Household incomes have fallen faster since the end of the Great Recession than they did during it, even as corporations have returned to greater profitability than they reached before the Great Recession. Corporate profits passed their pre-recession levels earlier this year, but according to a new study from Sentier Research, household incomes have fallen behind, dropping nearly five percent from June 2009 to June 2012. During the recession, incomes dropped just 2.6 percent, as the Washington Post reports:
Incomes have dropped more since the beginning of the recovery than they did during the recession itself, when they declined 2.6 percent, according to the report, which analyzed data from the Census Bureau’s Current Population Survey. The recession, the most severe since the Great Depression, lasted from December 2007 to June 2009.
Overall, median income is 7.2 percent below its December 2007 level and 8.1 percent below where it stood in January 2000, which was at $55,470, according to the report.
Corporate profits are at record levels, reaching an all-time high of 11 percent of the nation’s gross domestic product in July. But instead of re-investing that cash into jobs that will help the economy recover, corporations are sitting on cash — the members of the Standard and Poor’s 500 held $800 billion in cash in June 2011.
And while they are loathe to spend money on new workers, many of America’s companies have had no problem enriching executives. Even as some companies layoff workers, they have spent money on share buybacks that make executives rich. Executive compensation, meanwhile, has grown 127 times faster than worker pay over the last three decades, and many companies have paid outlandish bonuses and salaries to executives even as they layoff workers.
All of that has had an effect on the American middle class, which, according to a study released today by Pew Research Center, had its “worst decade in modern history” during the first 10 years of the 21st century.