Why consumer pocketbooks had a rough start this millennium
Median family income rose just 1.6 percent between 2001 and 2004, a Federal Reserve survey released Thursday shows.
As Americans entered a new millennium, gains in their pocketbook slowed dramatically.
Median incomes rose just 1.6 percent after inflation during the 2001-04 period, according to data released Thursday by the Federal Reserve Board. The median family net worth, a measure of wealth that represents the sum of all assets minus liabilities, rose a similarly small 1.5 percent in that period.
Gains are better than losses, but the survey confirms and amplifies a trend of wage stagnation that is continuing to dampen American paychecks into 2006.
"It is a long-term trend," says Mark Weisbrot, an economist at the Center for Economic and Policy Research in Washington, which studies the well-being of American workers and families. "Over the past 30 years, the median wage has grown about 9 or 10 percent."
The Federal Reserve survey of consumer finances comes out every three years, and represents a more detailed portrait of family finances than the monthly economic reports that come from the Department of Labor or other government agencies.
The period studied in its new survey encompassed a rocky time for the stock market, a slow-growing job market, and a rise in both home prices and family debts.
Inflation-adjusted incomes have grown so slowly, Mr. Weisbrot says, despite solid growth in productivity. A worker today is able to produce about 80 percent more, per hour of work, than his or her counterpart 30 years ago.
"Globalization is part of the process by which the bargaining power of most employees in the United States has been drastically reduced so that they don't capture most of the gains from the economy," he says.
Thanks in large measure to a rough stock market, the 2001-04 period was not necessarily a lucrative one for the richest Americans either.