Even before we got to the White House, the President, the Vice President, and the economic team were crafting policies designed to offset the deepest recession since the Great Depression. Back in mid-December of last year, I remember a meeting in Chicago, with the snow swirling outside, as we began to plan the Recovery Act, the financial stabilization plan, and housing relief, all in the context of a budget that would bring down the trillion-plus dollar deficit we were about to inherit as quickly as possible.
I also remember the Vice President talking about the difficulties facing the middle class, struggles that predated the recession. With the campaign fresh in their minds, he and the President recalled that even in supposedly good times, when the economy was expanding and unemployment was low, the families they met on the trail were having far too much trouble making ends meet. Saving for college, paying for health care, keeping up with the mortgage payments... just making their basic budgets balance out at the end of the month seemed awfully hard in an economy that was supposedly solid.
Of course, that solid economy was fading fast; the recession was a year old, unemployment was rising, and helping people get back to work had become our top priority. But the longer-term, structural challenges that have been facing the middle class since long before the recession began were never far from the President's mind, which is why, shortly thereafter, he asked the VP to chair the Middle Class Task Force.
Today, in August of 2009, we're faced with yet another set of realities. After falling at a rate of about 6% from the last quarter of 2008 through the first quarter of this year, a rate of decline we hadn't seen in half a century, the economy contracted at a 1% rate in the second quarter of 2009. Yes, our economy is still ailing, but six months ago, economists worried the recession would descend into depression; now they're asking when recession will become recovery.
Here in the White House, however, recovery means something very specific, and it's different than what economists generally mean when they talk about it. According to the panel that decides when recessions officially begin and end, you don't need job growth or falling unemployment to declare that a recovery is underway. In fact, in the last two recoveries, it took 15 and 19 months, respectively, before the unemployment rate peaked.
That definition doesn't work for us. No jobs, no recovery.
But -- and this is the real subject of this post -- job growth isn't enough either. Remember, unemployment fell to below 5% at the end of the last expansion, but middle-income families ended up worse off, in real dollar terms, than they were before that expansion began. The productivity of our economy increased by 19% from 2000 to 2007, but the real median income of working-age households fell $2,000. The share of Americans living in poverty was actually higher in 2007 than it was in 2000.
How could this happen? In fact, the arithmetic is disarmingly simple. If the economy's growing, but middle-class and low-income families are falling behind, then the growth must be accruing to the top of the scale. And that's exactly what happened.
Some of the best data on income inequality are collected by two economists: Emmanuel Saez and Thomas Piketty. Their data go back almost to the beginning of the last century, allowing us to make some pretty amazing observations, like the one shown in the figure below. Income concentration, measured as the share of income going to the top 1% of households, was higher in 2007 (23.5%) than in any year on record going back to 1913, with one ominous exception: 1928, the height of the speculative, bubbly "roaring 20s" and the year before the stock market crashed and the Great Depression began.
For middle-class families to be part of the next recovery, this trend must reverse.
Yes, we want to see a GDP recovery take hold as soon as possible, and once we start seeing robust, consistent job growth we'll know we're solidly on track. But even then, we won't be done: not until the prosperity we're generating reaches everyone who's contributing to it, not until all the bakers get their fair slice of the pie -- not just the owners of the bakery or the investors in the bakery, but the men and women who are actually doing the work.
Here's what the President said about this way back in February 2007, when he announced his candidacy:
... let's be the generation that ensures our nation's workers are sharing in our prosperity. Let's protect the hard-earned benefits their companies have promised. Let's make it possible for hardworking Americans to save for retirement. And let's allow our unions and their organizers to lift up this country's middle class again.
Let's be the generation that ends poverty in America. Every single person willing to work should be able to get job training that leads to a job, and earn a living wage that can pay the bills, and afford child care so their kids have a safe place to go when they work. Let's do this.
Though he may not have realized at the time, the President-to-be was really describing the work of the Middle Class Task Force. Vice President Biden, the Task Force staff, and our members at all the cabinet agencies will do everything we can to make sure that the next recovery stacks up very differently than the bars in the graph above. The middle class won't get left behind again.
This post originally appeared on the White House Briefing Room Blog.
Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force
Loading comments… 
They laugh all the way to the bank when they hear comments like yours, because you believe in what they have spoon fed you to keep you in tow.
The late Edward Bernase, Sigmund Freud's nephew, and considered the Father of public relations who created the social phenomena of "Engineere
The game is over. Just go around and take a survey of what our young future generation of American's feel about their own role in the 21st century. In mine, it was no hope, no direction and guidence and quite frankly delusionme
If you think the future wealth of the American GDP is ever going to be distribute
Unfortunat
The middle class has no voice - the special interests have Washington - they bought both parties.
The government is wrong in doing this. They are responsibl
Former liberal, still progressiv
John W. Anthony
While 'shovel ready' takes care of some constructi
Getting the 'green economy' up and running will take the full course of Obama's tenure in office if it is not delievered stillborn out of the legislatur
People need to work, not only for a living, but to satisfy the needs of their souls. The stimulus is tepid at best and there is no way, no way that this economy can be turned around fast enough to deal with the millions, yes millions of people who have lost their jobs. Be bold. Create the next CCC.
"I know your deeds, that you are neither cold nor hot. I wish you were either one or the other! So, because you are lukewarm—n
Get Hot Mr. President.
Can't handle working 5 days a week or what?
There has been a study that close to 50% of people with mortgages will be underwater on their loans within the year. Take a look at your neighborho
To paraphase Ben Franklin, "We can all hang together or we'll all hang separately
The tax cuts pushed by Bush and his fellow Republican legislator
For many years, liberals, progressiv
To this very day, the serial liars who make up the Republican party will continue to argue that everything would get better if only we could cut the taxes on the rich.
Please, whatever you do, do not give up the fight for a public option on healthcare reform! I know the pressure is great! But 45 million people without healthcare in one of the richest nations in the world is just wrong! And how we justify it, I cannot understand
At a fundraiser last night, I stood with my sign across the street from a group of "birthers" and "teabagger
Those who have used their wealth and surrogates to promote fear and misinforma
We must counter the domestic insurgency with the same bully pulpit, that Reagan used to widen the stratifica
I applaud your candid forthright
keep thuis disparityd
They keep the "rabble" so stirred that nothing of substance can be done and our democratic republic becomes a "mobocracy
Our leaders and our population have been bought, one by actual money, the other by fear to act against their self interest.
All shall pay when we hit bottom, even the 1 percent.
If I were to try and get legislatio
The system is terribly imbalanced and until our elected leaders are more representa
If lobbyists and corporatio
Of course, none of this will ever happen, because our Representa
Sounds like a song by the Who, "We don't get fooled again, No No."
We are the forgotten Americans. In 1932 an outstandin
In 2008 a self proclaimed leader, BO, stood on the American stage and proceeded to reward the purveyors of overwhelmi