The article shows a different view: total wages dropped as a percentage of GDP from 50% post-WWII to 42% in 2011. This is the basis for the Ponzi-economy argument:
consumption is largely financed by accumulating debt liabilities to supplement inadequate wages and salaries, where government runs massive fiscal deficits, not only to support the income shortfalls of its citizens, but increasingly to serve and enhance corporate profits themselves
The article and I are in agreement on this narrow point. Wages as a fraction of GDP are down. Wages, themselves, are up.
Broadly, I disagree with the assertion that our economy's growth is unusually debt-fueled. Total debt as a fraction of GDP is worryingly high [1]. Strip out financial sector indebtedness, however, and we're where we were in the 80s. Household debt explains a relatively narrow slice of recent GDP growth.
[1] https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...
Heres how it could be fixed: http://www.slate.com/blogs/moneybox/2014/02/24/housing_infla...
Real wages have not gone up as much as productivity. And their gains have been unequally distributed. But it is important, in such discussions, to maintain objectivity. Most Americans are better off than they were before the crisis.
https://www.statista.com/statistics/192398/employment-rate-i...
Employment rate in the United States from 1990 to 2017. 63% in 07 60% in 2017. So we still have not gotten back, and it's still down.
PS: On very long timescales employment rate is a poor metric, but over the short term it says a lot more about the economy than 'unemployment' rate or employed wages. It for example very clearly shows the last 2 recessions unlike employed wages.
[1] https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...
I completely agree. That said, we have enough data to conclude that real wages are higher today than they were pre-crisis for the vast majority of Americans. The uncertainty is more pronounced if one were to ask the same question in respect of the last 4 or 5 years, in which case I'd have to say "we don't know".
That isn't quite right. Labor force participation fell after 2008, and it has never recovered. While wages might have seen a revival for those lucky enough to have a job, there remains a large block of people who were pushed out of the work force and never found a way back in. See the chart here:
http://www.smashcompany.com/business/labor-force-participati...
Labor force participation is age dependent. If someone is 45 they expect to work another 20 years. But if they lose their job, they have little hope of finding another job that pays as much as their previous job. Generally, an unemployed 50 year old would be lucky to get a minimum wage job. Presumably they made more than that during their career. They won't get back what they used to make (exceptions for those at the peak of their professions).
So folks with jobs are seeing slightly higher wages, but you also need to take into account all the folks who lost their jobs permanently.
Another group that needs to be taken into account is the younger generation that is having problems even starting a career.
My sister graduated from university a few years ago, and - like almost everybody else she knows in her generation - is bouncing between unemployment and terrible minimum wage jobs (some are de facto lower than minimum wage due to wage theft).
Real median usual weekly earnings for full-time Americans 16 and over went from 332 1982-84 CPI-adjusted U.S. dollars in Q4 2007 to 350 in Q1 2018 [1]. Americans are in the midst of record high real wages.
Hourly wages for manufacturing employees haven't recovered to their 2004 peak, but they too are well above where they were pre-crisis [2].
Broadly, the country's balance sheet is healthier in 2018 than it was in 2008. Savings are higher, banks are plumper and then economy's productive capacity has grown. The next recession will be a regular one, not a full-blown crisis.
> It's about time for Silicon Valley to tank
Wall Street may beat us to it:
"Christopher Ricciardi, a former Merrill Lynch banker, was known as the 'grandfather of CDOs' for helping popularize these complex structured products that blew up during the financial crisis.
Now, he is bringing his experience to another corner of the financial world with mounds of debt: student loans" [3].
[1] https://fred.stlouisfed.org/series/LES1252881600Q
[2] https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...
[2] https://www.wsj.com/articles/grandfather-of-cdos-trying-to-d...