By GREGORY N. HEIRES
Wages have declined for most U.S. workers since the end of the recession in 2009, and there’s little hope for improvement without policy changes.
The largest real wage declines have hit workers in the most poorly paid occupations.
“The declines in real wages since the Great Recession continue a decades-long trend of wage stagnation for workers in the United States,” notes a September report by the National Employment Law Project. “If this pattern of real wage declines among the lowest-wage occupations persists, then we can expect the overall pattern of stagnating wages to continue.”
Certainly, there’s little ground for hope if a Republican is elected president next year. While the Republican candidates have expressed some concern about wage stagnation and inequality, they haven’t offered any solutions, except for their familiar prescription of tax cuts, which they claim will boost economic growth, thereby helping the poor and middle class. On the other hand, Democratic candidates are calling for a minimum wage increase and say they want to address inequality, now as bad as during the Great Depression.
Real median hourly wages—pay adjusted to account for inflation—fell 4.0 percent from 2009 to 2014 across all occupations, according to NELP, which is a national advocacy institution for low-wage workers.
The decline disproportionately affected workers in lower wage and mid-wage occupations. They experienced losses of 4.0 percent or higher, whereas the top 40 percent of workers saw declines ranging from 2.6 percent and 3.0 percent.
The Human Cost of Lost Income
Cooks and food preparation workers felt the greatest loss, as their pay dropped 8.9 percent and 7.7 percent, respectively. Other workers hit particularly hard included janitors and cleaners, personal care aides, home heath aides, and maids and housekeeping cleaners.
Too often, reports about wage stagnation are abstract and fail to point out the human cost of the loss of income. But the NELP study makes an effort to show how wage stagnation hurts the standard of living of working families:
• For a cook who works full time, an 8.9 percent drop in income from 2009 to 2014 means a loss of $2,185, or $437 a year. For an average household, that lost income is equivalent to two monthly grocery bills a year.
• The 7.7 percent wage decline of food preparation workers comes to $1,622 over five years. That $324 annual loss is what a family generally pays for two-and-a-half months of gasoline expenses for their car.
• Retail workers saw their pay drop by $1,125 in the five-year period. Their $225 annual loss translates into what they would typically pay each month on utilities.
Five of the ten occupations that the Bureau of Labor Statistics expects to add the greatest number of jobs to the economy from 2012 to 2022 are among the lowest-paying occupations that are especially affected by wage stagnation. These include personal care aides, retail salespersons, home health aides, food preparation and serving workers (including fast-food workers), and janitors and cleaners (except maids and housekeeping workers). The pay of these workers ranges from $8.84 an hour (food preparation and serving workers) to $10.97 an hour (janitors and cleaners).
An interesting finding of the report is that the five-year wage decline of the bottom 20 percent of the workforce was least among the lowest-pay workers. In fact, their real income actually grew between 2013 and 2014. Why? It’s likely because 22 states increased their minimum wage between 2009 and 2014.
Besides NELP’s economic briefing, the Allianz Global Wealth Report 2015 is another recent study that notes the recovery isn’t trickling down.
Financial Insecurity
The Global Wealth Report cites a Federal Reserve Bank survey to highlight the financial fragility of the typical U.S. household.
Forty-seven percent of the respondents said they would have to borrow money or sell something if they were hit with an unexpected $400 emergency. Only 53 percent said they would have no problem dealing with the emergency through their savings account or credit card.
“These results only go to show that there is still a long way to go before the recovery has trickled down to all Americans,” the report says.
“This has not been helped by what has been poor wage development in recent years on the whole or by the marked income disparity that continues to plague the US: almost 47 percent of total income goes to the population’s richest 10%, with as much as 30.5% of income concentrated among the top three percent of the income scale.”
What should be done to address stagnant wages? NELP offers a number of policy options:
• increasing the minimum wage
• bolstering the right of workers to form unions and bargain collectively
• enforcing wage protections more aggressively and
• raising the pay of low-wage workers in the public sector and at businesses receiving government contracts or subsidies.
“Addressing wage declines, especially for workers in the lowest-paid occupations, is urgent and critical; it should be a central focus of policymaking efforts at the federal, state and local leveling coming years,” the report concludes.
