What we earn: Income growth stagnates in vice grip of recession
BY MICHAEL OVERALL World Staff Writer
Sunday, April 15, 2012
4/15/12 at 3:46 AM
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when economists go out to dinner, they see the menu a little differently. The prices become just another domino in a long, long chain reaction.
Gas prices go up, for example, so the delivery company charges an extra fee to bring food to the restaurant.
The restaurant makes up for it by increasing its own prices. Then customers can't afford to eat out quite so often. And the waiters collect fewer tips.
Now, the waiters can't afford so many groceries. So the stores order less produce. And the stockers have to work a shorter shift. So they can't afford to go to the movies.
On and on, the dominoes fall.
"When gas prices go up, everything that comes on a truck is going to cost more," explained Steve Greene, dean of the College of Business at Oral Roberts University.
"And everything comes on a truck."
It wouldn't seem so bad if paychecks were going up, too. But they aren't.
Included with Sunday's Tulsa World, Parade Magazine looks at what various jobs earn these days across the United States, while the World takes a closer look at some Oklahomans.
Between the 2000 Census and the 2010 Census, median household income in Tulsa County grew roughly 2.6 percent a year, staying just ahead of inflation at 2.4 percent.
The typical family's income went from $35,316 to $45,613 in Tulsa. But adjusted for inflation, spending power increased only $902.94.
"Any improvement is good," Greene says, "considering the economic situation."
Nationally, that situation looks bleak, with median family income plummeting 7.1 percent since the turn of the century, with most of that decline coming after the 2008 recession.
Locally, the recession hasn't hit quite that hard, but it has stopped the growth of income even while inflation picks up speed.
In other words, the typical Tulsa family seems to be treading water at best - not sinking financially, but not making progress either. Maybe even slipping a little.
"Income right now is not keeping up with inflation," Greene says, "and that's hitting people where life is made or broken - at the gas pump and the check-out lane."
Nationwide, median household income has fallen for three straight years, slipping below $50,000 for the first time since the mid-1990s.
Adjusted for inflation, the typical American family has the same spending power today as it had in 1996.
That's 16 years of no progress.
That time period "includes both the end of one of the longest economic expansions since World War II, and one of the most significant economic downturns since the Great Depression," says Craig Walker, the Wheeler professor of economics at Oklahoma Baptist University.
"It was a very unusual decade."
In the summer of 2000, gas prices averaged $1.59 a gallon in Tulsa. Last week, some stations went as high as $3.79.
Inflation, however, has been a lot worse in the past.
Since 1945, it has averaged 3.9 percent a year. But the last time it was really that high was 1991, when inflation hit 4.2 percent.
"Inflation," Walker says, "has not been a significant economic problem in many years."
The real problem is wage stagnation, which in turn comes from high unemployment.
When employers don't have to compete for workers, they don't have to pay higher salaries.
"With high rates of unemployment," Walker concludes, "we are probably not going to see increases in real household income.
"And without increases in real household income, we are not going to see increases in household spending."
Median income guide
Median household income calculates a mid-point, not an average. Half of all households make more. Half make less.
Median household income for Tulsa County in 2000: $35,316
In 2010: $45,613
Growth of median income: 29 percent
Cumulative inflation between 2000 and 2010: 26.6 percent
Oklahoma's median household income in 2010: $42,979
National median household income in 2010: $49,445
Sources: U.S. Census and the Consumer Price Index
Original Print Headline: What we earn
Michael Overall 918-581-8383
michael.overall@tulsaworld.com
Associated Images:
Photo illustration by TOM GILBERT AND TIM CHAMBERLIN / Tulsa World
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