In Memphis and around US, economic averages miss big picture
MEMPHIS, Tennessee (AP) – Dozens of FedEx jets queue up for takeoff at the airport here. Beale Street, the heart of the music district, hums with tourists. Yet the empty storefronts in Memphis’ moribund downtown and the cash-advance shops strewn near its highways tell another story.
It’s a tale of two cities, all in one place. And it’s a tale of two Americas: the one that national averages indicate has all but recovered from the Great Recession and the one lost in the statistics.
The pattern is evident in cities and towns across America, from Memphis to Colorado Springs, Colorado, from Wichita to Jacksonville: The national numbers aren’t capturing the experience of many typical people in typical communities.
A key reason is that pay and wealth are flowing disproportionately to the rich, skewing the data used to measure economic health – and producing an economy on paper that most Americans don’t recognize in their own lives. That disconnect has fueled much of the frustration and anxiety that have propelled the insurgent presidential campaigns of Donald Trump and Bernie Sanders.
Again and again, primary voters who were most worried about the economy told pollsters that they had cast their ballots for Trump or Sanders, according to Edison Research, which conducted the surveys on behalf of The Associated Press and television networks.
Trump’s candidacy, in particular, has been driven by support in some of the most economically distressed regions in the country, where jobs have been automated, eliminated, or moved to other states and countries. It’s in these places that the outsider message of an unconventional candidate promising a return to the way things used to be resonates most.
Mike Williams earns $22 an hour as a maintenance worker at an Owens-Corning factory, along with health care and retirement benefits. But after a recent raise, his hourly pay has only recently returned to where it was a decade ago, when he worked as a welder.
“I feel like I’m going backward rather than forward,” Williams, 51, said on a recent afternoon after finishing his shift.
In March, Williams voted for Trump in the state’s primary, which the real estate billionaire won easily. One reason he backed Trump, he said, is he feels less secure than in the past, when more manufacturing work was available.
“I remember when you could quit a job today and go to work somewhere else tomorrow,” Williams said.
After seven years of national economic expansion – to the point where the Federal Reserve is raising interest rates again – the depth of such insecurity across America has caught many observers off guard.
Said Carl Tannenbaum, chief economist at Northern Trust and former economist at the Federal Reserve: “The averages certainly don’t tell the whole story.”
Consider incomes for the average U.S. household. They ticked up 0.7 percent from 2008 to 2014, after taking inflation into account. But even that scant increase reflected mainly the rise in income for the richest tenth of households, which pulled up the average. For most others, incomes actually decreased – as much as 6 percent for the bottom 20 percent, at a time when the economy was mostly recovering.
In Memphis, hiring resumed after the recession and the unemployment rate has declined to match the national figure of 5 percent. Yet those figures, too, obscure as much as they reveal: Many of the new jobs, in Memphis and elsewhere, are in lower-paying industries and are more likely to be part time or temporary.
In Millington, a Memphis suburb where Trump held a rally in February at a military airfield, residents complain that most of the available jobs are in the fast-food chains that dot Highway 51, the main thoroughfare.
The U.S. economy has added a healthy average of roughly 200,000 jobs a month since 2011. Yet most have been either high-paying or low-paying positions. By the end of 2015, the nation still had fewer middle-income jobs than it did before the recession, according to the Georgetown University Center on Education and the Workforce.
That reflects what economists call the “hollowing out” of the workforce, as traditional mid-level positions such as office administrators, bookkeepers, and factory assembly-line workers are cut in recessions and never fully recover their previous levels of employment.
In Memphis, jobs in the one-third lowest-paying industries, such as retail, restaurants and hotels, are the only category to have fully recovered from the recession, according to Moody’s Analytics. Higher- and middle-paying jobs still trail their pre-recession levels.
In the first half of the recovery, jobs grew 5.6 percent nationwide. Yet in the wealthiest one-fifth of zip codes, hiring jumped 11.2 percent, according to the Economic Innovation Group think tank. For the rest of the country, total jobs increased just 3.3 percent.
“It’s hard to find an average city,” Tannenbaum says.
The same is true for households. These data suggest that the post-World War II trend of a steadily growing middle class, lifted by broader national prosperity, is reversing.
Slightly fewer than half of adults now fall in the middle-class camp, according to the Pew Research Center, a shift that followed four decades of decline. In 1971, 61 percent of households were middle class, according to Pew, which defines middle class as income between two-thirds and double the median household income.
Chris Rice, 29, has worked steadily in the Memphis region for the past 10 years, all at temporary jobs. Rice most recently worked as a forklift driver for Electrolux and for CEVA Logistics, a warehouse firm. The CEVA job ended after the company lost a contract to distribute Microsoft’s X-Box.
Rice said he was hopeful of getting a new temp job at a plant owned by printer manufacturer Brother International.
Still, “I’d love to have a permanent job,” he said. “I’m tired of going from temp agency to temp agency when there’s no work.”