Must-Read: Justin Fox: Where Median Incomes Have Fallen the Most

Must-Read: The net effect of the “China shock” is a net shrinking of manufacturing employment on the order of 0.22% of the nonfarm workforce. These income-falling numbers are much too big to be attributable to any sort of “China shock”. Even the differentials of the worst hit relative to the average state are much too big to be attributable to any sort of “China shock”.

My guess: a long process of capital substitution for labor in manufacturing that turns highly toxic in the low-pressure economies of the 1980s and 2000s, but that is win-win in the high-pressure economies of the 1960s and 2000s, and neutral in the 1950s and 1970s. The standard divorce between cycle and trend is playing havoc with our analyses bigtime here, as well as elsewhere…

Justin Fox: Where Median Incomes Have Fallen the Most:

Of all the indicators describing the not-very-impressive U.S. economic performance of the first decade-and-a-half of the 21st century the least impressive is probably median household income. It hit an all-time high in 1999 of $57,843 (converted into 2014 dollars), and as of 2014 stood at $53,657–a 7.2 percent decline…. The typical American household remains poorer than it was 16 years ago.

I see a clear pattern on the downside: The states that have struggled the most tend to have manufacturing-intensive economies (Delaware and Nevada are the exceptions). Also, it’s worth pondering for a moment just how bad things have been in some of these states. The typical household in Michigan and Mississippi was more than 20 percent poorer in 2014 than in 1999. And Mississippi, which had the fifth-lowest median income in 1999, was dead last in 2014, with a median household income ($35,521) less than half that of Maryland, the most-affluent state.

On the upside, there doesn’t seem to be a single cause. North Dakota… oil boom…. The District of Columbia has seen a population boom since the late 1990s as the government-industrial complex has continued to grow and its affluent employees have increasingly chosen to live in the city…. Montana, Hawaii and the rest … you tell me…. California and Texas… differing approaches to taxes, regulation and the like. On this particular economic metric, their performance since 1999 has been remarkably similar–and significantly better than the national average. Those with the urge to draw sweeping conclusions about economic policy are thus thwarted, for now at least