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URL:  http://boards.fool.com/yodaorange-thank-you-for-sharing-this-important-30604609.aspx

Subject:  Re: Disability: How the unemployed survive Date:  3/24/2013  2:40 PM
Author:  WendyBG Number:  418764 of 458988

Yodaorange, thank you for sharing this important information.

I would like to share charts that show the growth of transfer payments, which are all payments for which no value is currently received. This includes private and public pensions, Social Security (including disability), food stamps, Medicare, Medicaid, unemployment insurance, etc.

The data below is for January 2013, in billions of USD.



Personal Current Transfer Receipts (PCTR) 2,424.30 20%

http://research.stlouisfed.org/fred2/series/PCTR

Compensation of Employees, Received: Wage and Salary Disbursements (A576RC1) 6,973.10 58%
http://research.stlouisfed.org/fred2/series/A576RC1


DPI that is not wage/salary or transfer payments 2,525.80 21%


http://research.stlouisfed.org/fred2/series/A576RC1

Disposable Personal Income (DSPI) 11,923.20 100%
http://research.stlouisfed.org/fred2/series/DSPI



This shows that transfer receipts equal about 1/3 of wage/salary income. The transfer receipts come from many sources, but the total is a large part of total disposable income. (I am adding apples and oranges here, but it's hard to tease out all the numbers to get a pure income from transfer receipts.)

In a thought experiment, let's go back to a time when transfer receipts did not exist. This would remove 20% of the U.S. economy in one fell swoop.

I am not making a political comment for or against transfer receipts. Just saying that, little by little, this segment of the economy has grown to an enormous size. Personal transfer receipts exploded after the 2007 recession and 2008 financial crisis, when millions of people suddenly lost their jobs and left the work force, as shown by the plunge in the Civilian Participation Rate.

http://research.stlouisfed.org/fred2/series/CIVPART

Clearly, transfer receipts will grow as the work force ages. The growth in transfer receipts is faster than the growth in wage/salary income.
Wendy
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