The Decade of Retreat

If the 1990s is known as the Decade of Affluence because household incomes reached a peak, then these years may well be called the Decade of Retreat—especially for the American worker. Hardly a day goes by without more evidence of workers falling behind.

The Current Population Survey data, released yesterday, show a signficant decline in the earnings of men and women who work full-time (see post below). Wages and salaries now account for a smaller share of the gross domestic product than at any time since 1947, according to an analysis by the New York Times. Not only are wages falling, but the percentage of Americans with employment-based health insurance is slipping, and those with insurance must pay more for it. In fact, the value of employee benefits is failing to keep pace with inflation, according to the Times.

Americans are feeling the pain. According to a survey by the Pew Research Center, 59 percent of the public thinks today's workers must work harder to earn a decent living. Fifty-six percent say employers are less loyal to workers. Fifty-one percent think retirement benefits are not as good as they used to be. A comparison of the 2006 Pew results with surveys taken in 1989 and 1997 shows job satisfaction dropping sharply among workers aged 50 or older and growing discontent with employee benefits.

The quality of work life may not be alone in retreat. Tom Smith, director of the General Social Survey (GSS) at the University of Chicago's National Opinion Research Center, concludes in a study that "Americans on average are worse-off now than in the past." He came to this conclusion after comparing 2004 with 1991 GSS results. In both years, respondents were asked to identify the frequency and severity with which they encountered 66 different problems ranging from the death of a spouse to the loss of a job and the inability to pay for health insurance. The percentage of Americans experiencing at least one problem increased over the years from 89.1 to 91.5 percent. The average number of problems experienced grew from 4.03 to 4.34. Smith found significant increases in problems such as being unemployed, being pressured to pay bills, being unable to afford food, lacking medical insurance, and being hospitalized.

What factors might explain an erosion in the quality of life in the United States? One might be the aging of the population, which leads to more health problems. Another might be technological change and the consequent globalization of the workforce. The Pew survey shows how ambivalent Americans feel about these changes. Sixty-nine percent think email and other modern communication technologies have helped workers. But an even larger 77 percent think outsourcing—which is one consequence of the communications revolution—has hurt American workers.

Smith's study sheds some light on why things may be turning south, examining the demographic segments with the most and least troubles. The biggest change in the distribution of troubles was by education. In 1991, the lowest-educated group experienced 1.33 problems for every 1 problem experienced by the best-educated group. In 2004, the ratio had grown to 1.79 to 1. The growing gap between the haves and the have-nots in an increasingly competitive world may explain the Decade of Retreat.

Here Are the 2005 Numbers

At 10:00 this morning, the Census Bureau unveiled the much anticipated snapshot of our economic wellbeing, the results of the Current Population Survey's Annual Social and Economic Supplement. Taken in March of each year, the supplement asks a large, nationally representative sample of Americans about their economic status in the previous year. Here are the numbers unveiled by the Census Bureau this morning.

HOUSEHOLD INCOME UP
Median household income rose 1.1 percent between 2004 and 2005, to $46,326. This is the first significant increase in median household income since 1999, according to the Census Bureau. But the 2005 figure is still well below the level of 2000, and the gains were limited to a few select demographic segments. By age, only householders aged 65 or older saw their median household income rise significantly between 2004 and 2005—up by 2.8 percent. Behind the gain is higher labor participation among the elderly. By income, changes were not significant at the 90 percent confidence interval, but it is interesting to note that all but the highest income quintile lost ground.

MEN'S EARNINGS DOWN
Among men working full-time, median earnings fell 1.8 percent between 2004 and 2005, to $41,386 after adjusting for inflation.

WOMEN'S EARNINGS DOWN
Among women working full-time, median earnings fell 1.3 percent between 2004 and 2005, to $31,858 after adjusting for inflation.

HEALTH INSURANCE DOWN
The percentage of people without health insurance climbed from 15.6 to 15.9 percent between 2004 and 2005. The number of uninsured grew to 47 million. The percentage of the population covered by employment-based health insurance fell from 59.8 to 59.5 percent.

POVERTY STABLE
The percentage of people living in poverty held steady at 12.6 percent in 2005, not significantly different from the 12.7 percent rate of 2004.

Few Are Trapped in the Housing Bubble

The recent downturn in the housing market has everyone ringing the alarm bells in a frenzy of concern. Let's get real. The latest data from the 2005 American Housing Survey show that, in fact, few homeowners will be vulnerable to a pause or even a slip in housing prices. Here are the numbers on who will be hurt.

Homeowners without a fixed-rate mortgage: Of the nation's 46 million homeowners with a mortgage, 9 million (19 percent) do not have a fixed rate of interest. Instead, they have adjustable rate mortgates, balloon mortgages, or some combination. They will be hurt by rising interest rates.

Homeowners with little or no equity in their home: Of the nation's 46 million homeowners with a mortgage, 5 million (12 percent) owe 90 percent or more of the value of their home. They will be hurt by falling prices.

As the housing market finds a new level of stability, it is important to keep in mind that many homeowners (39 percent) have no mortgage at all, most homeowners with mortgages pay a fixed interest rate, and those with mortgages owe only 55 percent of the value of their home—in other words, they have enough equity to weather a substantial price drop.

Who Will Get Hurt by Housing?

Yesterday the National Association of Realtors announced a decline in sales of previously owned homes for the month of July, and today the Census Bureau reports that new home sales also fell last month. Although the declines were expected by analysts, both exceeded predictions, heightening fears of trouble ahead for homeowners and the economy.

Who will be hurt by a downturn in the housing market? One vulnerable group is young adults. The homeownership rate of householders under age 25 has grown faster than that of any other age group over the past five years. In 2005, 26 percent of householders under age 25 owned their home, up from 22 percent in 2000. The homeownership rate of householders aged 25 to 29 ranked second in growth during those years, rising from 38 to 41 percent. Of the 3.3 million new homeowners in the U.S., more than one in five are under age 30.

In years past, these young adults would have been renting apartments and could have benefited from the transition to a buyer's market. But with housing prices rising fast and lenders marketing tempting interest-only loans, many took the plunge. Now they may have a hard time staying afloat.

Back to School

A Census Bureau press release notes the following astonishing facts about the nation's elementary and high school students:

—41 percent are minorities.
—22 percent have at least one foreign-born parent.

Source: Bureau of the Census, Back to School, 2006-2007

How Much Elbow Room?

Later this year, the U.S. population will top 300 million people. The last time we passed a 100 million mark was in 1967. The United States is a big country, and we have a long way to go before we are as densely populated as most other countries of the world. In 2005, there were 80 people per square mile in the United States, according to the Population Reference Bureau. That's up from 57 people per square mile in 1967.

While it's getting more crowded around here, we still have a lot more elbow room than most other countries. Among the world's 200-plus nations, we rank around the 25th percentile in population density. China, the world's most populous country, has a population density of 353 people per square mile. India fits 869 people into each of its square miles. Japan has even more, with 876. Those countries seem empty in comparison to the most densely populated nation in the world, Bangladesh, with 2,594 people per square mile.

Americans have more space to themselves than do most Europeans. France has 285 people in each of its square miles. Germany is even more tightly packed with 598, and the United Kingdom tops it with 635. Some nations are emptier than we are, including Brazil (56) and Russia (22). The Canadians, with only 8 people per square mile, and the Australians with an even smaller 7, would feel downright claustrophobic in our crowds.

Bet You Didn't Know

Percentage of households owning dogs: 36
Percentage of households owning cats: 32

Number of dogs per household: 1.6
Number of cats per household: 2.1

Source: American Veterinary Medical Association, U.S. Pet Ownership and Demographics Sourcebook, 2002, as reported in the Census Bureau's 2006 Statistical Abstract