The plight of America’s unemployed is terrible.
Yet, for the 91 percent of those in the U.S. labor force who do have a job, the numbers also tell a dark story. Take-home pay, adjusted for inflation, fell 0.3 percent in August, the third decrease in five months, the Commerce Dept. just reported. The declines followed news from the Census Bureau that median household income in 2010 fell to $49,445, the lowest in more than a decade, while the poverty rate jumped to 15.1 percent, a 17-year high. Salary and benefit growth “has been going nowhere,” says Mark Zandi, chief economist at (MCO) Moody’s Analytics in West Chester, Pa. “One of the key reasons the recovery has stalled is that real incomes have fallen."
Stock market losses are eroding personal wealth. “It’s hard to see where consumers are going to get a lot of wherewithal to sustain strong spending,” says (JPM) JPMorgan Chase’s chief U.S. economist, Michael Feroli.
The share of households saying it was a bad time to buy goods and services was the highest in three years. A record 91 percent of consumers expect that growth in their incomes will match or fall behind price gains in the coming year, according to participants in the September (TRI)Thomson Reuters /University of Michigan sentiment survey, which dates back to 1978. Until people see their wages or the labor market get better, they will be “spending on necessities, not desires,” says Chris G. Christopher Jr., senior principal economist at IHS Global Insight.
The worsening outlook for incomes will cause “continued pressure on home prices and on the stock market,” says Malcolm E. Polley, who oversees $1 billion as chief investment officer at Stewart Capital Advisors in Indiana, Pa. There may be higher use of 401(k) loans as emergency funds. Americans will feel even poorer. “Perception is reality from the standpoint of consumers and investors,” Polley says. “We need people to start feeling good about themselves.”
As demonstrations took to the streets across the country to decry the excesses of Wall Street, a reporter asked President Barack Obama what he thought of them. Obama allowed that he understood their anger and even offered a bit of carefully modulated praise. Even before the protests started on September 17, the Administration had begun to move in that direction with a $447 billion job creation plan, to be funded by a tax on the rich.
"The protesters are giving voice to a broad-based frustration about how our financial system works," the President said at an October 6 press conference. His kind words for Occupy Wall Street were a sign of the four-week-old grassroots leadership movement's success.
Source: Bloomberg BusinessWeek, October 17, 2011
We have entered the age of empowered individuals, who use potent new technologies and harness social media to organize themselves. Most are ordinary people with new tools to force you to listen to what they care about and to demand respect. The institutions of modern developed societies, whether governments or companies, are not prepared for this social power.
With unemployment terrible and employee take-home pay evaporating, how will your organization respond when a grassroots leadership movement demonstrates in your community or outside your place of work?