Why has real household income been dropping for years?
"A major, and overlooked, part of the answer appears to be quite simple: Americans are working less," University of Georgia economist Jeffrey Dorfman writes in an article for Forbes
"A smaller percentage of people are working, so there are fewer hours of work in each household. This is related to the infamous employment-population ratio that rose for decades until 2000, . . . but has been falling since."
Over the past 10 years, the average hours worked per household has dropped 5.2 percent, while real median household income has slid 4.6 percent, he notes.
"That implies a tiny gain in hourly pay above inflation, but also makes clear that if households were working the same number of hours as they did a decade ago, median household income would be in much better shape."
The issue here isn't income inequality, Dorfman writes. Rather the data show that "when people and families work fewer hours, they earn less money."
"We need to create jobs and get people working; that is how to address financial pressure on the middle class."
Personal income rose 0.2 percent in October, matching the gain in spending. Many economists took a positive view of the data.
"We see no shortage of cash to finance robust spending," Ian Shepherdson, chief economist at Pantheon Macroeconomics, tells The Associated Press
. "Wage and salary income is up . . . and sooner or later, people will start to spend the gas price windfall."
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