Five years after the financial meltdown, triggered in part by the Lehman Brothers bankruptcy in September 2008, a lot of attention has been paid to the business sector and how it has recovered.
AIG, the insurance giant that was saved from bankruptcy by a taxpayer bail-out, has repaid the government, with interest. Fannie Mae and Freddie Mac are now both profitable. So are the nation's largest banks, which have benefited from the Federal Reserve's low-to-no interest rate policy.
The average consumer, on the other hand, hasn't fared nearly as well. This week the U.S. Census Bureau reported that the average American family earned $51,689 – in today's dollars – in 1989 but in 2012 earned $51,017. In 2011 the median income was $51,100, showing that wage-wise, the American family is still losing ground.
Distraction at work
The Great Recession, which started in December 2007, officially ended in mid 2009. But for millions of consumers, it hasn't felt like it. Wayne Hochwarter, a business professor at Florida State University, has just completed a study that documents the recession's lingering impact. He found that the effects of the recession remain a “distraction at work” for about 40 percent of workers.
His survey of more than 600 blue and white collar workers this year found a common theme; frustration, feelings of isolation, pessimism about the future of their companies, career disappointment, job anxiety and burnout.
“I view the recession as a traffic accident,” said a plant manager who responded to the survey. “The crash may be over, but the car will never be the same even after we did our best to fix it.”
In the immediate aftermath of the financial meltdown the private sector reacted with massive workforce reductions. Overnight millions found themselves unemployed. Those who remained were sometimes faced with increased responsibilities and had to live with the concern that they might be next.
More than four years after the recession officially ended, Hochwarter’s study found 44% of respondents said “they still must work harder as a result of the recession in their organization.” Nearly half said “they still must do more with less due to the recession.” Thirty percent worried about their job security.
The study also seemed to expose a divide among managers and employees. Forty-six percent said management is “stingier” than it used to be.
“Management just doesn’t see how bad it is because it really isn’t all that bad for them,” an industrial salesperson told Hochwarter. “But it is for the rest of us.”
The feelings of slipping backward economically may not go away anytime soon. Bloomberg BNA this week released its Wage Trend Indicator (WTI) and it suggests the slow pace of annual wage increases in the private sector likely will continue in the coming months.
Plenty of people seeking work
"Although we are continuing to see slow but steady job growth, there is still a very large pool of unemployed workers, which tends to lower the pressure on employers to raise wages," economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said.
The Index projects wage gains in the private sector to remain anemic – at around 1.9%.
Economic frustrations in the workplace boiled over into public view last month when fast food restaurant employees in several large cities went on strike for higher wages. Many restaurants pay the government's minimum wage, which a number of employees complained was not a living wage.
While most fast food restaurants attempt to hire high school students looking for extra spending money, the realities of today's job market may mean older workers – with more economic responsibilities – are now taking these jobs.
The nation's largest labor organization, the AFL-CIO, says America remains in what it calls a “jobs crisis.” While the pace of hiring since the beginning of 2013 has picked up momentum, many of the jobs have been part-time. Also worrying economists is the fact that the unemployment rate is falling for all the wrong reasons. It fell in August to 7.3%, in part because more than 300,000 people dropped out of the labor force.