David Leonhardt writes about why the economy looks so bad even though unemployment has fallen below 6 percent:
American workers have been receiving meager pay increases for so long now that it’s reasonable to talk in sweeping terms about the trend. It is the great wage slowdown of the 21st century.
Yes indeed. This started around the year 2000 and hasn’t changed since. But as I’ve written before, that’s not all that changed around the year 2000. Here’s a more comprehensive list:
- Median income growth slowed in the mid-70s, but it stalled almost completely around 2000 and hasn’t recovered since.
- Real-world investment opportunities began stagnating around 2000.
- Labor markets slackened permanently starting around 2000.
- The employment-population ratio among women plateaued around 2000 and continued its long-term decline among men.
- The labor share of income in the nonfinancial sector dropped steeply starting in 2000 and never recovered.
- The number of jobs created by new businesses peaked around 2000 and has been falling ever since.
- State and local government output suddenly stagnated around 2000.
- Globally, the energy intensity of GDP stopped growing around 2000, which means world economic growth became limited by energy growth.
- Household debt inflected upward in 2000, and kept growing until the Great Recession put a stop to it.
I call this the Inflection Point of 2000, and it seems like too many things, all happening at about the same time, to be mere coincidence. In my piece last year about our robotic future, I suggested that much of it might be the barely visible early signs of a more automated economy, and I still suspect that may be part of what’s going on. But I don’t know for sure, and the evidence on this score is distinctly fuzzy.
And yet. It sure feels like something changed right around 2000. But what?