Life in America isn’t always easy. As Americans we struggle with the desire to provide a better life for ourselves and for our children. We work and toil for our daily living. However, it seems as though this work and toil is being rewarded less. American household incomes have been dropping significantly over the past few years leaving less for spending and economic recovery.
American incomes have grown fairly steadily for most of the countries life. However, the recent recession has taken a hit and helped to spark a decline in overall household incomes. People are taking jobs for less and living with less luxury in their lives. This impacts the ability of people to spend and make ends meet.
Household income is defined as all the income a house currently earns. For example, If the husband makes $30,000 per year and the wife works part-time and earns $5,000 per year they have a total household income of $35,000 per year. An increase or decrease in household income indicates an increase or decrease in household earnings and buying power.
Household income declined at levels in 2009 from $49,777, 2008 $50,163 and 2007 from $52,163. This decline can have a larger impact when multiplied across 115,000,000 million households in the country. This creates a situation where $287,500,000,000 out of the American economy in addition to the $2 or more trillion spent on economic recovery.
Nearly 70% of Gross National Product comes from domestic purchases. When large amount of money are taken out of the economy it limits the ability of citizens to spend money and help spur the economy. The more money taken out of the system the less money companies can earn.
The debate between increasing wages and decreasing wages is a big one. Many small European countries like Sweden have higher household incomes than the U.S. However, most major nations are much further below levels in the U.S. Therefore pushing wages down will encourage companies to move to the U.S. while moving wages up will allow more money into the system. Is it the egg or the chicken that comes first?