In recent months, there have been many indications that the economy has recovered from the recent recession, as over 300,000 jobs were added in November and unemployment is at its lowest in nearly a decade. But are these jobs allowing Americans to live well?
(Photo Credit: Tom Caswell/Flickr)
According to PayScale’s Real Wage Index, “wages have risen 7.4 percent overall in the US [since 2006]. But when you factor in inflation, ‘real wages’ have actually fallen 8.7 percent. In other words, the income for a typical worker today buys them less than it did in 2006.” Essentially, wages aren’t keeping up with inflation, so the average American has less discretionary income. While this is troubling news for all aspects of the economy, it is especially harrowing for those who own houses — and those looking to buy.
A peak of 18 million homes underwater, or 35 percent of borrowers, hit in February 2011, according to mortgage performance tracker Black Knight Financial Services. Currently, only 8 percent of borrowers, or about 4 million homes, are in that situation.
“The Great Recession is officially over, but Americans are still 40 percent poorer today than they were in 2007, the year before the global financial crisis,” reports Quentin Fottrell at Market Watch.
The average net worth of white households is down 26 percent since 2007. For hispanic and African-American households, the drop was 42 percent and 43 percent respectively, showing a disproportionate racial wealth gap. Some theorize this is due to white households being more likely to hold stocks and have retirement accounts, says a recent report by the nonprofit Pew Research Center.
This is especially bad news for first-time home buyers without family money. Given that the average down payment required is 20 percent, it could take over 12 years to save enough to buy a home at the current income/inflation rates, which bad news not just for Americans, but the overall economy — even despite claims of economic recovery.
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Are you earning less now than you were before the recession? We want to hear from you! Leave a comment or join the discussion on Twitter.
After working full time for 30 years and having benefits, I have been severely under-employed for the past 16 months. I apply, I interview, but I have not landed a position that meets my basic bills. Becuase I have a 401k, I am not eligible for public assistance programs. While I understand that I may never see $35/hour full-time again, I would hope that my education and experience would at least allow me to have a job that covers $1500/month.
I’m making more at my employment with some small raises. Where I really lost money is with the FED holding down interest rates my return on savings went from $20,000 a year down to $2,000. I with drew from the stock market because they didn’t really fix the problems that exist in the markets. With the FED’s quantitative easing(i.e. monetizing the debt) and now Japan taking over with just as much printing as QE IV, they managed to levitate the… Read more »
I am a medical professional with a degree, not certificate, with experience and extra credentials and good references. I made 47.42 an hour in 2007. i had to take a pay cut to 43 dollars an hour when the HOSPITAL clinic I was working in closed after 30 years of being open. I finally started earning 48 dollars an hour when I changed jobs back in April of 2013. I do not get regular raises at this job abd have… Read more »
Underemployed & making far less than before the recession. Making 27% of what I made in 2009. Illinois has faired far worse in overall economic recovery than the rest of the nation. Any job growth has been part time, low wage, low skilled (unskilled) service positions. Stop putting so much of a measure in this “unemployment rate” and look at the bigger picture. It’s an ugly one!
The article seems very shallow to me. It promises to provide an explanation to the discrepancy, but it does not. Worse it renegs on the sensational title that Americans are making 40% less now than in 2007. With whites making 26% less and minorities who fare words making only 43% less, the weighted average must fall some whre in the low thirties. THen it tries to blame the problem on inflation, which has been low (according to all official stats),… Read more »
Absolutely I’m making less than before the recession. In 2008 I lost my job with a large corporation after 23 years where I had enjoyed my work, my workplace associates, a healthy salary, ample vacaction time, and great benefits. It was a struggle to find comparable employment, as I was in the “over 50” bracket. After a year I finally landed a 12 month contract which payed very well, but the contract wasn’t renewed. Since then, I’ve held lesser paying… Read more »