We already know the dirty little secret of the "alternative measurement" – the unemployment number you get when you combine the main unemployment rate with those folks who are not otherwise counted: folks who have just plain given up and don't where to look for a job and those who only found part-time work in their quest for full-time. That little equation can increase the basic number by almost 100%! But other dirty little secret is how much less Americans are actually earning, drops that are well below the percentage decline in the numbers of employed people. How do we know this?
Because someone was projecting how much money Americans were expected to earn in 2010 – to fund Social Security – and they knew that the unemployment numbers were going to be around 10%. Trouble is initially they guessed that Social Security tax receipts/income were going to cover outlays (for retirement and disabilities), that there wouldn't be a deficit until 2018… but when the numbers began to slip… and when they began to see that a deficit was possible, even then, the Social Security Administration trustees came up short: "[The] trustees had estimated a $41 billion deficit (excluding interest income), but the final deficit came to $76 billion -- almost twice what they had guessed. Just as troubling, their estimate for total SSA income in 2010 (which included both Social Security payroll taxes and interest paid by the Treasury on the Social Security Trust Funds) was $791 billion -- a number that overshot the actual total income of $741 billion (tax receipts of $631 billion plus interest income of about $110 billion) by $50 billion." DailyFinance.com (January 19th).
While it's true that Social Security maxes out just above $100,000 a year in annual income, the fact there's a drop in aggregate Social Security income below expectations tells you that, with the exception of the highest earners in the nation (and we can't tell how they fared from the Social Security statistics, because they earn so much more that the SS limit), Americans are making less money; the middle and lower class is getting sucker-punched. With home values at an all-time low, and the number of houses in foreclosure still rising, Americans are clearly doing less well in 2010 than they did in 2009, the year in which the recession slid the most. And we have to wonder why consumer confidence is so low when the stock market is still soaring?
There's another place where Americans are earning less money. Look at soaring commodities prices (foodstuffs, gasoline, steel and copper, precious metals, etc.) – as rising lifestyles in massively-populated China and India are increasing the levels and quality of their consumption – and the hint of inflation as some currencies that have always trailed the US dollar – like the Canadian dollar – are suddenly worth more. At least inflation and currency devaluation actually make American labor more competitive – even where American workers do not take ostensible cuts in their pay rates – because the currency they are being paid with is worth less. That's one huge advantage we have over Europe – where a unified currency (for most, but all, European Union members) makes it difficult to adjust the failings of one economy – like Greece or Spain – when it shares the same currency with a successful one – like Germany. Indeed, deflation and austerity – which actually cut the rates of pay and cause much higher unemployment for local workers in underperforming countries (a real morale killer and root cause of massive protests) – seem to be the only adjustments that can be made when the ability to devalue the currency is taken out of the loop.
In the end, Americans are adjusting to smaller homes (McMansions are out; under 2,000 sq. ft. is in), more efficient cars, lower job and pension security, lower educational standards and fewer years of schooling, higher costs of living in some major sectors and dwindling buying power. In the end, we aren't feeling too good about ourselves.
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