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Feeling Squeezed? Many Others Wedged Into The Same Tight Economic Spot

Ever feel as though you're not getting ahead financially?

Join the club. The very big club.

A new study shows that across the world's 25 advanced economies, two-thirds of households are earning the same as, or less than, they did a decade ago.

McKinsey Global Institute, the research arm of the global consulting firm McKinsey & Co., studied incomes for 2014. It found that between 540 million and 580 million people are living on lower or stagnant incomes compared with similarly situated people in 2005 — just before the Great Recession hit.

Between 1993 and 2005, less than 2 percent of households — with fewer than 10 million people — found themselves worse off than in previous years. "That has now changed," according to the study with the discouraging title of "Poorer than their Parents? Flat or Falling Incomes in Advanced Economies."

When comparing the income brackets, McKinsey finds that these days, even in the world's wealthiest countries, families in the bottom 60 percent have lower incomes, while those in the 60th to 80th percentile are just treading water.

"The recession that followed the 2008 financial crisis was one of the deepest and longest-lasting downturns of the post-World War II era, and the recovery that followed it has been unusually sluggish in many advanced economies, especially in Western Europe," the study said.

And here's the big problem for many workers in this recovery: "Robots and computers have automated tasks that once required workers," McKinsey said. "Demand for low- and medium-skill workers has been lower than for high-skill workers," it concluded.

So even when orders rebound for companies, the jobs don't come back. That puts downward pressure on wages. In this country, young workers in the lower third of educational attainment saw wages fall on average by 15 percent between 2002 and 2012.

"There are 20 times as many single mothers in the lowest income decile as in the highest," the study said, and the income drops for them have been faster than other households.

At the same time, many families in advanced economies have fewer spouses and children than in the past, so today's shrunken households have fewer wage earners, the study shows.

But here's a finding that also stands out: Affluent Americans are flourishing.

McKinsey says in this country, upper income households saw rising wages as more and more jobs opened up for people with higher skill sets. They actually made larger gains on a percentage basis than the wealthiest people whose incomes had shot up like rockets in the years before the recession.

Economists are not shocked to see such data about affluent, well-educated workers doing well, according to Lindsey Piegza, chief economist at Stifel Fixed Income in Chicago. "This study seems very much in line with what we have seen" in one survey after another, she said.

Incomes are rising if you happen to work in information technology, accounting, engineering and other high-demand fields, she said. But for low-skilled workers, automation is replacing labor and causing a wage downdraft, she added.

"When you see incomes falling year after year after year, you can't look at it as a blip," she said. Even as the impact of the Great Recession fades, the wage trends identified by McKinsey are likely to continue, she said.

Copyright 2021 NPR. To see more, visit

Marilyn Geewax is a contributor to NPR.

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