Measuring "The Economy"

Following up on a point from a recent post...

We should come up with a measure of "the economy" that matches the way ordinary speakers of English use the term. There has been some discussion of late that it leaves out important things like happiness or inequality, which is true. But for our purposes, the problem with GDP is not what it leaves out, but what it leaves in: "the market value of goods and services produced by property located in the United States." 

When people say "the economy is growing" they really mean that new jobs at decent wages are being created. Those numbers are out there. 

We could define "decent wages" as "enough to generate yearly earnings within 50% of the median income and count how many jobs were out there. This would involve looking at the Bureau of Labor Statistics numbers on employment here.

Another way to do this would be to look at the total wages paid. The Bureau of Economic Analysis reports "Personal Income" right along with GDP. One problem is that "Personal Income" as reported by the BEA includes income to business and real estate owners. The sub-category, "compensation of employees, paid" is what we are actually interested in.

Also, it would be good to divide compensation per capita. I think that would be more helpful than per employee because the population not in the workforce--children, the disabled, and retirees--rely heavily on payroll taxes and also directly on family member wages. 

Another number, per Robert Reich, could be the size of the middle class, perhaps households within 50% of the median income, plus or minus. This could be expressed as a percentage of persons or households.

Another interesting number would be the "Middle Class Line" which would be the household income at the bottom of the middle class. 50% of the median is actually too low to be meaningful, though. Perhaps "middle class" could be above median.