Black Friday is over. This year, there were many news stories of hope and optimism that consumers would rush out and buy, buy, buy.
The broadcast news stations sent their local correspondents to talk with mall owners and department store managers to get their forecast. The ones I saw used their interviews to plug discounts, their great service and expanded store hours.
I admire their optimism, but I doubt working Americans earn enough to buy us into prosperity. There are too many Americans who live on meager wages to expect them to buy us out of a recession.
The Retail Sector Doesn’t Really Pay
The two occupations with the most jobs in the economy are in retail: salesperson and cashier. There are 4.4 million jobs as a retail salesperson and 3.5 million jobs as cashiers.
The national median annual wage of a retail salesperson in 2008 was $20,510. while cashiers were only at $17,660. And these wages are not keeping up with inflation.
Retail salesperson had a national median annual wage in 2008 of $20,510.00; cashier $17,660.00. Worse these wages are not keeping up with inflation.
The dollar median wage reported for retail salesperson in 2004 was $18,680.00. If we adjust that 2004 wage for inflation measured by the Consumer Price Index between 2004 and 2008, it would need to be $21,293.29 to maintain the buying power of 2004.
Since it is only $20,510, buying power is falling for retail salespersons.
The dollar median wage reported for cashiers in 2004 was $16,240.00. If we adjust that 2004 wage for the inflation measured by the Consumer Price Index between 2004 and 2008, it would need to be $18,512.02 just to keep up.
Since it is only $17,660.00, buying power is falling for cashiers.
Buying Power is Falling Across the Board
In 2004, the Bureau of Labor Statistics reported 28.4 million jobs in 71 occupations with a median wage of $20,000 or less. In 2008, 30.2 million worked in those same 71 occupations and 21.2 million of them worked in occupations with falling buying power.
Someone earning just $20,000 will not have enough to pay rent and live independently in any of America’s cities. They will need to have a working spouse or double up with others and share rent.
Despite their apparent poverty, Federal taxes for a single person with $20,000 of wages are $2,786.25, remembering FICA and assuming the standard deduction. For a married couple with two jobs and wages of $20,000, their Federal tax exactly doubles to $5,572.50, again with the same assumptions. And there are other taxes.
In 2004, 89.5 million jobs in 480 occupations had median wages of $40,000 or less. In 2008, 93.3 million worked in those same 480 occupations and 68.6 million of them worked in occupations with falling buying power.
Reading about data can get tedious, but now you know: America’s wage earners cannot buy us out of recession.
(image: yomanimus)
About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
{ 0 comments… add one now }