PowerPoint Presentation

Reversing the Middle Class Jobs Deficit

Alan B. Krueger

Chairman

Council of Economic Advisers

April 26, 2012

Figure 1: The 2000s Saw Far Weaker Job Creation Than Each of the Previous Five Decades

1

Source: Bureau of Labor Statistics; CEA calculations.

Figure 2: Real Earnings for the Median Year-Round Worker Stagnated

2

Note: Earnings adjusted for inflation using the Consumer Price Index for all urban consumers.

Source: CEA calculations based on Current Population Survey March Supplement.

Figure 3: The Share of Workers Earning a Middle-Class Income Has Been in Decline Over the Past Three Decades

3

Source: CEA calculations based on Current Population Survey March Supplement.

Figure 4: Economic Growth Turned Positive in 2009:Q3 and Has Continued for 10 Straight Quarters

4

Source: Bureau of Economic Analysis. Shading denotes NBER recession.

Figure 5: Jobs Have Been Growing Since February 2010

5

Source: Bureau of Labor Statistics. Shading denotes NBER recession.

Figure 6: Job Growth in the Current Recovery is Closely Tracking the Early 1990s Recovery

6

Source: Bureau of Labor Statistics; CEA calculations.

Figure 7: Strong Economic Growth in the 1990s Helped Lift Incomes for All Quintiles

7

Source: Census Bureau; CEA calculations.

Figure 8: The Manufacturing Sector Provides a Path to the Middle Class, Especially for Workers with an Associates Degree or Less

8

Note: The median annual earnings is based on full-time year-round workers.

Source: CEA calculations based on Current Population Survey 2011 Annual Social and Economic Supplement.

Figure 9: Manufacturing Employment Fell Beneath Its Normal Bounds Early in the 2000s

9

Source: Bureau of Labor Statistics, CEA calculations.

Figure 10: Domestic U.S. Manufacturers Are Increasingly Competitive

10

Source: Bureau of Labor Statistics, International Labor Comparisons; CEA Calculations.

Figure 11: Share of Population with a Post-Secondary Degree in 2009 by Birth Cohort

11

Source: Organization for Economic Cooperation and Development, Education at a Glance 2011.

Figure 12: College Completion Rate by Income Quartile

12

Source: Bailey and Dynarski (2011) based on National Longitudinal Survey of Youth, 1979 and 1997. College completion is measured by age 25.

0204060801001201401601801950196019701980199020002010

1950s+24%1960s+31%1970s+27%1980s+20%1990s+20%2000s

Nonfarm Payroll Employment

Millions

Jan.2000-

Dec. 2007

+5.7%

32,00034,00036,00038,00040,00042,00044,00046,000198119861991199620012006

Real MedianEarnings for Full-Time Year Round Workers, 1981 -2010

2010Dollars 2010

66.164.860.259.5565860626466681980199020002010

Share of Full-Time Year Round Workers With Annual Earnings Within 50Percent of the Median

Percent0

0.53.63.01.7-1.81.3-3.7-8.9-6.7-0.71.73.83.93.82.52.30.41.31.83.0

-10-8-6-4-202462007:Q12008:Q12009:Q12010:Q12011:Q1

Real GDP Growth

Annualized Quarterly Percent Change

2011:Q4

-900-750-600-450-300-1500150300-900-750-600-450-300-1500150300Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12

Change in Private Nonfarm Payrolls

Thousands,Seasonally Adjusted

Feb-10

9698100102104106108

-36-30-24-18-12-6Trough61218243036

Private Payroll EmploymentDuring Recoveries

NBER-Defined Cycle Trough = 100

Current (June 2009Trough)Months from Trough19912001

-0.4%0.1%0.3%0.6%1.2%Lowest fifth2nd fifthMid fifth4th fifthTop fifth-0.50.00.51.01.52.02.53.03.5Percent

Annual Growth Rate of Real Income Across the Family Income Distribution,1979 to 2010

2.2% 2.1% 2.2% 2.3% 3.2%

0.00.51.01.52.02.53.03.54.0Lowest fifth2nd fifthMid fifth4th fifthTop fifth

Annual Growth Rate of Real Income Across the Family Income Distribution, 1995-2000

Percent

Manufacturing

56%

Manufacturing

63%

Non-

Manufacturing

47%Non-

Manufacturing

49%

0102030405060708090100

All WorkersAssociate's Degree or Less

Percent of Workers With Annual Earnings Within 50 Percent of the Median, 2010

Percent

101214161820221965197019751980198519901995200020052010

Manufacturing Employment

Millions

Dec. 2000-Dec. 2007

-3.4 million

Dec. 2007-Jun.2009

-2.0million

Jan. 2010-Mar.2012

+470,000

-23.0-10.82.12.914.117.120.840.844.167.679.0

-40-20020406080100

SingaporeJapanU.K.KoreaSwedenGermanyFranceCanadaItaly

Changein Manufacturing Unit Labor Costs, 2002-2010

Percent

Taiwan UnitedStates

010203040506070

PortugalMexicoTurkeyItalyCzech Rep.Slovak Rep.PolandKoreaGreeceAustriaHungarySpainChileSloveniaFranceIrelandIcelandBelgiumLuxembourgGermanyDenmarkSwedenNorwayJapanNetherlandsSwitzerlandU.K.FinlandAustraliaEstoniaNew ZealandCanadaUnited States

Share of 55-64 Year Olds With a Post-Secondary Degree

Percent

010203040506070

TurkeyItalyMexicoCzech Rep.Slovak Rep.AustriaPortugalHungaryGermanyGreeceSloveniaChilePolandIcelandEstoniaSpainFinlandSwitzerlandNetherlandsUnited StatesSwedenBelgiumIsraelFranceDenmarkAustraliaU.K.LuxembourgNew ZealandNorwayIrelandJapanCanadaKorea

Share of 25-34 Year Olds With a Post-Secondary Degree

Percent

0.090.210.320.540.050.140.170.3600.250.50.75Lowest Quartile2nd Quartile3rd QuartileTop Quartile1979 to 1982 birth cohorts1961 to 1964 birth cohorts

Fraction of Students Completing a Bachelor's Degree, by Income Quartile and Birth Year