By GREGORY N. HEIRES
If you believe that the so-called economic recovery means that the living standards of workers have improved, you should think again.
The stagnation of wages—the defining characteristic of our economic times along with rising inequality—continues. Since the 1970s, wages have failed to grow along with productivity, fueling economic inequality not seen since the Great Depression.
“2014 Continues a 35-Year Trend of Broad-based Wage Stagnation,” a report by Elise Gould of the Washington-based Economic Institute, describes the pay crisis.
“Last year was yet another year of poor wage growth for American workers,” the EPI report says. “With few exceptions, real (inflation-adjusted) hourly wages fell or stagnated for workers across the wage spectrum between 2013 and 1014—even for those with bachelor’s or advanced degrees” The report adds that, “ever since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline.”
Yes, the economy shows signs of a rebound. But the recovery has left millions of workers behind. Millions of others are struggling to keep up with the cost of living. Record profits have benefitted only those at the top of the economic pyramid.
The EPI report’s conclusions:
• During 2013 and 2014, real hourly wages fell for the majority of Americans.
• Since the recession, only those at the top of the wage distribution have experienced a real increase in pay.
• People of color continue to experience falling wages significantly below that of their white counterparts.
• The most significant wage loss occurred among those with college and advanced degrees. That calls into question the belief that wage performance is rooted education and training.
• Workers with the least education actually experienced a growth in their wages. The growth was likely a result of increases in state minimum wages, demonstrating the impact public policy can have on wages.
The Roots of Our Economic Malaise
The Economic Policy Institute discusses the factors at the root our economic malaise in a Jan. 6 report called, “Causes of Wage Stagnation,” by Lawrence Mishel, the president of the progressive think tank. The factors include:
The abandonment of full employment: Policy makers’ obsession with inflation as opposed to unemployment has harmed wage growth. High rates of unemployment dampen wage growth, which in turn leads to greater inequality.
Declining union density: The decline of unions helps account for the increase in corporate profits in recent decades. The erosion of union power accounts for a third of the growth of inequality among men and a fifth of that of women.
Other labor market policies and business practices: The long-term decline in the federal minimum wage accounts for about two-thirds of the increase in the gap between lower- and middle-wage workers.
Growth in power of the top 1 percent, particularly finance and CEOs: Financial deregulation has allowed CEOs and other managers to earn excessive wages and bonuses, and
Globalization policies: Trade agreements have benefited U.S. corporations and driven down the wages of its United States-based workers. The government’s failure to maintain the value of the dollar has hurt domestic labor by encouraging imports from lesser-developed countries with lower-paid workers.
Unemployment and Wages
“As long as you have unemployment, employers don’t have to cater to their workers,” said Gertrude Schaffner Goldberg, chair of the National Jobs for All Coalition, which advocates for full employment.
Today, the official employment rate is 5.5 percent. Some 27.7 million workers are unemployed or forced to work part-time. Some 18.5 workers million workers make up the working poor, earning less than the $27,000 poverty line for a family of four. All told, 40.2 million lack good jobs.
“Until we have a tight labor market, we won’t we see lower unemployment or any significant increase in wages” Schaffner said.
