“To nobody’s surprise, this confirms that we are very much still feeling the effects of the 2008 financial meltdown,” Scott Bailey, regional labor economist for the state Employment Security Department, told Columbian reporter Erin Middlewood. Keep in mind that Bailey, just last month, hailed recent robust job growth in Clark County and said, “We’re just in the right place at the right time. Economies do come back after downturns. Businesses do start investing again. Consumers start spending more. We are in a recovery.”
Those competing sentiments — the notion that wages have not recovered but job numbers have — are not contradictory. It is entirely possible to suffer from the lingering effects of the economic downturn, yet still be in recovery, and in that regard, Clark County is far from unique. One of the hallmarks of this recovery across the country has been a growth in jobs but a stagnation in wages.
As the Wall Street Journal reported in March: “Wages are booming in some of the hottest segments of the economy, but those gains are masking an otherwise bleak picture for American incomes five years after the recession ended.” And, as The New York Times wrote editorially in August: “In 2013, after-tax corporate profits as a share of the economy tied with their highest level on record (in 1965), while labor compensation as a share of the economy hit its lowest point since 1948. Wage growth since 1979 has not kept pace with productivity growth, resulting in falling or flat wages for most workers and big gains for corporate coffers, shareholders, executives and others at the top of the income ladder.”
Most of us, it seems, are treading water even as the economy improves. There are many systemic causes for this, and elected officials typically receive too much credit — or too much blame — for the state of the economy when their policies can have only a limited impact. But the lack of wage growth can and will have long-term effects that permeate the economy if people are unable to afford large purchases, or save for a child’s education, or sock money away for retirement. Sooner or later, a lack of wage growth will be devastating to everyone, not just those whose wages have stagnated.
Which brings us back to President Truman and an updated version of his economic theorizing. For it could be said that a recovery is when your neighbor makes more money, but a boom is when you do.
