The TV hand puppet, Count Blah, used the word “blah” as punctuation when he spoke. Today, his peculiar speech pattern could be mistaken for economics commentary.
As we begin a new year the American economy is showing off its strength in some areas, and the Federal Reserve believes that the old jobs and money machine is finally developing some momentum. On the whole, though, the economy’s past year was not one that spilled over with excitement and energy. There was no, “Let’s Dance.” With apologies to songwriter Danny O’Keefe (and Elvis, of course), 2015’s music was more like, “Goodtime Charlie’s Got The Blahs.”
There is no official name in economic theory for our current economy but if it had one it would definitely be “blah.” Even the financial sector, which has done very well for itself in the recovery, had a year that seemed lucky to be lackluster. A Bloomberg News headline described the past 12 months as, “The year nothing worked; stocks, bonds, cash go nowhere in 2015.” We had growth in national income, production, and jobs, but not enough to get excited about.
A blah economy presents a puzzlement for economists, for policymakers, and political candidates. For each of them, there is the problem of what to fix. The economy is somewhat like a car that starts right away and accelerates smoothly…until it gets to 23 miles per hour. Most fixes are aimed at problems like non-start, non-slow, or non-stop. With a car, a skilled mechanic can diagnose and fix the problem, of course, but that requires knowledge and experience. With the economy, we may not have enough of either just now. Certainly, we don’t have an army of economists with experience in energizing a blah economy.
For political candidates, the economy isn’t bad enough to present a simple, easy target for criticism. The economic issues quickly become complicated and complicated, like blah itself, doesn’t work in the negative polarity of today’s campaigns.
Household income provides one example of blah. The Sentier Research organization produces a monthly report based on the Census Bureau’s Current Population Survey (CPS) data. The latest report, for November 2015, is encouraging, but not so much that we want to hire a hall for a celebration. Their analysis reveals that in real money — that is, adjusted for price levels — “The November 2015 median income of $56,746 has now surpassed the median of $56,714 in December 2007, the beginning month of the recession that occurred almost eight years ago.” What that tells us is that it took us over 8 years to get our real median household income back to where we were before the recession.
The Sentier report goes on to note that, “The November 2015 median is now only 1.1 percent lower than the median of 57,388 in January 2000.” In other words, we still haven’t clawed our way back to where we were 15 years ago.
Our average household income, of course, is affected by wage income, and real wages, for most workers in the private sector, haven’t improved much over the past half century. According to the data published by the Bureau of Labor Statistics (BLS) the average worker’s wage in 1964 was $19.18. Fifty years later, in 2014, it had reached $20.67. This is an improvement no doubt, but at a rate that certainly qualifies as blah.
Real wage earnings aren’t growing and in many cases are even slipping. A Pew Research survey in December 2015 found that nearly half of American families, 49 percent, reported that their income wasn’t keeping up with inflation. As worrisome as that sounds, it represents an improvement from eleven months ago, when the portion of households reporting the same problem was 55 percent.
Government efforts to intervene in labor markets have, most recently, taken the form of higher minimum wage edicts. In fourteen states and three municipalities there are new minimum wage laws taking effect on January 1, 2016.
The ultimate effect of these, and other, wage mandates, though, is unclear. Certainly they will raise some wages, but whether the average wage is improved, or employment is increased, is another story. In the wonky dream world of government, mandated minimum wage increases will address not only “living wage” issues but also the broader, income inequality problem that is dogging the U.S. and other developed countries. In reality, of course, this will not happen, and instead, the mandates’ unintended consequences will probably increase dependency on private and public assistance.
The cure for the blahs is simple enough: take a deep breath or two, remember who you are, “accentuate the positive” and, as the military might put it, “move your butt.” It works for individuals and, in the end, we individuals are the economy.
James McCusker is a Bothell economist, educator and consultant. He also writes a column for the monthly Herald Business Journal.
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