This document discusses reversing declining middle class jobs and incomes in the United States. It provides 12 figures analyzing job and income trends since the 1950s which show that (1) job growth was much weaker in the 2000s than previous decades, (2) median earnings have stagnated since 1981, and (3) the share of middle class incomes has declined since 1980. The figures also show that economic growth and job growth resumed in 2009 and have continued since.

1. Reversing the Middle Class
Jobs Deficit
Alan B. Krueger
Chairman
Council of Economic Advisers
April 26, 2012

2. Figure 1: The 2000s Saw Far Weaker Job Creation
Than Each of the Previous Five Decades
Nonfarm Payroll Employment
Millions
180
160
2000s
140 1990s
+20%
120 1980s
+20% Jan. 2000-
1970s Dec. 2007
100 +5.7%
+27%
1960s
80 +31%
1950s
60 +24%
40
20
0
1950 1960 1970 1980 1990 2000 2010
Source: Bureau of Labor Statistics; CEA calculations. 1

3. Figure 2: Real Earnings for the Median Year-Round
Worker Stagnated
Real Median Earnings for Full-Time
Year Round Workers, 1981-2010
2010 Dollars
46,000
44,000
42,000 2010
40,000
38,000
36,000
34,000
32,000
1981 1986 1991 1996 2001 2006
Note: Earnings adjusted for inflation using the Consumer Price Index for all urban consumers.
2
Source: CEA calculations based on Current Population Survey March Supplement.

4. Figure 3: The Share of Workers Earning a Middle-Class
Income Has Been in Decline Over the Past Three Decades
Share of Full-Time Year Round Workers With Annual
Earnings Within 50 Percent of the Median
Percent
68
66.1
66
64.8
64
62
60.2
60 59.5
58
56
0
1980 1990 2000 2010
Source: CEA calculations based on Current Population Survey March Supplement. 3

5. Figure 4: Economic Growth Turned Positive in 2009:Q3 and
Has Continued for 10 Straight Quarters
Real GDP Growth
Annualized Quarterly Percent Change
6
3.6 3.8 3.9 3.8
4 3.0 3.0
2.5 2.3
1.7 1.7 1.8
2 1.3 1.3
0.5 0.4
0
2011:Q4
-0.7
-2
-1.8
-4 -3.7
-6
-6.7
-8
-8.9
-10
2007:Q1 2008:Q1 2009:Q1 2010:Q1 2011:Q1
Source: Bureau of Economic Analysis. Shading denotes NBER recession. 4

6. Figure 5: Jobs Have Been Growing Since
February 2010
Change in Private Nonfarm Payrolls
Thousands, Seasonally Adjusted
300 300
Feb-10
150 150
0 0
-150 -150
-300 -300
-450 -450
-600 -600
-750 -750
-900 -900
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: Bureau of Labor Statistics. Shading denotes NBER recession. 5

7. Figure 6: Job Growth in the Current Recovery is
Closely Tracking the Early 1990s Recovery
Private Payroll Employment During Recoveries
NBER-Defined Cycle Trough = 100
108
106
104 1991
102
100
2001
Current
98 (June 2009
Trough)
96
-36 -30 -24 -18 -12 -6 Trough 6 12 18 24 30 36
Months from Trough
Source: Bureau of Labor Statistics; CEA calculations. 6

8. Figure 7: Strong Economic Growth in the 1990s
Helped Lift Incomes for All Quintiles
Annual Growth Rate of Real Income Across the Family Income Distribution,
1979 to 2010
Percent
3.5
3.0
2.5
2.0
1.5 1.2%
1.0 0.6%
0.5 0.3%
-0.4% 0.1%
0.0
-0.5
Lowest fifth 2nd fifth Mid fifth 4th fifth Top fifth
Annual Growth Rate of Real Income Across the Family Income Distribution,
1995-2000
Percent
4.0
3.5 3.2%
3.0
2.5 2.2% 2.3%
2.1% 2.2%
2.0
1.5
1.0
0.5
0.0
Lowest fifth 2nd fifth Mid fifth 4th fifth Top fifth
Source: Census Bureau; CEA calculations. 7

9. Figure 8: The Manufacturing Sector Provides a Path to the Middle
Class, Especially for Workers with an Associate’s Degree or Less
Percent of Workers With Annual Earnings Within 50
Percent of the Median, 2010
Percent
100
90 Associate's Degree or Less
80 All Workers
Manufacturing
70 Manufacturing 63%
Non- Non-
60 56% Manufacturing
Manufacturing
47% 49%
50
40
30
20
10
0
Note: The median annual earnings is based on full-time year-round workers.
Source: CEA calculations based on Current Population Survey 2011 Annual Social and Economic Supplement. 8

10. Figure 9: Manufacturing Employment Fell Beneath Its
Normal Bounds Early in the 2000s
Manufacturing Employment
Millions
22
20
18
16
Dec. 2000- Jan. 2010-
Dec. 2007 Mar. 2012
-3.4 million +470,000
14
Dec. 2007-
Jun. 2009
12 -2.0 million
10
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: Bureau of Labor Statistics, CEA calculations. 9

11. Figure 10: Domestic U.S. Manufacturers Are
Increasingly Competitive
Change in Manufacturing Unit Labor Costs, 2002-2010
Percent
100
79.0
80
67.6
60
44.1
40.8
40
20.8
20 14.1
17.1
-23.0 2.1 2.9
-10.8
0
Singapore Japan U.K. Korea SwedenGermany France Canada Italy
United
-20 States
Taiwan
-40
10
Source: Bureau of Labor Statistics, International Labor Comparisons; CEA Calculations.

12. 0
0
10
30
40
60
70
10
30
40
60
70
20
50
20
50
Turkey Portugal
Percent
Percent
Italy Mexico
Mexico Turkey
Czech Rep. Italy
Slovak Rep. Czech Rep.
Austria Slovak Rep.
Portugal Poland
Hungary Korea
Germany Greece
Greece
Austria
Slovenia
Hungary
Chile
Spain
Poland
Chile
Iceland
Slovenia
Estonia
France
Spain
Ireland
Finland
Iceland
Switzerland
Belgium
Netherlands
Luxembourg
United States
Germany
Sweden
Denmark
Belgium
Sweden
Israel
Norway
France
Source: Organization for Economic Cooperation and Development, Education at a Glance 2011.
Japan
Denmark
Australia Netherlands
Share of 25-34 Year Olds With a Post-Secondary Degree
Share of 55-64 Year Olds With a Post-Secondary Degree
U.K. Switzerland
Luxembourg U.K.
Degree in 2009 by Birth Cohort
New Zealand Finland
Norway Australia
Ireland Estonia
Japan New Zealand
Canada Canada
Korea United States
Figure 11: Share of Population with a Post-Secondary
11

13. Figure 12: College Completion Rate by Income Quartile
Fraction of Students Completing a Bachelor's
Degree, by Income Quartile and Birth Year
0.75
1979 to 1982 birth cohorts
0.54
1961 to 1964 birth cohorts
0.5
0.32
0.36
0.25 0.21
0.09
0.17
0.14
0.05
0
Lowest Quartile 2nd Quartile 3rd Quartile Top Quartile
Source: Bailey and Dynarski (2011) based on National Longitudinal Survey of Youth, 1979 and 1997. College completion is 12
measured by age 25.