecessors.

The United States leads the industrial world in the percentage of its jobs that are low-wage. Fully 25 percent of the workforce makes less than two-thirds of the nation’s median wage — ahead of Britain (where just 21 percent hold such low-paying jobs), Germany (20 percent) and Japan (15 percent). This is not what the “We’re Number One!” chant presumably refers to, but it could.
This is not the first time U.S. mass retailers have faced the problem of under-consumption. In the 1920s, as U.S. cities swelled, the low incomes of the new urban consumers posed a constant challenge to merchants. In contrast to today’s Walton family heirs, however, some of those merchants realized that the solution was to raise workers’ incomes.

Edward Albert Filene - By Henry Rox

In the ’20s, Edward Filene, whose family owned both its eponymous chain and the Federated Department stores, called for the establishment of a minimum wage, unemployment insurance, a five-day workweek, legalized unions and cooperatives where people could do their banking. (He helped establish some of the first banking co-ops himself.) The Straus family, which owned Macy’s, and shoe-magnate Milton Florsheim endorsed similar measures and were among the more prominent business leaders who supported Franklin Roosevelt’s New Deal. They were well compensated for their clear understanding of how to make an economy thrive: During the 30 years of broadly shared prosperity that the New Deal reforms made possible, department stores catering to the vast middle class were a smashing success.

Today’s economy, alas, has increasingly more in common with the pre-New Deal era than with the more robust an  egalitarian mid-20th century. The mass market has fragmented into a bustling luxury trade and a stumbling low-income sector. As in the 1920s, wage increases are few and far between. And with the economy disproportionately generating low-wage jobs as middle-income positions dwindle, it’s time to ask why the Waltons can’t see what the Filenes and the Strauses saw fully 90 years ago: that a nation whose workers have inadequate incomes and no bargaining power isn’t likely to be one where mass retailers can thrive.

Those workers, meanwhile, are growing restless. ...They are asking for a minimum wage of $15 an hour — not that much when you consider that 70 percent of today’s fast-food workers are adults and that $15 an hour comes to just $30,000 a year. As in the ’20s, these nonunion workers probably can’t persuade their employers to give them a raise. Yet that doesn’t mean they can’t prevail. Writing in 1924, Filene predicted that if workers “cannot settle their issues inside industry by industrial methods, they will go outside industry and settle them by political methods.” States (and some cities) have the authority to set their own minimum wage standards. As long as employers like the Waltons remain so indefatigably dense, that may be the only way workers can win adequate pay — and the only way mass retailers can return to health.