The Great Recession officially ended in June 2009, but the U.S. economy still has not fully recovered. While existing home sales have returned to their June 2009 level and the current unemployment rate of 7.4% is far below the June 2009 rate of 9.5%, less people are participating in the work force and incomes are decisively lower.
A new report out Thursday from Sentier Research found that the median annual household income of Americans was $52,100 in June, after adjusting for inflation. That's 4.4% below the level in December 2009.
Even more dramatic, the median income is 6.1% lower than the level in December 2007, when the recession began, and 7.2% lower than January 2000. For many Americans incomes aren’t just stagnant, they’re falling along with their purchasing power and standard of living.
“This is yet another study that basically confirms what a lot of people already know: it’s getting harder to get ahead; it’s getting harder to pay the bills,” says Rick Newman of Yahoo! Finance.
Newman sees two economies: one with people who are back to work and another where people are languishing or “washing out."
The big question now: what can be done to change the situation, and who can do it?
Individuals “need to be more mobile and have to move more quickly,” says Newman. “It’s easy to say that, but hard to do. And it’s very hard to give people the support they might need to pay for more education or get the right training.”
So is government the answer? Newman doubts that anything good can come out of "the political meat grinder in Washington." And that assumes there is meat to grind, when in reality many politicians have put the federal government on a diet, pursuing policies to spend less, not more, in order to reduce the deficit and balance the budget.
What abut the private sector?
“Maybe we should say to our business leaders: 'You don’t have to take home $70 million this year,’" says The Daily Ticker's Henry Blodget. "We need to move toward an ethos of business that is much more of a balancing tool where you don’t hurt shareholders but share the wealth a little bit.”
Neither the government nor the private sector is doing anything to solve the problem of declining incomes but any solution would probably involve both, says Newman.
Ultimately this “will be solved by the government, probably through taxation,” adds Blodget. “That’s the way we dealt with it after the 1920s. I hope we don’t get there….just a little balancing, that’s all I’m asking.”
Watch the video above to see what really can--and can't--be done to reverse the slide in U.S. incomes.
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