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American Workers Are In Pretty Great Shape

Over at the New Republic, Clio Chang tells the story of Richard Ault, a Silicon Valley technologist who fell on hard times and ended up in debt to the tune of $60,000:

“It’s ridiculous to me to think that $1,000 to every family in this country is going to save the country,” Ault said of the government’s sporadic relief checks, especially living in a city with such a high cost of living. “It’s rearranging the deck chairs on the Titanic.”

Ault is one of millions in the United States facing a similar crisis. Household debt, which has been on the rise for the last decade, reached an astronomical $14.56 trillion at the end of last year. As rent and mortgage debt piles up, nearly a third of people in the country are at risk of eviction or foreclosure. While credit card debt, which is now at $820 billion, fell overall, in part due to a decline in spending, some 51 million people still saw it increase during the pandemic. Student loan debt, the second-biggest type of household debt after mortgages, continues to skyrocket, reaching nearly $1.6 trillion.

This is an example of a writer who's just not willing to give up a standard narrative regardless of the facts. First off, here are blue-collar hourly earnings:

Hourly wages for blue-collar workers have been steadily rising since 2014 and spiked upward at the start of the pandemic recession. Even now, after wages lost a bit of their gain, they are still well above the trendline of the past few years.

Here is household debt:

Monthly debt service, which has been at its lowest recorded level for the past eight years, plunged yet again at the beginning of the pandemic recession. It is now well below anything seen since the Reagan era.

Here is the personal saving rate:

This is higher than anything we've seen since the Reagan era. Those "sporadic relief checks" have not only kept spending from falling off a cliff, they've also kept savings high. And this chart goes only through the third quarter of 2020, so it doesn't account for either the December stimulus bill or the current bill working its way through Congress.

Finally, here's the personal bankruptcy rate:

This is post-bankruptcy reform, so the comparison is apples to apples. Bankruptcies fell steadily during the Obama recovery, flattened out around 2016, and then spiked downward after the first stimulus bill passed in March of last year.

In summary: Nearly a year into the pandemic, American households have higher incomes, less debt, more savings, and are filing fewer bankruptcies than they have in decades.

I get that data doesn't tell you everything. Averages can hide a lot of variation, and there are always people in trouble even during the best of times. That said, the data doesn't even remotely back up the economic horror story that liberals seem to be addicted to. If anything, American workers are, in general, better off now than they have been in quite a while—and they'll be better off still after the American Rescue Plan is passed. So let's quit jawing and get it passed.

22 thoughts on “American Workers Are In Pretty Great Shape

  1. Vog46

    KD-
    While I agree with overall thrust of your argument here's some random thoughts:
    Hourly wages adjusted for inflation are skewed by the fact that the minimum wage has NOT been adjusted for inflation. How would that chart look had it adjusted automatically for inflation?
    If a debt to disposable income ratio had been the same since about 2008 then ANY gains made by Americans since 2008 were wasted on increased spending which may or may not have been necessary spending.
    Think about what we spend money on now that we didn't in the latter parts of last century
    Cell phones and portable cell phone plans
    Personal services (masseuses, skin art, etc)
    These are just two areas.
    Who still cuts their own grass? Who still drives a car that's over 5 years old? Who spends $800 - $1200 dollars every year or two on a new phone just because?
    I do not get the love affair with spending.
    But I also do not get the love affair with "adjusted for inflation" statistics when the minimum wage is NOT adjusted for inflation

    1. samgamgee

      In regards to the idea that min wage is not accounted for correctly in his charts, the chart is looking at "blue collar earnings" which encompasses more than just min wage in it's value for wages that year (didn't look if it's just avg or what).

      The next year's "earnings" are tabulated and then adjusted for inflation to keep the comparisons relevant. Min wage's lack of growth should affect the overall growth of "earnings" and thus show up in the trend accordingly.

      Either that or I need more coffee.

      1. Vog46

        @samgamgee
        From Wikki:
        "A blue-collar worker is a working class person who performs manual labor. Blue-collar work may involve skilled or unskilled labor. The type of work may involve manufacturing, warehousing, mining, excavation, electricity generation and power plant operations, custodial work, farming, commercial fishing, logging, landscaping, pest control, food processing, oil field work, waste collection and disposal, recycling, construction, maintenance, shipping, driving, trucking and many other types of physical work. Blue-collar work often involves something being physically built or maintained.

        In contrast, the white-collar worker typically performs work in an office environment and may involve sitting at a computer or desk. A third type of work is a service worker (pink collar) whose labor is related to customer interaction, entertainment, sales or other service-oriented work. Many occupations blend blue, white, or pink-collar work and are often paid hourly wage-labor, although some professionals may be paid by the project or salaried. There are a wide range of payscales for such work depending upon field of specialty and experience."

        Now - if, and it appears to be a big if - IF - you follow the historic definition of blue collar then yes they are doing OK. But if white collar and "pink" collar jobs are NOT included in that definition then their much lower wages would change KD's chart by a lot
        As pointed out below half (if not more) of American workers make less than the median income of $31K per year. $31K per year is $15/hr give or take. So half of Americans make LESS than that if the posters figures are correct down below.
        For the un-initiated (or old man like me)
        52 weeks per year X 40 hours per week = 2080 hours worked
        I usually round off to 2000.
        So a $15/hr wage works out to $30K

    2. Crissa

      I have never paid someone to cut grass. My car is eight years old. I have always paid for a phone, it's just no longer tethered to a building. I don't see what you're implying has changed in forty years.

      1. Vog46

        Crissa -
        You (& I) are a distinct minority in this country.
        My last land line telephone bill was $15/month and it was used by (at the time) 3 family members so $5 per person per month.
        Is it worth the convenience to have the phone in your hand WHENEVER you want it? I say no because I never use the damned thing anyway.
        My car is 7 years old. The Mrs is trying to get me to stop doing my own oil changes - says I'm too old to do that type of stuff.
        I don't get the need to have the latest and greatest

  2. NealB

    I read these repeated economy fluff pieces you're posting and wonder what they're about. They seem to be simply about themselves and your love of charts and numbers. Yes, we've all got a couple hundred dollars more in the bank since a year ago. At least until tax time, or that long postponed roof repair or dentist visit, or saving a dime for retirement. The gains you cite are a drop in the bucket to the ground we've lost and may never make up. And worse, right now, like the last time and the time before, it's all a fluke of the latest national economic meltdown, isn't it? (And including an implicit comparison to "the best of times" is awfully wishful.)

    The reality is that the economy is terrible and over 90% of Americans struggle day after day to survive. Just to survive. And it's been this way for over 50 years now. Over. 50. Years. Livelihoods and lives lost that will never recover.

    You need to get out more and look at something besides landscapes through a camera lens, I think (much as I enjoy those photos).

    1. ProgressOne

      "90% of Americans struggle day after day to survive. Just to survive. And it's been this way for over 50 years now"

      Get real man. Those 90% of Americans are some of the most affluent people in human history. Today nearly half the world lives on less than $6 a day.

      1. bmore

        I hope that comment was snark. Otherwise, read up on relative poverty vs. absolute poverty. Also, read $2.00 a Day: Living on Almost Nothing in America by Edin, Kathryn, H. Luke Shaefer.

        1. ProgressOne

          It's not snark. The people in the 90% are not those living on $2.00 a Day. The top 90% of households make at least $15,000 per year, and the median is about $65,000.

          Few people in the top 90% live in poverty. The US relative poverty rate in 2020 was under 10%.

  3. bokun59elboku

    Half of American workers make less than about 31k a year (median wage for all workers). That seems like it should be a big deal. I do not know a single person who says things are economically great. Not one.

    Bankruptcies are incredibly hard to attain right now. That fact is my main reason for wishing Biden had not won the nomination. His bankruptcy bill is a horror show designed to punish the poors. Cruel beyond measure.

  4. Pingback: Things (on average) are not so bad as many believe | Later On

  5. skeptonomist

    Kevin tries to show how things have not gotten worse recently, which ignoring details is true in some senses. But he also seems determined to conceal how the outlook of American workers has badly worsened since around 1970. For example real wages of BLS "production workers" have not actually improved since 1973:

    http://www.skeptometrics.org/BLS_B8_Min_Pov.png

    Before that, wages kept up with GDP/capita or productivity, and this was not just a post-WW II phenomenon:

    http://www.skeptometrics.org/WageIndex.png

    This uses a wage index from the Economic History Association (EH.net). As wages have essentially not improved, income and wealth inequality has increased. Kevin does not show how CEO pay, for example, has increased. The stagnant wages and increasing inequality are a true story that some people who call themselves liberals try to call attention to. Kevin on the other hand evidently thinks that workers should be happy if any small part of economic expansion over the last 50 years has trickled down to them.

    By the way the jump in hourly earnings was due mostly to the fact that the lowest-wage workers were disproportionately laid off. Personal bankruptcy filings would be a lot higher if it weren't for the law of 2005, which makes it much harder for consumers to file. I wonder if debt-service payments takes account of various moratoria - a lot of back rent and mortgage payments will be due later.

    1. KenSchulz

      Good points. I had the same issue with the upticks in wages during recessions. If the debt-service decrease is actual payments, it doesn’t mean anything at present because of the deferments. And, as always, I would like to see data broken out by quantiles.

  6. golack

    I dunno. Can we, the gov't., keep paying people to be "independent contractors" (God forbid they be employees) or to stay afloat for the time being so they don't vote to unionize? There will be a bit of turmoil when the Covid social distancing times are over.

  7. n1cholas

    You can point to as many charts as you want.

    To believe Americans Workers are really getting ahead is hilariously tragic.

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