We’re Measuring the Economy All Wrong

The official statistics say that the financial crisis is behind us. It's not.

Comments: 229

  1. I wish you luck in convincing those with their hands on the levers of power to show some of the truths behind the numbers. They are much less than motivated to show us that the vast majority of us are being had.

  2. @Gerry. But the media should be doing this. They have the means and the motivation, and don't need government permission, right? Spend less time and space on Trump's tweets and put this kind of information on the front page.

  3. @Gerry: Time to change the hands on the levers of power.

  4. @Gerry . I would offer this: The knowledge doesn't have to be for the powerful. It should be used by average joe and joline to make decisions about how to use their limited resources to build wealth for self instead of the powerful. We've got a consumer culture... we can start there. Opt-in or opt-out.

  5. Thank you. The govt. and media are definitely not "saying what we're seeing or feeling." I'm not a quant but the graph showing the glaring lag of net worth compared to stock prices is an important reality mirror. The reflection ain't pretty, unless you're already rich.

  6. Thank you, Mr. Leonhardt, for opening this conversation.

    The economic indicators you mention, as well as mass media's coverage of same (and exclusion of all else) is a reflection of the top 1% of the mega-rich and the handful of giant corporate-owned media conglomerates that exclude and/or silence anything that is not in the best interest of that very upper echelon.

    At the same time, as your piece suggests, the VAST majority of the populus of our country have not recovered in any meaningful way from the 2008 Wall Street collapse of their rickety house of cards (a deck of 52 jokers?)

    The very fabric of our democracy is at risk. We, as a nation, can and should do better to ensure life, liberty, and the pursuit of happiness for all Americans - not just the uber-wealthy.

  7. @Cindy But many did not suffer that much so they did not need to recover. For example if you kept your job, did not buy stuff you could not afford, and kept your head down nothing much bad happened to you.

  8. Worth contemplating: many of the new indicators are really calculated fields and don’t require net new data collection. The financial press is free to report them using their own calculations. That might not be as good a s a government statistic but it certainly would bring attention to the discussion when parties disagree on what’s most valid. Other measures require new data but in the Internet age, collection isn’t that hard. So the real question is why is the financial press happy to report on statistics from the Model T era?

  9. @DenisPombriant. So all reports can be sourced, and some sort of “one truth” is reported. You cant just run around making up stuff, which is essentially what you’re proposing.

  10. Excellent opinion. Another misleading economic indicator is inflation, which fails to capture changes in markets most consumers consider indispensable: Health care, higher education, and housing. The astronomical inflation in these areas over the past few decades belies the oft-repeated mantra that "inflation is low."

  11. Don’t forget about stock prices!

  12. @Greg Health care for the healthy is not really a concern, the media makes it more than it actually is. And many are insured against it.

  13. @Greg I've been thinking the exact same thing! Just because inflation has happened slowly over time still makes it inflation. When wage growth has barely budged for the past twenty years (I was an admin assistant and the going wage this year is $18/hr and that's what it was in 1997 when I entered the market) while costs have grown 3% a year (twenty-years at 3% equals 600% inflation). Something smells and it ain't the fish...

  14. During the period from 1950 to 1960 the inflation adjusted earning power of the median of U.S. households increased 57%. This is what the "Make America Great Again" folks think will happen with Trump. Also, during this time, when Eisenhower was president, the highest marginal personal income tax rate was 93% (not a typo!). Notably, since 1960, when the highest brackets started to come down (yes, under JFK and accelerated under Reagan) real wages of the median earner, again adjusted for inflation, has actually decreased by 13%.

    We really don't have a middle class in the U.S. any more and like it or not, the only way to make the middle class strong again is with income equality, with much higher marginal tax rates for the rich and a minimum wage that reflects where we live (e.g. $25 per hour in S.F., $20 in Seattle, etc. )

  15. Agree with all your points, but one important technical point. Kennedy proposed, but Johnson passed the 1964 tax cut. It was the only tax cut to achieve its stated purpose: lower taxes and decrease the deficit. It is the model that all Republicans have pointed to for the past 30 years. There is, however, a dramatic difference between cutting the max rate from 93% to 65% while cutting spending and eliminating loopholes and cutting the max rate from 65% to 28% in the midst of a massive military buildup.

  16. @Samuel You are probably projecting, I don't think that the past is coming back. We will make America great again when we have a much better rule of law, conformity to the constitution, and opportunities that have been moved to other countries. This means immigration reform, trade reform, and respect or fear by every country around the world. All things the president promised, and the congress needs to deliver.

  17. @Samuel Lifting marginal tax rates makes it sound like high earners are being penalized for hard work or their smarts. Lets just "even the playing field". Warren Buffet tells us he pays a lower tax rate than his secretary. Why? Capital gains rates. Capital gains are just the income earned when saved money is put to work in an investment. Why should those earnings be privileged? When a stock is sold to a new buyer the seller pockets his profit. No money goes to the company whose share was sold so that business is not "built" in the process. If a store owner sells a dining room table he buys another and DOES help build the business of the furniture maker but gets no capital gains rate for taxes. Which is better for our economy? - a growing furniture business that hires more workers or a richer investor who buys another stock?

  18. First of all, WONKISH!. Second, great history lesson on the stats we now so ubiquitously hear. Third, WONKISH.

  19. We used to justify poverty by arguing: "Yes, it's inevitable that there will always be poor people in America, but those people are constantly changing. Most poor people, if they work hard, won't be poor for long. That's "The American Way."

    That argument, if it was ever true, seems to be making less and less sense these days. I'd like to see a stat that measures the "stickiness" of poverty. Can the "average" poor family in 2018 expect to climb out of poverty by, say, 2023? 2028? Ever? This measurement might give us a greater understanding of what's really going on in our "land of opportunity."

  20. @WDG - Put "economic mobility in the us" into google. You will get lots of answers.

  21. @WDG I've actually seen international studies on 'social mobility', and they clearly demonstrate that most European nations have more movement up and down the class ladder. More (hidden) evidence of the rigged, stagnant nature of the 21st century US economy.

  22. @WDG, Sociology, Patrick Sharkey has those statistics.

  23. The NRA doesn't want the Government to collect statistics on gun violence and the rich don't want the Government to collect accurate data on income inequality for the same reasons.

  24. This data is available, it just takes time to find because the data is not put into the news with its source very often.

  25. @Ronny.... and we the people keep losing our financial security, and our safety from gun violence--along with our influence on our elected representatives.

  26. The economy hasn't recovered in the community where I live. We don't have a high unemployment rate because young people have left for better opportunities.
    Our high school graduated 25 students last year. Twenty years ago, the numbers were in the hundreds.
    Most of our citizens are old enough to have pensions and Social Security. The town voted for Donald Trump, in part because they don't want their tax money to be used to help the undeserving. They hate the idea of immigration and believe that people of color are criminals and lazy.
    Upstate New York has a lot of communities like this. The economy hasn't recovered because agriculture has changed. There is nothing to replace it and towns are caught in a downward spiral. I suspect this is true in many rural regions.
    What kind of different statistics would capture these problems? That is a big question, but it rings false to say that the economy has recovered in this time and place.

  27. @Betsy S SO true with the "aching" disparity of our overall economic output, which extends to our "restructuring" of key market levers since '08, e.g. manuf, auto plants, etc. toward AI/robots, and how this is netting out to lower living "standards" compared to pre-80's. But that's part of the angst, we're not going back to those days, considering big tech, big agr., more freelance/1099 jobs that are less stable. Seems part of the solve is the green collar economy that wasn't Obama's concept, others did it, but still hasn't taken off. The healthcare, SS issues are in a different zone to this topic.

  28. @Betsy S. The undeserving they want to keep their money from is themselves. Social security and Medicare is the largest government expense. They want to keep health care from everyone, I guess. The military, another big ticket item, must also be filled with “undeserving”. Remember when we didn’t have the money to provide soldiers in war zones with body armour? And children, because a large portion of food support goes to children. Are children so undeserving. Are they undesrving of health care too, I suppose, if their parents can’t afford it? Should there be treatment available for the opioid addicts in their midst.

    So you community votes because they don’t want their money to go to the “undeserving”: the elderly, soldiers, children, and the sick. That’s quite a list. Maybe they should pin it on the fridge.

  29. @Betsy S. First your neighbors need to get over labeling people as undeserving. Hasn't it occurred to you that some in power are labeling YOU as undeserving? That's why the economic recovery is so good for the affluent and not so good for the workers. Workers have been labeled as undeserving. Quit voting against your interest - rich white men are not interested in helping you. They are interested in helping themselves.

  30. All of our current malaise stems from two obvious things:

    * the well off do it from investment income.

    * a variety of factors including automation, off-shoring, and subtle effects like better materials and designs that reduce maintenance have eliminated very large numbers of jobs of what used to be "blue class royalty:" the solid upper-middle class job for someone who was a very skilled technician, or the foreman or low-level manager who directed their work teams.

    People need to think about what drove the french and russian revolutions ... the rich shifted all the taxation onto the poor.

  31. @Lee Harrison Great points, but the poor pay almost no federal income taxes, so where is that shift?

  32. I agree with this assessment; any effort to improve a company or a society requires an accurate measurement of present location and/or condition; and periodic assessment of relevant indicators related to most recent similar measurements. In another words: if we don't know where we're at or how we got there -- we cannot improve or maintain our society nor give assurance of progress toward reaching of our national objectives; which are not clearly known or stated to the general public. If we don't know "what we don't know" -- how can even ask the right questions?

    A free and self-governing society requires an educated public informed by relevant information to enable a majority of citizens to reach independent - yet collective decisions focused on commonly accepted goals and measurements. American has been lost and wandering in a "desert of numbers" unrelated to reality -- since the end of WWII.
    America won the battle of WWII with -- help of our then global allies -- and lost the war of liberty and justice for all...

  33. The unemployment rate expressed in new jobs created each month and the decrease in the number of unemployed, is to use statistical analysis created 120 years ago. No corporation
    today would utilize statistical models to predict their future which were created in the horse and buggy era. I believe we are now using rockets and supercomputers. How many new jobs are the creation as reseult of restaurants opening new locations each month. What is the base pay of those employees? Where is the foresight to train the unemployed with skills to earn more than $10/hour. They really aren't sharing in the rise in economic status and didn't benefit from the big tax cuts handed out last December to the more affluent members. This still remains a divided nation of have and have nots because of government passing laws to benefit only one group at the cost of rest. Wall Street is not Main Street.

  34. @Mike Thompson Don't assume that it's the "unskilled" making $10 an hour. I know people that hold a BS in chemistry working in analytical labs that start at $12 an hour! There are baristas at Starbucks with advanced degrees. The fact is there are no decent jobs available where you can use your skills and still pay your bills. We have biology majors managing restaurants and cleaning pools for a living.

  35. @Mike Thompson
    "How many new jobs are the creation as reseult of restaurants opening new locations each month. What is the base pay of those employees?"

    The base pay is set by how little money an illegal immigrant is willing to take to do that job. Get rid of the illegal immigrants and the restaurant owner will have to pay more to attract enough workers to open his restaurant.

  36. Mr Leonhardt makes some very interesting points - discouraged workers - those who no longer look for work has been increasing year over year for decades. The income inequality in America continues growing at an alarming rate - the poor getting poorer, the rich getting richer. The measurements the government has been using may not be the most updated or accurate measurements of a healthy economy. One point he missed - our Country's debt -$21 trillion - and the inability of Congress to balance our budget, increasing our deficits which in turn increases our debt. Americans are unaware how dangerous and costly this debt is - the interest expense on the debt will be approaching $500 billion - it's like unmanageable credit card debt - we'll never pay the principal, just the interest. The day of reckoning will come.

  37. Too many people have no net worth, they live paycheck to paycheck, they are unprepared for retirement, unfunded pension liabilities are huge, governnent debt is huge, future healthcare costs are huge. GDP has increased, employment is high, business valuations are way up, but much of this is because interest rates have been held to rock bottom levels for 10 years and now taxes have been lowered. The action necessary to fix the balance sheets of the governments, the pension funds and the average person, if taken, would knock the pins out from under the economy and stock market valuations would plummet. That is the hole that was dug by the financial crisis, and digging out of it will take at least another decade, asuming there is another crisis.

  38. I don't dispute at all what David Leonhardt is saying here; inequality is our most significant social problem.

    But I also wonder what happens to our economic analysis if we factor in the costs to the economy of climate change related disasters and the billions spent in rebuilding? or the health care costs resulting from millions now uninsured?

  39. @dmdaisy Inequality if earned is nothing, if not (and mostly it is) corruption is the cause and can be dealt with.

  40. Housing was not at a healthy or sustainable level in 2007. It was part of a speculative bubble caused by bad lending practices and wall st trickery. We should not aspire to 2007 level housing, sorry.

  41. It also seems to me that we ought to talk about more than income, especially total net worth. That net worth then should be broken down into housing vs other resources. As is noted in the column, when most of a family's net worth is tied up in housing, they may still struggle with expenses of living or extra costs such as medical bills. They may be 'worth' as much as someone who rents, but has a few $100k in investments, but still be struggling more.

    Net worth is an important figure. As a retired person, my "income" is lower than it used to be, but that is certainly not the full picture of my financial situation. Yet, non-investment income is the basis upon which the gov't determines tax bracket. That in turn determines the tax for investment income for folks who fall into the lowest "income" (non-investment) bracket with the result that they pay no taxes on long term capital gains & qualified dividends.

  42. @Anne-Marie Hislop I agree. We have a tax structure written in 1930's to encourage investment and it worked! But back then most of the tax revenue came from wages because most people earned wages. Nowadays most of the wealth in our national economy is not earned form wages, it's earned in investments so we need to turn the tax structure on it's head and derive the bulk of our net revenue from investment income and the financial sector. We need to tax wages at 14% and investment income at 60% and eliminate Schedule E altogether! When it's more lucrative for rich people to put on a suit and got to work everyday then they'll do it! We need to put the rich back to work because when the rich work, we all work!

  43. Brilliant article. Also, we need to add new economic indicators that take into account unpaid "caring" work that includes raising children, looking after elderly and disabled family members, and unpaid housework. It is crazy that the work that approximately half the adult population (women) used to do full time, and that adults continue to do on top of or instead of paying jobs, is unaccounted for.

  44. I’m sure the data could be created, if it’s not already. The reason economists don’t highlight these numbers is because they had been, historically, focused on production. We count that through how much is spent by consumers. Kids rarely pay their parents for the service of raising them and so we can’t accurately measure this against the person who made a chair.

  45. @Lois Yes, it is particularly inane that the additional work parents or spouses do outside of paid employment is not counted in "productivity."

    Whether maintaining property to keep values up across a neighborhood, volunteering locally to reduce the burden on municipal agencies, or -- crucially -- helping children or those in frail health, most adults are indeed being productive in a number of ways that are only rarely quantified, that add value to all of society. Obviously, well-parented kids are better prepared for school/work/society; well-cared for people with health challenges reduce the burden of care on our medical profession. Just for starters.

  46. @Lois -- Yes, and as I said above, the AARP puts that hidden cost at more than $450 billion/year.

  47. Progress. But the GDP growth needs shown needs to be adjusted for US population growth. In 2000, the population of the US was 282.2 million. In 2018, it was 326.8 million.

    Iff every individual would had generated the same constant contribution to the GDP, the GDP would therefore increase by 12.3%. Without leaving any individual better off.

    The graph shows the GDP of the Nation. Once you adjust for population growth, you find that the GDP per capita is a third lower. And that is the number that counts for the experience of individuals

    The GDP per capita is readily available.

    And yet, it is rarely used. For a decade, Mr. Krugman reported that the Japanese economy was stagnant. In reality, the Japanese economy adjusted for demographic changes , i.e. by GDP per capita, grew faster than the US economy between 2000 and 2008, that back then was thriving under a housing bubble.

  48. @Woof Great point yet we were over populated then and more over populated now. Especially with low capability individuals. Yet many thing we need more population, how foolish.

  49. We need better statistics, more accurate measures of what is really going on. No doubt but one thing is certain, the Republicans will vote against it. They wouldn't want us to know what's really wrong.

  50. @Cornflower Rhys That's not entirely true. Republicans will resist it till they're not in power and then they'll support it wholeheartedly if it makes the democratic administration look bad- just like the national debt rhetoric. How much have you heard about the national debt form Republicans lately? All I hear is crickets.

  51. I agree that new measurements are needed. But measuring household wealth from 2007, the high point of the real estate market, is wrong. The price advances at least from 2004 were the product of irresponsible lending that created the boom--and thus the crash. One has to go back before 1997 to find a "normal" real estate market. Whatever date between 1995 and 2003 one selects, it should be a "normal" real estate market date, not a boom date. Then, of course, the data should be inflation-adjusted.
    Using a "normal" starting point will yield a very different picture from the one painted starting at the top of the market. I suspect that household wealth will not be so different from what it is today for most Americans.

  52. @Martin Lowy Do you think anyone cares what the house is worth if they have to sell and move away from their lives to enjoy it? You move away from a lifetime of building a support network and being a vital part of a community and in the the years you'll need those things the most and can contribute the greatest amount of knowledge to others you have to move away from real wealth to be able to use your money. Housing values may as well be GDP in that case- both are just antiquated statistics.

  53. There's so much. Median Income weighed against median housing costs, median education costs, median medical costs. etc. More important to see where people are as opposed to the economy.

  54. In addition, the statistics do not reflect the individuals who have been permanently harmed by the financial crisis. Those who lost their homes, those who graduated college in 2009, and those who lost their jobs at age 50 or more have not and probably will not ever recover what they had or would have had.

    And those who were not personally affected in such a way (apart from the 1%) now find themselves living with a sense of insecurity that also will last a lifetime.

  55. @John Graubard I am no where near a 1%, due to some luck and some skill I never had that sense of insecurity, overly emotional folks do.

  56. This reminds me of a younger self driving up to Seattle in 1972 with a friend to find a job on a salmon boat for the summer. We were rolling along, and, then, around Redding, the red light on the dashboard came on (it was a '66 VW Beetle). Red light! It was two things: the battery or the alternator. But the car war running, so it was probably the alternator.

    We found a gas station and pulled in. In those days they did car service. We talked to the guy and fiddled with the alternator attached to the top of the engine. Bad design! I found out that if I pushed down an armature the red light would go off. Problem fixed! I wedged a match underneath it to keep it down. The red light stayed off. But, actually, it turned out, the armature was normally held down by an electromagnet when the alternator was producing electricity. It wasn't producing electricity, I suppose, so the armature flipped up (until I wedged it down).

    Near Weed, almost in Oregon, now nightfall, the headlights started fading and we managed to find a closed gas station where we froze all night waiting for it to open. When it did we charged the battery and took off, but had to pull over later where we decided to change the brushes on the alternator. We barely made it to Seattle a day late. We got a friend-of-a-friend to fix it.

    We both found jobs on boats to Alaska that summer. I then went back to California to finish my last year of college to become the genius I am today.

  57. Isn't it wonderful unemployment is lower than it has been for nearly ever. In fact many people are working more than just one job. In fact several are working two or three jobs at wages that still don't help pay for food, a place to live, and any kind of health care.

    I guess that is better than no jobs at all!

  58. This is a great article. Better indicators are clearly needed. Since individual economic conditions are not normally distributed due to the great inequality of economic life in the USA, averages are inappropriate and misleading while median calculations are more informative. Breaking up the data into quintiles is even better. As mentioned by others in this comments section, GDP per capita is a better statistic for understanding economic growth. Unfortunately, the more and potentially better analysis of the economy will offer greater opportunities for politicians to cherry-pick the statistics to "prove" their points. Or as Trump does so shamelessly, politicians can just lie.

  59. "The financial crisis remains the most influential event of the 21st century." This is arguable. One can make a case that 9/11 was the most influential event and that, indeed, the financial crisis stemmed from it.

    While I don't disagree on income inequality, a different but related issue, is how much scamming goes on that masquerades as legitimate market transactions. Scamming should not only be discounted in a GDP measure, it should actually be a subtraction, because it harms people.

    We still had a landline phone at home, get lots of calls that the caller ID identifies as people I don't know or don't care to deal with, and who don't leave a voicemail. Is that sort of activity productive? How much of our economy is like that sort of activity? We should be asking questions like that.

  60. We need to upgrade and expand current statistics, but some new ones are certainly needed to have an accurate financial picture of the country's finances. For starters, how we count a job creation needs to be updated and beyond all recognition of what we have now.

    Currently it's done by controlled census of households someone comes out and asks questions of whomever lives there. There was a time when on several temp contract jobs I counted as both unemployed while corporate america got to count me as having created 2 jobs. The length, terms and compensation including benefits (quality) must be added to the data otherwise trump & conmen fake the stats that they are job creators when, in fact, they are churning what we think of employment into working poverty all the while bragging of the good they do.

    The stats we need to add is labor not counted in GDP, labor not traded but keeps the economy running. For instance, many young people moved in with their elderly family members as unpaid home health workers when jobs pay so poorly it's more valuable. IMedicaid. From the number I spoke to as a Medicaid intake worker, it's not a stretch that millions are keeping the elderly from being an expense to the state in residential care. The dollar value is not counted except as a drag because they asked for help with healthcare. They often didn't ask for SNAP BTW. Their work should be reflected somewhere and rewarded for the service it is that impacts everyone.

  61. You should check with Obama before writing this stuff. He just claimed credit for the great economy. You wouldn't want to disagree with him would you?

    The claim that wealthy households own the bulk of the stock is deceiving given that 401k accounts total 3.5 trillion and pension funds are over 10 trillion.

    In summary, Democrats will complain about the economy as long as there is a Republican Congress no matter how things improve.

  62. @kwb: I’m puzzled by your second paragraph: why do aggregate totals refute anything about the inequality of the system? If the top 10% of 401k account holders have 90% of the assets, doesn’t this confirm what Mr Leonhardt is arguing?

  63. @kwb
    35 percent of private sector workers over the age of 22 don't work for a company that offers a plan. And 42 percent of those who do have less than $10,000. So the claim is not really that deceiving.

  64. Everyone with a brain needs to read "The People vs Democracy - Why Our Freedom is in danger and How to save it" by Yascha Mounk, a lecturer in Government at Harvard. The problem is, unfortunately, a lot bigger and more complex than just the financial collapse of 2008 and associated problems. Putting my own spin on it, I'd say that the essence of the problem is that the complexity of modern society has greatly outrun our ability as individuals to competently manage our own affairs. Our lives, of necessity, are increasingly run undemocratically by a great host of technical specialists beyond the day to day reach of normal politicians. These range from central bankers, to financial market regulators, to judges, to regulatorss of environmental protection, health care, public education, etc. None of us are competent to properly do these jobs without years of specialized background. So it has a natural tendency to come to feel and to be ever more undemocratic. So we elect a total ignoramus jughead to pull down the structure of government. In the end we are all of us stuck with having over 70% of the same DNA as a slug. The essence of our ability to make progress and to prosper is our ability to work cooperatively with each other which requires mutual good will, and serious dedication to honesty and disclosure, and the greatest possible use of uncorrupted learning and study. Unfortunately, populism is pretty much contrary to what we truly need.

  65. @Charles Further to my own comment, the complexity of the situation is a real barrier for us to know how it needs to be addressed. of course very simple solutions have great appeal, especially to those who are least equipped to understand the complexity but who, at the same time correctly diagnose the insincerity of so many leaders and understand in a deeply personal way that things just are not working as they should be. Their revolt is justified but it has be carried out in a productive way which is the problem. How? Really caring for each other would be a good start - to be shown at all levels, by every leader in every party. Unfortunately that isn't what is being dished up. We're getting anger and lies.

  66. @Charles I read the description, the basic assumption makes an *** out of him and you. The constitution in the US prevents most of those things that happen in say Russia. The president appoints judges that uphold the constitution, yet is seen as an authoritarian. Seems like Obama is that, not Trump.

  67. The measurements won't change until genuine interest in improving the lives of the 99% outweighs the the desire of the members of the 1% to have it all for themselves and do so by manipulating politics and the economy. The little people truly don't rate until they find guillotines. That isn't likely though. Nowadays the disillusioned are exhausted by working two jobs or are medicated with opioids, alcohol, video games, Netflix, and Tinder. Swipe left on your culture and country. Hope it is worth it.

  68. As documented in a NYT's reporter's book, "What Went Wrong", the redistribution of America's earned wealth to the already wealthy began in the 1970's, and has continued since. Tax policy, reduced financial regulations, Federal subsidies, militarization, anti-union laws, Citizens United &c have created a "perfect storm" favoring the rich, corporations and Wall Street. Increased poverty, a declining middle class, eroding infrastructure, educational and healthcare systems are among the consequences.

  69. Thankfully this is only an opinion piece because its not mired in virtually any fact. Its distorted, was there a mention of u6? was there a mention of what happened in 2010 when a certain past administration changed how the unemployment rate was calculated to make it look "better" NO Socialism is on the rise and this is bad for everyone especially the poorest. Terrible opinion piece

  70. @Jim

    "Socialism is on the rise and this is bad for everyone especially the poorest"

    Its odd, Jim, that in a post sarcastically critical of the data you make such an assertion and offer no data, nor any other sort of thing, to support it.

  71. Jim, I guess you missed all the graphs in this op-ed, article, whatever you want to call it. Also, the author gave a historical perspective, not a political one. And finally, regarding your quip about socialism, I disagree, and urge you to consider Europe, especially the Scandinavian countries. Universal health care, free or at least inexpensive higher education, strong labor laws, consumer protection laws, all protect and grow the middle class, which is the bulwark against social instability. As far as I'm concerned, socialism can't come fast enough to America.

  72. More data is always good.

    I doubt the bill will ever become law in this administration or the next.

    BTW Why didn't Chuck Schumer introduce this bill during the first term of the Obama administration when he could have easily pushed it when Harry Reid was around? Politics huh?

  73. As David Leonhardt says, the more revealing set of indicators already exist, but "they tend to be obscure". Well, raising information from the depths of obscurity is almost a definition of what the media is supposed to do. So why doesn't the NY Times pick a set of economic metrics that it considers more representative and revealing, and highlight them with front-page headlines whenever they become available, usually every month?

  74. @Enda O'Brien
    Yes please! This would be a great service that the NY Times could provide. Please consider doing this!!

  75. A fantastic idea from all the way over in Ireland. Make it so, NYT! Better yet, assemble like-minded newspapers and team up with these economists so that many papers are publishing the real numbers each month.

  76. Yes! NYT you have the Megaphone! Use it, practice what you preach. Make an alliance with the referenced economists - they create the data, you publish it. Put together a working group with other progressive newspapers like the Washington Post, LA Times, Mercury News, etc. Bring in Steve Balmer for financial assistance for the economists if needed. Unfortunately, given the state of politics today, and what it will take to break out of the entrenched status quo, it is probably more effective to force change from outside the government. As can be seen from comments, there is support for this information/reporting.

  77. The American economic environment has become a rigged casino, Congress are the billboard entertainers and exotic dancers, banks the croupiers, and we all know who owns the "house."

    Official economic indicators are hollow distractive deceptions.

    These matters are self-evident, plain and in stark, clear sight, and there is nothing, nothing, mere citizens can do about it,

  78. Don't wait for the government to start using new measures. Instead, the NY Times and similar news organizations should methodically report these and similar data points. Make these measures part of everyday discourse, then perhaps governments may well take them up.

  79. @ACT: great idea

  80. @ACT Yes! I couldn't agree more!

  81. @ACT ... Of the 10 occupation categories projecting the greatest growth in the next eight years, only ONE pays a middle-class wage.

    FOUR pay barely above poverty level and FIVE of the ten pay BENEATH POVERTY LEVEL. These jobs also pay very low rates of taxes, thus undermining government revenues (as the Tories have found to their chagrin in Britain)

    THIS IS WHAT THE SUPER-RICH DID with the tax breaks Cheney-Bush- and Trump gave them: Invested them overseas, and shifted your jobs and infrastructure to China, etc.


  82. "Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.

    It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.

    It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

    Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.

    It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

    And it can tell us everything about America except why we are proud that we are Americans."- RFK; March 15, 1968

  83. Rebuttal: GNP is used to determine how much Americans produced every year. Marriages aren’t production so if you were expecting that to included, Mr. President, you are grossly misunderstanding what economists are trying to do with this data.

  84. @Mark. Are you sure that was RFK? It sounds just exactly like something Donald Trump would say.

  85. Labor statistics are cruel. They tell a lie about the wellness of the middle class in a way that is infuriating. These cruel numbers have been used by the past four Presidents without a blush, even Obama. They have all been out of touch with reality. The public needs to know quality as well as quantity. Suppose a Fortune 500 creates 100 new accounting jobs, but without benefits, at a 20% lower starting income than a decade ago? Suppose these jobs "renew" once per year? What kind of work is that for anyone but the desperate? Is crocheting baby hats the same "job" as teaching? I assure you, this type of "job fraud" is happening all over. Most people live in populated areas. If jobs are created 2000 miles away, what good is that? There may be plenty of tech jobs, but how many are "contract" positions? How many come with benefits, and pensions, something our fathers expected as the norm after WW2? We in the middle class know these statistics are a fraud. We know the stock market is booming, but not for us. It is up to the fourth estate to expose this fraud for what it is, and tell the truth about the economy. For the middle class, it is not great at all.

  86. If the middle class were to unite In various labor unions, we could pull these back into being the norm.

  87. @et.al.nyc

    How many tech jobs and other jobs are filled by people with H2B or whatever they are visas... including many university level full time teaching jobs in fields with an abundance of US grads in the field --e.g. art history. Trendy to be foreign or otherwise exotic and bilingual -- hard for native born English speakers to accomplish. It really has to stop. (Tired of being second class -- because I am straight, white, female and native born and now old!)

    Americans are often very nasty to other actual Americans.

  88. This is an excellent analysis and demonstrates the falsity of Republican claims that their tax cuts boost the economy. The cuts put money in the pockets of the super rich, but not the rest of us. Then we get to pay for them with payments to service the growing national debt.

    Averages are just that. Average household income is around $72,000. That takes into account the super rich. Median individual income in 2016, (latest figures) is $31,099. Big difference. Many households only have one earner.

    Something like one half of the population could not come up with $400 cash in an emergency. That is a shocking statistic. Talk about living life on the edge!

    Since Trump has been elected, not much has changed for the bottom half except that they got a $10 a week tax cut which has been eaten up by inflation and higher interest rates. Oh, and they may lose their health coverage if the Republicans remain in power.

    This all explains why Republicans in Congress will not oppose Trump. They are making too much money of of him. This is why Trump's corporate tax cut was his most coveted act. It was essentially a bribe to get the GOP establishment off of his back. Their corporate donors are only too happy to go along for the ride.

    So yes, change the way we measure the economy. Let's see what the numbers look like when we take out the incomes of the people who work at Fox News and just look at the rest of us.

  89. @Bruce Rozenblit. Great post, Bruce, but I want to add one comment. The rich donors demanded this payoff to them, threatening to cut off donations to the Republican Party, and Congressional Republicans delivered. Republicans aren't masterminds, they are servants to the oligarchy. Corporate and wealthy donors aren't going along for the ride, they are driving the bus.

  90. Financial experts recommend saving at least 10% of every paycheck to ensure you have a decent cushion should the economy fall. Many Americans choose not to do this and I think it is very sad. Most people can afford this 10% savings.

  91. @Bruce Rozenblit I just tried to get Obamacare, silver plan, for a friend of mine. Twenty-five years old and he makes about $29K a year. The website shifted him right to Medicaid; we'll have to wait for their verdict on that before he can apply for the silver plan he wants. If Medicaid goes to people in the range of the median income in this country (imagine so many families of four trying to live on $31,099 - and less), we desperately
    need better health cost coverage in this country, desperately. People, when there's nothing left to lose, go into that booth and do yourself a favor - vote Dem.

  92. As was pointed out, the wealthy get their money from investments, not working. Jobs now are a mugs game used to generate greater wealth for the already wealthy.

    The 1% do not value work and do not value the people who do it. They are interchangeable, expendable and just a cost of doing business. Jeff Bezos donates $2 billion dollars to charity but does he provide a living wage to his employees?

  93. A living wage should not really be our goal when a single person in the company can donate billions. How about a significant shrinking of the wage gap between CEO and the lowest paid employee? There’s no reason that a CEO makes billions and then gets fired and receives a bonus from their golden parachute. Workers at all levels should be receiving a share of the benefit of their work. Not a set % but it should be more equal.

  94. @Gord Lehmann. If Bezos spent that same money on higher wages for his employees, his tax consequences would be essentially neutral, so the only reason to be stingy with salaries and generous with charities of his choice is the egotism of feeling like a benevolent god.

    Besides, his fellow business billionaires would call him a chump for paying a penny more than he could get away with. Better to accumulate mindless wealth for bragging rights, the occasional famous newspaper, and feel-good donations.

  95. @Gord Lehmann Yes some of the wealthy (whatever you think that is) get money from investments. They also work and did in the past. Doctors, lawyers, CEOs and such work, and some work pretty hard.

  96. The epicenter of our current (and future) financial stress to me centers on student debt. Skyrocketing education costs, less availability of aid, high interest rates on government loans, and flat wages create a nightmare for students and their parents working to obtain an education. How does that help our future economy?

  97. Have statistics changed since Trump was elected? Stats never told the whole story but that's been always true. To cherry pick them now is disingenuous. And today, with the growth of IRA's, stock is indirectly held by more and more people.

  98. @Tom Booth Only 13% of Americans outside of civil service, and labor unions have a real pension plan. Only 54% of people in the USA own stock directly or through a 401K or pension. Slightly less than half of the country is left out of the stock rebound and most in private sector have no defined pension plan leading to uncertainty about their retirement and future. What if we have another great recession or depression, especially in this new age of unfettered financial deregulation.

  99. This piece was not about politics or Trump.
    Both sides are guilty of explaining away numbers they don’t like, but the point here is we need to use better numbers.

  100. It would seem a simple measure of what proportion of working adults earn under an indexed living wage would be telling.
    Is it not the mass transition from unionized manufacturing jobs and short order cooks and tipped waitresses to low paying fast food and Walmart Chinese made goods shelf stackers jobs that has caused the misery that has resulted in many people betting on change... any change?

  101. The stock market may be going gangbusters but if you're dependent on it for your income=retired people=the loss was permanent in its size and the time it took to recover ground.

  102. @Kim Findlay If you lived on dividends and not capital you are incorrect. If you had an annuity or took capital out you are correct. The 4% rule is foolish, live simply on your income, not reducing your capital unless an emergency happens and you are near the end of your life.

  103. I will not feel financially secure until we have decent, truly affordable health care and truly secure retirement.

  104. @Roger Reynolds -- YES. Anyone with a preexisting condition, or with a family member having one, is mostly stuck in their job and unable to seek higher wages elsewhere or start a business, because they may not be able to get healthcare. Employers know this is a matter of survival, so they don't have to offer competitive pay.

    Now the ACA fixed that, but Republicans have spent almost 10 years sabotaging our healthcare, and now they want to remove the preexisting conditions provisions too. VOTE.


  105. @Roger Reynolds
    And a right to public housing or rent control

  106. @Roger Reynolds For every one? That means the answer is NEVER!!

  107. Actually, I am old fashioned enough to think that running up huge deficits is bad for an economy in the long run. Initially, the only problems it causes are trade deficits (which are convenient politically in this case). However, after a few years the inflation will return, which will take many years to work out to the system.

  108. Totally agree on unemployment, but what about people who don’t want to work or are unqualified? Where is that statistic? Also, what defines being wealthy? There are plenty of people making good salaries that I’m sure don’t consider themselves wealthy. While the recent tax cut may not be fair to all, it eliminated the Alternative Minimum Tax which was grossly unfair. Bottom line is GDP growth is still a good barometer of the economy. What can’t be measured is the corruption of politicians who line their own pockets and then claim they’re for all classes.

  109. Excellent column, thank you.
    Inequality - of income, resources, opportunity - breeds conflict and turmoil
    I am not advocating that everyone have the same income, but it is absolutely in the interest of the country to measure inequality, and perhaps shoot for a goal (like the Fed talks about a goal of 2% inflation), with steps taken if inequality is reaching unhealthy levels.
    For example, I recently saw in NYT that the minimum wage would be at least $20 per hour if it had kept up with GDP growth.

  110. A change in the methodology used to calculate economic well-being would require the abandonment of measures and indicators which are convenient to political creatures, many of whom are more interested in hiding the economy's weaknesses than they are in eradicating them.

    Continued use of stale and increasingly meaningless metrics not only perpetuates following the path of least resistance; it also serves to create a decided impression that our nation's leaders are doing a better job than they are actually doing.

    It's safe to say that most Americans, particularly those who are not schooled in economic theory and practice, aren't sufficiently familiar with the ingredients that go into the recipe of calculating the myth of economic health. What they do know and understand all too well is the pain they are feeling by being left out of the supposed gains that the economy is making.

    Honesty has never been a characteristic that most people apply to politicians. When the disparity between ostensibly robust economic indicators and the lack of a sense of economic well-being becomes too great, what people do feel is a disconnection from their institutions. Coupling a loss of confidence in our political system with a lack of confidence in our economy shreds the fabric that has long held our country together, leaving any sense of national unity in tatters.

  111. We need to get more money into the hands of the middle and lower classes. 80% of spending is by consumers.The rich can only buy and consume so much. Someone has to purchase our Gross National Product.

    That is one reason the gross inequality in wealth we suffer from, worsened by the Great Recession, threatens our future growth.

  112. @mw We spend way too much on "stuff" and way too little on investment. Just get those jobs back from say China, etc.

  113. I always remember Hank Paulson's comment when the Fed/Treasury was trying to figure out what to do when the economic crash hit. "There are no good options." A few of us since have been commenting that almost no one seems to understand what happened. So, 10 years later folks are waking up, maybe? You don't recover from stuff like this; it has been in the making since post WWII and especially since Reagan. It appears to me that most people don't even know what money is. Just going through their daily routine with blinders firmly in place. Nightly s Business Report. THEY BELIEVE IT! Just to add to the author's comment: This populist upheval is a direct parallel to post WWI Germany. They had the Versailles debacle and we have the 2007-2008 economic crash. Same difference. H

  114. Excellent discussion and one we need more of to help people break out of 100 year old thinking. Piketty's book "Capital" opened my eyes to the vast wealth being accumulated by so few in the US and globally. In the US the process of concentrated wealth accumulation has been accelerated dramatically by government policy of the last 35 years and accelerated again with the recent tax cuts that primarily benefit the top 1%. And it is all "legal" because they paid for it.

  115. This would all be solved if we could start measuring two fundamental aspects of our economy: greed and generosity.

  116. The Piketty, Saez and Zucman metrics will face tremendous headwinds, because if more socially responsible statistics were in place, they would demand that politicians make policy to remediate economic hardship of the bottom half of society, or take the politically heartless road of defending inequality. Neither establishment Democrats nor Republicans will do that. So I don’t look for much change. If these types were really serious about alleviating the current economic position of most Americans, they would have already put policies in place that would have made new metrics unnecessary.

  117. I agree. If one looks at income growth by economic class you will see all class incomes increasing at approximately the same rate from WW2 to 1973. At that point the upper class income accelerated and has continued to accelerate to the present. This has been consistent through Republican and Democratic administrations.

  118. @Ockham9
    Yes, and the flip side of that argument is that if people and institutions put enough pressure on politicians to approve the new metrics, and they succeed, then politicians will be forced to reckon with the current economic inequalities.

  119. A way to report on the economy that will reduce the chances of politicians playing around with the statistics to make themselves look better?
    No politician will support this. Maybe talk about it positively, but act on it.... no way.

  120. I understand. The statistics used by the media and everyone else to praise Obama for the incredible recovery that he was responsible for during his 8 years of President should be discarded now since Trump is President. Of course we have to find new economic statistics that show how bad things really are. I wonder if we would be seeing such an editorial if the Democrats were still in power?
    Based on this piece I guess that we should now surmise that Obama's 8 years were actually terrible for the "real economy", in fact his recovery was really the one that was "false".
    In reality though, the old statistics don't lie, the US economy is the strongest it's been in a very long time, consumer confidence is at all time highs. Yes we have a segment of the population that has not shared equally in the recovery, that is a real and serious but separate problem. The solutions to that are not simple, but the rise of calls for "socialist" style solutions by the Democrats is a mistake. Those solutions have never been effective, there is plenty of evidence for that.

  121. @Rob
    Just take a look at the reasons David cites as being proof the crisis isnt over - the US elected a racist President.

  122. Why do you want to make a very important piece just about politics?
    I know both sides do that, but this piece attempts to rise above it and get at what really should be measured and strived for to improve people’s lives.

    (If you recall Republicans found holes in what were favorable numbers under Obama and Trump actually suggested it was O’s political operatives faking them before the 2004 election)

  123. @Rob Both parties are selling the same bunk. people are waking up. Money has corrupted Washington and everyone knows it.

  124. I assume you either haven't had time to read the hosannas on the economy 2012 - 2016 or didn't hear President Obama's speech that the booming economy is his doing?

  125. @Vincent

    "Boom" is a short-sighted and, dare I say, ignorant concept.

    Let's leave Obama out of it, if you can (you Republicans just can't get over the fact that he saved your bacon...going so far as suing him for rescuing the biggest re-insurance scam on the planet), and focus on Calvin Coolidge, I mean Trump.

    What looks like a boom to you is really just our run uphill to the edge of a vary big cliff.

    We are mortgaged ed to the hilt with Trumpianesque loans, we are creating world-record deficits while starving that nasty Washington beast (the one that pays for your army and your highways, your water and your air, not that you care) and there is no plan in sight to pay for it all.

    We are the Harvard freshman with her first credit cards, no one around to say "You realize you have to pay for that, right?", and the foolish hope that there's always somebody who will loan us still more.

    Feels like a boom, looks like another crash in the offing. Just like Silent Cal, Trump's real hero.

  126. Do we have a "healthy" economy? It is strong, but not all that healthy, but then you have to define healthy. Strong economic activity and wealth production is a necessary but not a sufficient condition. (Our GDP is $19 Trillion and per capita it is about $55,000, but our personal income per capita is more like $38,000 but median personal income is $31,000 and wages as a percent of GDP is 53% an 39% of wealth goes to the top 1% and only 7% to the lowest 90%.) David Kahneman made a comment on NPR that government probably does not have a responsibility to make citizens happy, but it may have the responsibility to remove misery. Happiness, may not be related to how much money you have (look at our president, a very unhappy wealthy man) but misery removes happiness, satisfaction and sense of well being. So does lack of a feeling of security and chaos. Wealth may have a point of diminishing returns for people, but acquisition of wealth may be a proxy for self esteem for some. Merriam-Webster defines commerce as #1"the social dealings between people" and then #2 "buying and selling". Our economy deals with #2 but should include #1 to define our health as a people.

  127. Economics, like history, is written from the top.

    It isn't as if we don't now what life is like for the less-than-elite, its that we don't care.

    No really, nobody who matters cares even a little bit.

    Not our legislators;l they could hardly be more profligate in their contempt, in their pointed neglect of the people who actually make this country go.

    The courts? Oh no. They are thoroughly and self-righteously in the pocket of the rich and the corporate.

    If there's a decision to be made, it will favor the wealthy. And now, by God, they bring religion into the scam, in ways ridiculous and offensive, but always slave to the whims of the wealthy.

    If ever there is going to be relief for America and her citizens, its not going to come from the courts.

    Its going to come from the opposite of the courts; lying Trump and the angry streets. It isn't going to pretty or effective, just one ugly spasm of angry release.

    We need new statistics, I suppose. But what we really need is leaders who understand them, and who care enough to do something about it.

    And voters who care enough to make them.

  128. I agree that politicians don’t want to solve homelessness and poverty issues but I disagree as to why. They are notoriously hard problems to solve that would take decades of constant spending with minimal progress at the beginning. Can I win re-election by spending money with no results? No. But what if I can be seen to be doing something by moving the problem out of sight of most of my voters? Now I can win. We need to change our election system to allow for long term planning.

  129. GDP and other economic measures capture only part of the picture. In fact, the economy and personal income or wealth are only means to a higher value, happiness or well being. We need broad measures of well being to capture not just the growth of the economy, but how well the economy is serving our country and the world.

  130. A massive program to build dikes around our coastal cities will be a huge boon to the GDP.

  131. @Thomas
    It takes taxes to build infrastructure. We have already seen the reality of what will happen the industries will move to where taxes are lower and they move to other locations.
    The North Carolina miracle is over.

  132. Great idea. (But afterwards expect politicians to continue to lie about what the numbers really mean, and who is responsible, regardless what the numbers show).

  133. Another dimension to be considered in a revised model for calibrating the economy is the environment. When Mr. Kuznets was working on what would become the GNP model the subject was not relevant. Today, worldwide, it is indeed relevant for a variety of reasons.

    As long as common resources are depleted for economic purposes without recourse or any kind of consideration to health and standards of living, a true measure of the economy and how people benefit from its activities will be short changed.

  134. Right on the money (pardon the pun). A financial collapse, and a complete one, is inevitable.
    Richard Wolff is right: capitalism has hit the fan.
    All the gains go to the top ten percent. Wages have stagnated since the 70s, thanks to people like Ronald Reagan.
    What happens when the market collapses and everyone loses their 401k?

  135. @Joe - Everyone is complaining that the largest companies control the economy. Your 401K consists of stock in the largest companies.

    So which is it? Do these companies have all the money, or are they totally worthless and ready to fall?

  136. @Joe Hell will break loose. I do not want another bloody French Revolution! Please vote!

  137. I agree with an alternative GDP measure, but the 800 pound gorilla in the room is monopoly capitalism where large corporations and a financial sector control most of the economy and the working class have no power. Booms and busts. The capitalists getting more and more of the national income. We need to replace our entire current economic system with socialism that values working people, environment, and fairness.

  138. As the writer points out these statistics are readily available. There is no need for the NYTimes or other news organizations to wait for the government to act - publish them early and often and make them front and center in all reports.

  139. I get why many politicians on all sides manipulate economic data to distort reality in favor of their narrative. But why does “much of the media” abrogate its fact finding responsibility in order to continue providing “a misleading portrait of most people’s lives”?
    Is it laziness borne out of habit or complicity in gilding the American economy? In either case it’s clearly dereliction of duty.

  140. Yes - though changing the measures won't solve the problems in what's being measured, it would clarify our perceptions, change the discussion, and open the possibility of improving our collective judgment.

  141. I do not wish to see another economic bust. It will destroy whatever is left of the middle class. What we need is new sets of economic measurements that truly indicate what is happening to the middle class based on facts not political slogans, as indicated by the author of this article. Another downturn will cause chaos amongst those who are already suffering trying to make ends meet. This may be a good start for a graduate student bent on doing something to help ordinary people. A welcome economic PhD thesis.

  142. To understand the "financial crisis" one needs to look at why no measures have been put in place to keep the country from going through another one. Home ownership went down for the middle class - and went up for wealthy investors. Now we rent from them. Income inequality increased. These crashes are the best way for people who have extra cash to invest to get ahold of property - with no risk of jail time! If the Ruling Class thought crashes were bad for their economy, they'd be doing things to prevent them.

  143. @Peter
    Right on!
    It's all part of the cruel game of the Ruling Class.
    Wake up! The system is rotten to its core.

  144. The statistics we have already used in the 20th century are the essential descriptros but today we have internet and advanced computing, it is obvious that economic statistics which is reported in news are the bare bones, if you put flesh on it the real pictures emerges.

    Thomas Piketty's work you really need to deep look and use advanced computing much detailed explanation.

    this is what all other scientist doing in their areas, but economic statistic consumer is average people, they have a diminished interest about the truth in Trump era.

  145. From painful personal experience I know it can be demoralizing losing a job and then not being able to find one that pays as much as the old one. But is the right response to give up looking for a job and instead remain unemployed? In the early 80s, I lost my engineering job when the oil industry in Houston went belly up. Thousands lost their jobs and some neighborhoods in Houston became ghost towns overnight. I attended job fairs, called on friends and acquaintances, sent out many resumes and yet had no luck finding a job as an engineer. I wiped out my savings and needed to pay my bills. What did I do? Instead of giving up and sitting idle, I got three jobs: sales person from 9 to 5; waiter from 6 to 10; and bar bouncer from 11 to 2 am. It was brutal and I was exhausted, but I never got behind on my bills and learned a lot about myself. Six months into this grueling schedule I got called back to work. Did I enjoy it? Absolutely not, but the lessons learned during those terrifying times have stayed with me. I look back with pride at the fact I did not give up. It can be done.

  146. @CEA it's true that might have been possible in the 80's, not so much now.

  147. @CEA I am glad that you made it through and came out stonger. You clearly have determination and intelligence and luckily your industry eventually took you back. I would challenge you empathy by asking how you might have fared at these three jobs for the rest of your life, or as a single parent, or a caretaker for an ailing family member or as a person without the good health to perform any one, much less three of those physically demanding jobs. A society needs to work for the weakest among us as well as the strongest. Congratulations on your success!

  148. Sincere congratulations that you were able to juggle three jobs, and get back on your feet financially.

    Statistics show that most people are worse off nowadays, and opportunities are fewer.

    Hard work and initiative aren't enough anymore. Lucky breaks are needed too.

  149. Some points to look for when looking at data.

    1. Usually the median is a better measure than the average.

    2. Check to see if the figure is adjusted for inflation or not. Look for the word "real." This can make a huge difference over long periods even when inflation is low. For example, if we had an inflation rate of 2% for twenty years, a dollar would be worth about one third less at the end than at the beginning.

    3. When comparing dollar amounts between countries or over time in the US, you have to take the size of the economy and inflation into consideration. Dividing by the GDP does just that. For example, although the federal debt owed to the public is a lot bigger in dollars today than it was in 1946, as a percentage of the economy, it is a lot smaller.

    4. When people talk about reducing the debt, however, by reducing spending or raising taxes, they are talking about the debt in dollars, not the debt ratio. A change in the debt has a complicated effect on the debt ratio. For example, from 1946 to 1973, the debt soared, while debt ratio plunged. When reading an article, make sure the author distinguishes between the debt and the debt ratio.

    5. Also private debt, the sum of household and business debt, is very different from the federal debt. They should never be lumped together. Since the deficit measures the flow of money FROM the federal government to the private sector, you would expect private debt to go UP, when federal debt goes DOWN. It does.

  150. Ever heard of the labor force participation rate? That is a far better indicator than the unemployment rate.

  151. The stock market has never been a measure of the national economy. I've explained it to the uninitiated this way:

    "Take the 50 most highly paid baseball players in the National League. Average their salaries and weight that average. Call that the 'National League Industrial Average'. Does that tell you anything about the health of baseball in America? Does it tell you how many tickets are sold? How many hot dog vendors or beer stands are thriving? How many bars and parking lots are in business around the stadia? How many ad dollars are being sold by TV networks? No. It gives you a very broad understanding of how much the owners value their teams; and nothing else."

    Back in the day of the Huntley-Brinkley report about 60 seconds each Friday, rightly, was devoted to "the market".
    My how times have changed.

  152. I'm not sure if there are statistics to measure these problems, but I think there are three primary factors that drive financial insecurity in the modern economy.

    First, more than ever, people are dependent on a steady income from a job to survive. Everything in our economy—from the basics of survival to luxuries—requires cash. Most of us don't and can't grow our own food, provide our own clothes and shelter, or really do anything without cash. And the cost of all those necessary goods and services is so high that most of us can't accumulate any wealth, so we not only need income, we need that income to be steady and continuous through our entire life.

    Second, control of our jobs is increasingly distant from ourselves. Corporations are no longer locally owned. You don't know the people who own the company you work for or even the top managers of that company. Often they are located in distant cities or foreign countries. Your job—and therefore your income and your survival—is at the mercy of individuals you will never meet, who don't know you, and see you only as a dollar figure on a P&L statement.

    Third, with our dependency on jobs for survival, communities can't flourish. In the past, if we lost our job, we could rely on the people we lived near (friends and family) to help us out. Now people move with jobs, and community and family ties are weakened. We don't live near people we know, so if we lose our job, we're on our own.

  153. @617to416 Good points but what is necessary? Do you need a fancy phone and a data plan? Cable TV? Eating out? A large place to live? We think of many things that we "need" that we really just want.

  154. @617to416
    Very astute insights...from angles not often looked at, but are real life issues.

  155. "In the wake of the 2007-09 financial crisis, the underground sector has become a sizable part of the U.S. economy – perhaps as much as 10 percent."
    We need some real data on the effects of the cash economy. After all, the goal is to truly understand how the economy is working and improve results, not just prove an already-formed theory, right?

  156. @mijosc - The NY Times will never look at that, it goes against their agenda.

    Take food stamps. When a work requirement is imposed, many people stop taking money from the program. The NY Times will say oh, these poor people, they're too feeble to work. But does it ever occur to them that a lot of these SNAP recipients are working full time, or more, but in cash businesses?

  157. Around here there are plenty of luxury cars on the roads, although many if not most are no doubt financed. At the same time we have a huge and increasing number of fellow citizens who are utterly lacking in hope for a better life. We smugly tell them to get moving, to bootstrap themselves upward. But if we take the time to do the math on what it takes to just survive, let alone afford healthcare and a decent education, and compare that to the amount one earns at a minimum wage job, we can understand the hopelessness. So we don't take the time to make that calculation, instead busying ourselves with our own lives, believing that we made all on our own because we are more worthy. Most of us, myself included, were just born lucky. We don't need a statistic to see that, just a conscience, a little honesty, and a lot more empathy.

  158. @Michael - I paid cash for a used Infiniti, at the Manhattan dealership. The saleswoman said she couldn't remember anyone ever having paid cash. I found this a little surprising - aren't there lots of incredibly wealthy people in Manhattan?

    So if your neighbor is living like a king, it's probably all done on credit!

  159. @Michael
    The world has exponentially gotten more complicated.
    A high school diploma doesn't cut it any more. Some people just can't grasp how the system works and they are left behind. Ayn Rand had a point that individuals do vary in motivation and intelligence, it's in the genes.

  160. Yes indeed do read The Growth Delusion by David Pilling. GDP is a stupid measure of economic health; utterly meaningless in a country that can't provide either a college education or trade skills pathways to its citizens, let alone basic health care.

  161. Republicans don’t want you to read this or think about it. The Democrats have been slightly more honest about it, and are now starting to use this issue to recapture “populism.”

    Reflecting other comments about sources of income between the rich and not-rich, whatever happened to the phrases “unearned income” and “earned income?” I grew up in a household where we respected income that came from actually doing something, and we had at least some disdain for the money that arrived just from having money.

  162. @Edward C Weber - Well, in order to have wealth, you first have to save money from your income. In the beginning, nobody had any wealth, but some people lived below their means and accumulated property. Maybe you did the saving, maybe your ancestors did, but at some point somebody put aside part of their earned income and bought capital assets.

  163. Bravo Mr Leonhardt!
    This article should be translated and published throughout Europe.

  164. Is the last graph the bottom 90% or 90th percentile? I think it may be incorrectly labelled

  165. The media play an important role. Reporters who report economic news typically report business news. They spend a lot of time talking to high-level corporate employees and, consciously or unconsciously, adopt the attitudes and opinions of the people they must cultivate to be effective reporters (to get the story first or exclusive background). Business reporters typically are optimists and cheerleaders. How can anyone be surprised when their reports on economic data rarely get behind the optimistic headlines. How can anyone be surprised when media consumers believe that the overly optimistic reports they read.

    The Times often reports economic data fairly. A good example is the September 12 article headlined, "U.S. Household Income Rises to Pre-Recession Levels, Prompting Cheers and Questions".

  166. Numbers are just numbers. But the interpretation of these numbers depends on your imagination. Oscar Wilde once said something like this: "Statistics is like a beautiful blonde girl wearing a bikini on the beach. What it shows is attractive. But what it doesn't show is vital." To me, this set of numbers are just for politicians to use to fit their purposes. As long as news media faithfully portrait people's daily life in all parts of the country, we should know how we are doing as a whole. No number can hide the truth from the people.

  167. @Usok I'm sure somebody made the remark about the bikini, but it wasn't Oscar Wilde. He died in 1900, which was 47 years about the introduction of that particular swim suit.

  168. The "official statistics" say that the economy has been growing for 10 years now. But the middle class' share of our nation's wealth has been shrinking for 40 years, and continues to do so.

    Rather than GDP or S&P, the number that should dominate the headlines every day is the MCSP: Middle Class Share of the Pie.

  169. Great column!

    I'll highlight the need for another indicator -- real measures of *economic insecurity*. This applies to both poverty and unemployment.

    For example, the poverty rate should measure the percentage of people who experienced poverty *at any point* in the previous *five* or *ten* years. As it turns out, there is a great deal of churning with people falling in and out of poverty. Most so-called "poor people" are there only temporarily, so we need to get past the idea that the poverty rate refers to a stagnant underclass --and stop stereotyping that group. But what makes the situation even worse is that a vastly larger percentage of the population experience poverty at some point over a five-year or decade stretch of time, upwards of 40%!

    Similarly, we should report the unemployment rate over a five-year or ten-year period, not as a snapshot at a single point in time. We need to know the percentage of people who have lost jobs, been unemployed, or been unable to find jobs during a five- or ten-year stretch of time.

    Here, again, the shocking thing is what a large portion of the population is suffering from economic insecurity. The current indicators hide all that...

  170. Re Piketty, his study is comprehensive and compelling due the large amount of data, original and otherwise collected to discover new patterns in income distribution and wealth. Much of this was included in his book, “Capital” published a few years ago. After viewing all of his charts and explanations re the past, methodology, changes in income distribution and reasons for it his conclusion regarding policy are the most important and difficult to address. He absolutely believes that income distribution centered policies are not the answer to the problem of the bottom 50%’s reduction in national income. Rather more resource based policies centered on education, skill development, labor market adjustments to include higher minimum wages and institutional (read unions) development and steeply progressive taxation. In the spirit of the doable rather than the desired, I suggest that the USA will not go back to pre 1984 personal income tax rates and to believe that will happen is to believe in tooth fairies. The authors, for all their statistical analysis pay little attention to broader demographic and economic forces that have forever changed the country and world. Thus skills and education policy prescriptions are the most effective and perhaps major part of any attempt to begin to change the dynamic for the bottom 50%. What that means is beyond this writer’s expertise but perhaps college for all is not the solution?

  171. @Charles Gonzalez
    I'll admit I haven't read Capital, although I read a lot about it. But I don't understand a seeming contradiction in your description. You say "income distribution centered policies are not the answer to the problem of the bottom 50%’s reduction in national income" and later "and steeply progressive taxation." Isn't steeply progressive taxation a form of income distribution?

  172. @Charles Gonzalez

    The college item is essential just so people understand what is going on. The essential role of education is NOT to provide jobs. Ignorance is NOT bliss; feeds the mess we find ourselves in today.

  173. Actually the effects of the financial crisis are largely behind us. This is an article about growing inequality which undoubtedly exists and is a serious problem because it's reaching the stage where it's undermining the wider economy simply because the wealthy, who are taking a larger share of national wealth, spend less of their additional disposable income. But this problem long pre-dated the financial crisis and income/wealth distribution is back to roughly where it was in 2007.

    Some of these charts are misleading. There is no shortage of jobs, vacancies are at a record, so if men are not working it's because they don't want to for whatever reason. And GDP has never claimed to be a measure of national well being although there is a crude parallelism at work. The economy is in pretty good shape and has been for at least five years. In fact the fear is it could start to overheat. So yes inequality is a problem but search for the reasons in the right place.

  174. The immediate cause of all of our 6 depressions and the Great Recession of 2008 was too much private debt--the sum of household debt & business debt.. Nouriel Rubini & Ann Pettifor independently predicted the crisis of 2008 based on the explosion of private debt.

    Too much private debt means that banks are creating too much money in loans wrt their reserves. In 2007, the big banks had 27 or 28 times the amount in outstanding loans as they had in reserves. As in the 6 previous depression, the banking system cannot support such a level of leverage. We would had had a 7th real depression in 2008 if the FED had not poured TRILLIONS into the banking system, but it wasn't pretty.

    Go to https://tradingeconomics.com/united-states/private-debt-to-gdp The column graph that comes up shows that private debt came down from 2009 to 2013, but has been rising ever since. If you set the range to max, you will see a line graph that shows the huge rise in private debt from 1996 to 2009. I think the next recession will be caused by the rise in private debt starting 2013. BTW if you look at graph on slide 6 at https://www.slideshare.net/MitchGreen/mmt-basics-you-cannot-consider-the..., you will see that the private sector balance declined (i.e. private debt went up) before each recession from 1952 to 2008.

    The reason for the increase in private debt has usually (always?) been a decrease in the federal deficit which sends money from the federal government to the private sector

  175. I'm quite sure that if Obama was President and economy was doing well according to these statistics, you and the whole liberal media establishment would be mocking anyone who wrote such a column.

  176. @Reasonable Guy You make a fair point but there has been talk of changing or expanding the criteria for years, even during Obama’s term because his people couldn’t understand why the public wasn’t feeling the recovery the numbers said was happening. This article is long overdue.

  177. @Reasonable Guy
    100% correct, rightist writers said the same thing about unemployment stats during the obama years

  178. @Reasonable Guy

    It is true that some Democrats are hypocrites. But pointing to the hypocrisy of political partisans as some sort of evidence that this article is false is not reasonable.

  179. This was an interesting and informative article. Thank you for writing it.

    The NYT is arguably the country's most influential newspaper. Mr. Leonhardt is an influential and important leader of the NYT. Why doesn't the Times start publishing these relevant statistics, along with all the others, as part of its regular business coverage? Change has to start somewhere and it is unlikely to come from the current administration in Washington. The Fourth Estate can play an important and progressive role here.

  180. @Gary A. Klein
    And I would argue that the climate crisis be addressed on a regular basis, as well.
    Make it a front page headline story.
    Great story today about the Green voting bloc. Let's have more like this.

  181. Should be part of its societal not business coverage! Part of the problem is that “business” is a sacred cow in these United States.

  182. @Gary A. Klein Putting this information in the business section would be a good way to hide it. It should be be a new section, reporting the condition of economics of the people, all people, where the money goes and where it flows. Does it flow for the water wheels that grind the wheat for the people or does it go to enlarge the private lakes of the rich.

  183. Over seven billion humans on the planet and growing daily.

    That is the real burden on quality of life.

  184. $180 million of my state's pension money, which I'm forced to pay into (and might receive some of, some day, maybe, despite the Federal Supreme Court's decision that the state doesn't have to pay it) was stolen by the Corzine administration and given to Lehman Brothers, as they were failing, to help prop them up. This is our system: the working class (what's left of it) and middle class pay to support the rich. I know people who have lost their jobs, their homes, their health care, their pets (I adopted some of them, and pick abandoned cats off the streets). This country will not recover until people are given a living wage for their work, security in their homes, interest for their savings, and health care coverage. None of this will happen as long as the rich continue to suck our blood as exploiting parasites and pay no taxes. This country isn't capitalist, it's feudal. Until we overthrow our feudal overlords, we will remain serfs.

  185. @Stephanie Wood - That's a huge exaggeration. $180 million was invested , but only $20 million was lost. Furthermore the state sued to get that back. I haven't been able to find if it succeeded.

    Lots's of good people made bad investments then.

  186. @Stephanie Wood
    Great comment - I agree completely. It seems to me that it is not just the US. Global capitalism is supplanting the nation-state and is creating global feudalism. I would be enthusiastic at the development of a more spiritual sort of global consciousness as a positive step towards addressing problems that are increasingly global (climate change, species die-off, air, water & food pollution, bio & nano weapons etc), but that rise in consciousness seems to be outpaced by global capitalism. Country after country is falling to right-wing conservative-religion other-hating authoritarian-loving sort of regime. To varying degrees I think of India, France, UKIP in England, conservative groups in Sweden, Five star in Italy, Netanyahu in Israel. Someone more knowledgeable than me could probably list several others. Capital & the oligarchs suppress left-wing populism while simultaneously creating the conditions that produce hatred of immigrants or various minority populations within a given country. Feudalism and serfdom will be huge trends this century. Enforced by armies, local strongmen and police forces paid for either by forced "tributes" or by the .1% and the oligarchs.

  187. Useful article. But would’ve been more useful if he discussed recent trump admin suggestions about proper measure of income. Did that make sense or not? And why?

  188. A few people have all the money; that explains the American Economy. They are hoarding all the resources as the planet they destroyed starts killing this human virus off. As for infrastructure, we are on our own as the filthy rich run and hide from their selective-ignorance in their private worlds of destruction.

  189. Regionalism needs to be addressed. The low interest rate policies employed to bailout the banks and Wall Street, caused great increases in real estate prices in certain cities like New York, but had little or no effect in many other areas of the country. So net worth even for middle/middle class folks in some places jumped dramatically. In other areas, peoples from the same class got little more than lies about inflation.

  190. We also need public indicators for the ecological condition in which our economy is functioning. We need to know if our economy is ecologically sustainable.

  191. Leonardt dances around it, but the maldistribution of income is not just a few billionaires. It involves the top 10%, households with an income over $112K, nearly 30 million affluent professionals who earn, save, and live well.

    By a not-so-strange-coincidence, this is the ruling class of the USA, the people who are in charge of everything. They also include all the economic policy wonks who calculate and analyze the statistics. So don't hold your breath.

  192. Our current economics metrics essentially assume an ongoing Ponzi scheme. Without constant population growth, we end up with low or negative GDP growth. Japan is a great example of a country where the average person is getting wealthier, but GDP is not growing. We need to start using metrics normalized to population size (GDP/capita), and stop using expansion-based metrics (such as Housing Starts).

    Additionally, we need to report rolling window metrics. This is especially true wrt government policy. Governments should not be forced to balance budgets each year, but spending should be restricted to match the inflation adjusted government revenue over the past 5 years or so. This allows some level of Keynsian counter-cyclical spending, while also imposing constraints on government deficits.

    But most importantly, there need to be metrics which act as a proxy measure for well-being. This means reflecting increases in usable income across a broad population, relative to working hours. So, another $Billion for Bezos does not add value. Nor does another $10k/year at the expense of more working hours and less leisure.

    How about: Average all personal income in excess of $30k/year per person and less than $500k/year per person, and divide by average working hours.

    And ... an age-graded wealth distribution. Of course, a 20 year old has no wealth, but if the average wealth of people 55-65 is dropping, then we have a problem.

  193. Inequality. Yes!

    And I say that as someone who till 30 years ago was way down the economic ladder.

    We need these new methods of measuring economic “well-being” (of humans, not just corporations or the wealthy).

    We also need to reorient our values. We could all live more simply. Sharing the wealth. Sharing leisure time. (I say the latter because those working 2 and 3 “jobs” have little free time.) And sharing access to free or very affordable healthcare. (The latter could be done by making health education free or nearly free, thus providing a better group of doctors and nurses and medical technicians - without them incurring debt.)

    We need a more just society, a more caring, empathetic society, a less bellicose, bullying society. OK, I may be asking for “pie in the sky” but unless we aim high, with caring hearts, we will never be a just or equal society.

  194. Very interesting - 'what gets measured gets done', so it is good to see what Carroll D. Wright's motivations were, and how the devil is always in the details.

    It's also interesting to note how 'consumer confidence' has picked up since the 2016 election, though core economic conditions have changed little; Democrats' view of things have also changed little, but GOPers' change in attitude has completely flip-flopped:


    That's likely at least partly due to $1.5 Trillion$ in tax cuts to the well-heeled and corporations, as well as to the ability to deduct 100% of the cost of their private jets:


    Things probably do look like party-time, from a certain vantage point.

  195. It would give the national comversation around our relative economic health a kick in the pants to make the changes discussed. Currently it feels like there's a serious gap between all this supposed good economic news and what large swaths of the population are experiencing in their own lives. That means too many treat it like an abstraction which is potentially harmful when it is used to set policy and leaves many feeling disconnected from and distrustful of decision makers.

    Economic statistics are tough enough to understand properly for alot of us and can so easily be both manipulated and misused. Let's by all means make them more relatable and not make it so easy for the experts to obscure the nuances.

  196. Great article, thanks! The unemployment numbers don't account for the fact that we have replaced well-paid jobs with low-paid jobs or no jobs.
    The US helped create the middle class. Now our Lobbyocracy is destroying it.

  197. This column is outstanding. The GOP relies on the fact that the vast majority of Americans simply believe what they hear on the news and do not go deeper. They don't want to understand the numbers that matter. The GOP tries to push math and science in school, thus making human cogs in a system that will make the rich more money to donate to GOP campaigns. The GOP does not push analytical thinking skills that will make the electorate seek better numbers. We know that better numbers will be suppressed and challenged on many news outlets because they are controlled by GOP sympathizers. Americans need to wake up. We are not out of the great recession. Things are just getting worse.

  198. While I agree with later points in your article Mr. Leonhardt, I don't agree with the initial point that the economic collapse has caused a rightward lurch in politics. The logical response to the recession would have been a leftward turn. It was relentless right-wing misinformation campaigns that deceived people into voting against the very things that would help shield society from the excesses of plutocrats.

  199. @Thad Logical to progressives is a fantasy alternative reality to others.

  200. Anyone who has been paying attention for the last couple of decades is aware that the employment count is meaningless. I want to see figures on employment that pays a living wage with meaningful raises (for employees other than senior execs), provides job security and benefits. Where are the statistics on the economy that poses as part time but manipulates hours to full time without benefits or overtime. The gig economy may work for some, but raising a family on it is problematical.

    More government double speak.

  201. Yes, the median worker did very well post-war, from 1945 to 1965, real inflation-adjusted wages rising almost 60%. But remember that during thost post-war years, the USA with 5% of the world's population had 50% of the world's wealth and 75% of the world's manufacturing capability. Starting in the mid-50's and accelerating in the 1960's and 1970's, the rest of the industrial world, flattened by the war, started to catch up. And now, in the last twenty years, China and India, with combined population (3.5 billion) surpassing the population of the world in 1960, have fully come 'on line' economically.

    Red-hat MAGAziners seek to wind the clock back to those post-war 'bubble' years when the USA was economically dominant. Not going to happen. And besides, the top tax rate under Eisenhower was 95% - if you wanted to go back to the greatness of the 1950's you would have to accept that as part of the equation. Maybe that part should happen.

  202. This has been true all along. Unfortunately when Obama was in office many Democrats didn’t want to hear it, while Republicans would sometimes point to the hidden unemployed. Now that Trump is in, people switch sides.

    I am not making an overall moral equivalence here— the Republicans are much worse on economic issues and only care about the rich. But we need to stop letting partisanship blind us to reality.

  203. Here is a statistic I like:

    "About 46 percent of Americans said they did not have enough money to cover a $400 emergency expense. Instead, they would have to put it on a credit card and pay it off over time, borrow from friends or family, or simply not cover it at all."


    The FED runs this survey on a regular basis.


    "According to Bankrate's latest financial security index survey, 34 percent of American households experienced a major unexpected expense over the past year. However, only 39 percent of survey respondents said they would be able to cover a $1,000 setback using their savings."


    So most Americans simple do not have enough money to spend on new stuff. The rich businessmen understand this, so they do not invest their money in their businesses. They buyback stock and use their money to speculate.

  204. @Len Charlap
    Having worked for years with people in the financial situations you describe, I can attest to the fact that many of these families have not prioritized their spending habits to be prepared for unexpected financial expenses.

    Some folks are in a situation where they simply do not have an opportunity to make a decent living given the opportunities where they live, or with their current skills. Moving or learning new skills can be a huge challenge, and these folks need a helping hand. However, there are others who simply spend too much of their income on non-necessities; smart phones for every member of the family, cigarettes, alcohol, and so on. "The Greatest Generation" learned that you need to save for a rainy day. A lesson worth learning for everyone.

  205. @Len Charlap But I bet they have cable TV, a decent cell phone, and many other things they could do without to have an emergency fund. Many have sufficient money they just spend it too fast.

  206. You guys are too hung up on Puritan morality. The point is that regardless of the reasons, people do not have enough money to but more stuff. This is a huge drag on the economy.

  207. I have 3 part time jobs to make ends meet. How do I fit into current measurements? Am I 3 jobs, part of a "surge in employment," or am I not even in the calculations?

    The state of NH allowed my employer to lay me off after 11 years with 2 days notice (because he had fewer than 50 employees--48). I applied for unemployment but the job prospects in my field were very few, so I could not meet the "constantly looking for work" standard and could not qualify for/live on the jobs posted by the state. Does not receiving unemployment benefits drop me out of the calculation altogether and into the vague "not looking for work"even though I eventually found 3 part time jobs?

    Finally, there are "help wanted" signs everywhere but most of the positions offered are low paying and part time and offer no benefits. OK for retirees and young adults still living with their parents, but unworkable in themselves for everyone else.

    Even if Trump succeeds in getting rid of all immigrants, the jobs they fill pay at the low end of the scale, so there will be more unliveable jobs with fewer people to fill them. That make the unemployment rate look great, I am sure, but it helps hide how bleak our economic future it due to inequality.

  208. I’m sorry you’re in this position but yes, you are counted in several statistics we use. You are underemployed and I believe you would have been excluded from some unemployment numbers but others would have still counted you. Little solace, but you were not ignored.

  209. @Tom Beeler Getting rid of H1Bs would open up jobs at the highly skilled positions, but they'll never do that because Americans are more expensive than foreign nationals.

  210. Is there currently a government statistic showing consolidation by industry? If not, then there should be.

    Increasing industry consolidation is one of several causes for stagnant wages.

    Anti-trust concerns, long ignored by Republican and Democratic administrations alike, are now gaining prominence.

  211. The GOP stopped talking about the underemployed (around Nov 2016) so I assumed it was solved

  212. Walmart just announced that it can't find enough truck drivers even at about $85,000 a year, better working conditions and a signing bonus. And there are help wanted signs all over America. So who are the uncounted who have given up looking for a job? My theory of income equality is that we are in a paradigm shift in the economy. Changing from an industrial economy to the information age and hi-tech. A hundred years ago saddle makers lost their jobs and the ones who were smart enough became automobile mechanics and made money. This will happen again but it will take time. Those who are wealthy now have mastered the new age and others will follow.

  213. The Reagan era ushered in a new economic paradigm - plutocracy. FDR and Eisenhower were the last American presidents to call out the rise of the special interests and their domination of America's institutions - economic, political, social, and ever more influence over religion. LBJ was the last American president to concern himself with the well being of the average American. Why has it taken so long for economists and media to expose it? There is nothing new about what is happening.

  214. Wealth creation has two components - income and reprising of assets. We need to focus on reprising of assets like real estate and stocks. The distribution of these assets on the population is skewed - 90% of population owns 20% assets and 10% owns 80% assets. The government policy should try to remove this anomaly - by forcing companies to distribute their stocks compulsory on a given distribution formula and helping population to own real estate. This may mean without giving subsidized housing, government should give house ownership to poor people. Currently all the discussion is focused on income and I do not think that will address the problem. Free market policies adjust the income based on market forces and this dynamics are working well. Any artificial force to disturb this dynamics will skew the labour market.

  215. So, give people free stocks and free houses, why didn’t I think of that?

  216. Those things that make life “most worthwhile”— committed relationships, a satisfying career, engagement with the arts, travel — more readily flourish when certain fundamental needs are more easily met, namely housing, education, and healthcare. I earn far more than my parents ever did, yet my quality of life is lower. For example, the home I grew up in cost about a quarter of my father’s annual salary at the time, but the equally nice or modest home (depending on your point of view) I am raising my children in cost more than four times my and my spouse’s combined salaries. Similar comparisons may be made for the costs of healthcare and education we confront. Factoring non-economic reasons into a career decision is very difficult. Travel is almost out of reach. Piano lessons for the kids feels like a luxury. I would like to see economists develop a general well being index that measures household income/wealth against the costs of these fundamental needs. If people had a number to hold onto, it might help the progressive politics we need to meet these needs as a society gain greater traction.

  217. @Mercury Descending Great for you. I have a computer and access on my desk that were not even thought of in my youth. Those things you value, are well not so valuable to others. And your progressive politics lack value to many, let the market rule.

  218. In any policy debate, the information that gets used to arrive at decisions is critical. If you can't measure or accurately describe a problem, you can't deal with it effectively.

    These ideas are long overdue. It doesn't take a rocket scientist to see we need them. It doesn't require any huge expenditure to implement them. What it takes is the political courage to look at what they show us and act accordingly.

    That's a real challenge in an age when our politics are dominated by a party notoriously averse to inconvenient truths, and addicted to alternative 'facts'. (See Paul Krugman today for the other side of this story.)

    It's past time to start basing economic policy on what's happening in the real world.

    Make it so.

  219. @Larry Roth Great points, but knowing what is happening in the "real world" is almost impossible.

  220. Economic statistics also seem to ignore the suffocating effect of the increased consumer debt load that many former middle class households now carry, chiefly interest on credit card and student loans.

    For many lower income earners, substantial interest payments on loans take a big bite out of their paychecks. Making it worse, those loans often carry high consumer interest rates, often punitive, that do not reflect the much-widely publicized low interest rates that high income folks use to refinance their homes.

    Sadly, those billions in interest payments do not create jobs either. They merely go to strengthen the marketing clout of the consumer loan business so banks can keep promoting the merits of borrowing more, and lobbying Washington for ever more favorable banking regulations that keep low wage borrowers right at the edge of financial disaster.

  221. I wanted to make a quick correction to part of your argument.

    Low interest loans and refinancing are available to those with good credit. Income is not a major factor of determining your credit rating. I have a massive amount of debt from my student loans but my credit rating is still an A because I have never been late with a payment. As a teacher in Az, I can say with confidence that I am not rich.

  222. This is an excellent, extremely insightful essay. It shines a bright light on old ideas and values that I have taken for granted.

  223. Here are some official statistics - GDP per capita versus of annual wages for various types of "production workers" from the BLS:


    which I think clearly show what has been happening. Since around 1970 wages have scarcely grown and all the growth in the economy has gone to upper incomes, lately to the 1% or even the 0.1%.

    This is not something that started in 2008 - the change in distribution of income started a long time ago. Corporate profits actually shot up around 2002. What caused this? There are actually many reasons, as economic policy swung toward conservatism. There were certain specific events in the crash which did have an effect but this was obviously just a continuation of a long-term trend. Anyone who wants to understand the current economy will have to start looking a lot earlier than the last crash and recession.

  224. The percentage of the population currently employed (Employment-Population Ratio) is a more clear metric than the unemployment rate, because it is more difficult to fiddle with. It’s a chart the Bureau of Labor Statistics updates monthly (see link)…


    Unfortunately, I’ve never seen this chart referenced on TV or in print/electronic media. It’s also unfortunate that we can no longer look back more than 10 years, or you would see the high point in employment was not 2006, but 1999/2000. I have screenshots that go back further, but I’m not sure what good they are now.

    All that said, I agree with what I believe was the authors overall point – that most of the metrics are quantitative, when we should be looking at qualitative indicators. Even the Employment-Pop Ratio does not take into account full-time VS part-time jobs, or the embedded pay rates, or, perhaps more important, the median purchasing power (not quantity of money, but what you can actually buy with it - an important stat if/when inflation gets hot again). Unfortunately, I’ve never seen such statistics.

  225. @Tim Most of the measurement systems suck. Use the social security data to determine all these things. You are not our of the employable category until you reach full retirement age. Calculate the unemployment rate the same way, if in a qtr you made contributions and next don't you are unemployed unless over the full retirement age. More reliable than some survey.

  226. @Tim

    Nothing matters until we acknowledge the devil.

    As in detailed definitions, operationalizations if you will.

    For example your comment on the "currently employed", a concept rendered meaningless in today's gig economy, employment at will, "sorry you only work 39 1/2 hours" no benefits economy.

    Having a job and having employment that supports a reasonably secure life are different, essentially unrelated, ideas.

  227. In 2016 63,600 Americans died from drug overdose. It helps to put that in context. For that same year. the CDC reports 38,658 deaths due to gunshot and the National Highway Traffic Safety Administration reports 37,461 deaths caused by automobile accident. Perhaps the statistics are staring us in the face?

  228. Good read. Yes, we need to track additional measures of economic welfare (and environmental costs) along with better data. That includes measuring the underground economy. Then we need to reform tax and economic policy to insure that all have paths to improvement over time.

  229. Multiplying the impact of income inequality is the tax favoritism of capital over labor. passive income should be taxed at least equally to wage income. In addition, we have not removed nearly all estate taxes which further separate those who were not born into wealth from the "equal opportunity" that our system is intended to provide.