Wednesday, August 21, 2013

American Workers Have Seen A ‘Lost Decade’ In Wage Growth

American workers have suffered a “lost decade” of stagnant or falling wages. Despite productivity gains of nearly 25 percent from 2000 to 2012, “wages were flat or declined for the entire bottom 60 percent” of the workforce, according to a new report from the Economic Policy Institute (EPI).

EPI looked at two sets of data for “A Decade of Flat Wages,” including information from household-based surveys and information from employer-based surveys. The household data provides the most accurate picture, and it isn’t a pretty one. The median hourly earnings for American workers are back to where they were in 2000, while the highest-earning Americans are now paid over 10 percent better:


The median American worker earned $768 per week in 2000. That rose to $770 just before the financial crisis, then slid back to $768 by 2012. Worker productivity increased nearly 8 percent from 2007 to 2012, but earnings actually fell. Looking deeper into the demographics, the picture gets uglier: black men earn $15 less per week than they did in 2000, for example.

The less accurate average figures for pay and other compensation from the employer-based survey data show slight upticks in earnings due to the wage growth at the top of the income distribution dragging the numbers up. But even in that data, productivity growth has far outstripped the slight boosts in pay:


Furthermore, sales professionals, production and transportation employees, and service workers all saw their average wages slide even in average terms.

The paper closes by noting that policies that have benefited consumers through lower prices – “globalization, deregulation, weaker unions, and lower labor standards such as a weaker minimum wage” – have destroyed the virtuous capitalist cycle in which consumers and workers are both supposed to benefit from greater output. In order to restore a sustainable relationship between work and earnings, the authors call for aggressive minimum wage hikes and strengthened worker bargaining rights, because technology and energy innovations are not enough on their own.

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