As bad as the current job recovery has been — and it's by far the weakest since World War II — the recovery in wages has been far worse.
Five years after the recession began in December 2007, total wages in the economy have yet to fully recover in real terms, Commerce Department data show. In other words, the wage recession continues.
By comparison, the longest previous post-war wage recession, which began with the 2001 downturn, was over in 2-1/2 years, even though that jobs recession lasted four years.
In recoveries past, wage recessions have ended long before payrolls hit new highs. But in the current expansion, wages and employment are on the same slow track to recovery. Both remain about 2% below their old peaks.
Real Disposable Income
Instead of looking at wages, let's consider real disposable income as a measure of the "wage recession". Here is a chart from Doug Short at Advisor Perspectives on Nominal vs. Real Income.
Real Disposal Personal Income Per Capita
click on any chart for sharper image
That chart shows an income recession for six years. I suggest the wage and income recession is even longer if one looks a breakdown of median income.
In "real" (CPI-adjusted) terms, 50% of households are no better off than they were in 1988. Let's dig a litter deeper.
Growth in Real Household Income by Quintile
The above chart shows percentage income growth by quintile since 1967. Since 1988, the bottom, 4th and middle quintiles (a combined 60% of households) have negative real income growth. The next chart shows the same thing in a different way.
Real Household Income by Quintile
No matter what your timeframe, only the top quintile did well. And from 1980 until 2000 the top 5% got the lion's share of income gains.
How Long a Recession?
Those in the top quintile have arguably had an "income recession" for 13 years! Only those in the top 5% have had real gains.
Those in the bottom three quintiles have not seen any improvement in real income since 1988 or longer (25 Years)!
To be fair, some people have moved up from quintile to quintile (or up within a quintile). However, unless someone moved up to the top quintile (if not the top 5%), inflation adjusted income growth has been a real struggle for a long time. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com