A different view on economic growth: Comparing
Employment and ‘Wages and Salaries’ to illustrate how stagnant jobs growth has
led to further disparity in the income distribution
to the Current Population Survey (U.S. Department of Labor, Bureau of Labor
Statistics) in 2007, there were 146.1 million employed and in 2014 there were
146.3 million employed. Employment
expanded by only 213,000 over the entire seven year period.
that same time frame, the Civilian Noninstitutional Population (those 16+ years
and older not in the military, incarcerated, or otherwise counted in on the
rolls of institutions) was 231.9 million in 2007 and 248.0 million in 2014 for
an increase of 16.1 million. Folks think
on this statistic for a while. Of the
16.1 million (16,100,000) net increase in the Civilian Noninstitutional
Population 16 years of age and over during the 7 year period from 2007 through
2014, only 0.26 million (263,000) or about 1.6% of them have found jobs (on a
Let’s not forget that most of these jobs are only part-time jobs. Some legacy indeed! We have to do better than this.
persons consist of: persons who did any work for pay or profit during the
survey reference week; persons who did at least 15 hours of unpaid work in a
family-operated enterprise; and persons who were temporarily absent from their
regular jobs because of illness, vacation, bad weather, industrial dispute, or
various personal reasons. The employment-population ratio represents the
proportion of the civilian noninstitutional population that is employed.”
National Income --- Wages and Salaries
and those Employed
and Salaries is a subgroup under National Income in the National Income and
Product Accounts published by the Bureau of Economic Analysis in the U.S.
Department of Commerce.
and Salaries were $6.4 trillion in 2007 and the employment level was 146.1
million. The average wages and salaries
came to $43,780. Keep in mind that these
numbers are nominal; as in, not inflation-adjusted.
2014, Wages and Salaries rose to $7.5 trillion, while the employment level rose
only slightly to 146.3 million. The
average wages and salaries were $50,938 per person employed.
face value, it’s a good thing to see that wages and salaries rose, but you have
to keep in mind that over that same time frame, 2007 – 2014, there were 16.1
million people added to the Civilian Noninstitutional Population. Using the Employment-Population logic from
above, if the Employment expanded at a 63% rate as a percentage of the Civilian
Noninstitutional Population, this would equate with 9.9 million additional
the following two graphs we’re showing a couple of takes on the same basic
the first graph we show the actual wages and salaries portion of the National
Income. Again, in 2007 Wages and
Salaries were $6.4 trillion and by 2014 they grew to $7.5 trillion. If we were to apply the 63%
Employment-Population Ratio from 2007 for 2014, the Employment would have grown
by 9.9 million. If the same average
wages and salaries rate of $50,938 were applied to the additional 9.9 million
added to employment in this scenario that would equate to an increase of $505
billion in wages and salaries adjusted from an actual of $7.5 trillion to $8.0
following graph looks at the issue on an average (wages and salaries)
basis. While the wages and salaries of
those employed rose from 2007 through 2014 [$6.4 trillion to $7.5 trillion],
the number employed remained static [146.1 million in 2007 to 146.3 million in
2014]. Since the wages and salaries
increased from 2007 through 2014 by $1.1 trillion (from $6.4 trillion to $7.5
trillion), this certainly added to the overall income disparity, especially
considering that 16.1 million were added to the Civilian Noninstitutional
Population (not to mention that 9.9 million of the 16.1 million that would have
been added to the employment roles if the 63.0% Employment Population Rate had
What does all of this mean in terms of
sharing the gains from economic growth?
summary, while employment remained basically unchanged in comparing 2007 (146.1
million) and 2014 (146.3 million), wages and
salaries* grew from $6.4 trillion to $7.5 trillion. While this is a good thing for those employed,
for those unable to find employment it only added to the misery. If, for example, if we used the 63%
Employment Population Ratio (Employed divided by Civilian Noninstitutional
Population) from 2007 in 2014, there would be a shortfall of 9.9 million people
in the employed.
is why when we hear the hue and cry for higher minimum wages, and legislation
to promote profit-sharing, we ask what does this do for the millions that are
not even currently employed? If the
minimum wage was raised, how would this encourage further employment? A higher ‘effective’ minimum wage would only
encourage employers to reduce the amount of labor demanded (Law of Demand…price
rises, the quantity demanded of the item in question, i.e., labor, decreases).
as recently proposed by Hilary Clinton, there was legislation encouraging
profit sharing through tax cuts to corporations, those employed would certainly
benefit, but what about those not employed?
Doesn’t this miss the mark so far as addressing the issue of adding to
the actual number of those employed?
disparity has and continues to be a political hot potato, but it is best
addressed through increased economic growth (and thus employment), not by
adding monetary distance from those employed and those relegated to the
Again, how does raising the minimum wage or expanding access to profit sharing
for those employed help those not employed?
good note, the Employment Population Ratio has risen to 59.3% in June 2015, but
the downside is that the Labor Force Participation Rate has fallen to 62.6% in
June 2015, down from the 62.9% for the year in 2014. What does this tell us? Well, the higher Employment Population Ratio
points to growing employment, but the lower Labor Force Participation Rate
shows that on a net basis, while unemployment is falling, those individuals are
moving out of the labor force altogether.
jobs is all about economic growth…on that point we have fallen far short over
the last several years.