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Snapshot for February 4, 2004.
Wage and salary income yet to share in growth
The Department of Commerce’s advance release on gross domestic product (GDP) estimated that the U.S. economy grew 4% in the last quarter of 2003. This is a solid growth number, although well off the extraordinarily high (and unsustainable) 8.2% rate of the third quarter. However, the rise in GDP has not yet translated into higher wages and salaries for many U.S. workers.
Despite solid GDP growth in the second half of 2003, many Americans continue to rate addressing the economy and jobs as the nation’s highest priority.1 One possible reason for this continued anxiety in the face of rising GDP is shown in the figure below: the current recovery remains the single worst on record in terms of generating the real (inflation-adjusted) growth in wages and salary income that is the economic lifeblood of most American families.
In the 25 months since the recession ended, total wage and salary income is up only 0.4%. It should be emphasized that this is growth after the recession ended and does not include income losses incurred while the economy was contracting. This is the slowest wage and salary growth of any recession since 1959, the first year in which monthly data on total wage and salary income is consistently available.
Wage and salary income after the previous five recessions was an average of 9.4% higher by this point in the recovery. Prior to this recovery, the worst post-recession spell for wage and salary growth was the last jobless recovery of the early 1990s, which still saw wage and salary income rising nine times faster (3.6%) than in the past 25 months. The current slow growth of wages and salaries means that many U.S. workers are not reaping the benefits of the recent GDP growth.
1. Source: Pew Research Center, poll dated January 6, 2004 through January 11, 2004.
This week’s snapshot was written by EPI economist Josh Bivens.
