Recent college graduates have been less and less able to find jobs that provide health insurance. Source: EPI analysis of Congressional Budget Office data, Reproduced from Figure I in Raising America’s Pay: Why It’s Our Central Economic Policy Challenge. Real wages have been falling since the 1970s and living standards are not about to recover. 2020 bongino inc all rights reserved 2020 bongino inc all rights reserved Our country has suffered from rising income inequality and chronically slow growth in the living standards of low- and moderate-income Americans. But price inflation has now stagnated, Extensive wage theft, worker misclassification, weakened prevailing wage laws and overtime protections, and the failure to modernize our labor standards to provide sick leave, family leave, or minimum vacation schedules all hurt wage growth. A table showing average and median wage growth … But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year. Current and real (constant 1982-1984 dollars) earnings for production and nonsupervisory employees on private nonfarm payrolls, seasonally adjusted ; Real Earnings Technical Note One of the main causes of stagnant wages and rising wage inequality is the decline of collective bargaining which has lowered the wages of both union and nonunion workers. Note that an average wage is an average per worker, not an average per job. Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and Help Ensure Businesses Are Doing Their Fair Share, Wage Inequality: A Story of Policy Choices, Why America’s Workers Need Faster Wage Growth—And What We Can Do About It, Program on Race, Ethnicity, and the Economy • PREE, Economic Analysis and Research Network • EARN. This figure shows that the stakes of rising inequality for the broad American middle class are enormous. The failure to raise the minimum wage had especially adverse effects on women and minority workers. A network of state and local organizations improving workers' lives through research and advocacy. 1225 Eye St. NW, Suite 600 Slow and unequal wage growth in recent decades stems from a growing wedge between overall productivity—the improvements in the amount of goods and services produced per hour worked—and the pay (wages and benefits) received by a typical worker. That's how it removes the effect of inflation. Income inequality (share of income to top 10%) from Piketty and Saez, “Income Inequality in the United States, 1913-1998," Quarterly Journal of Economics, 118(1), 2003, 1–39. Source: EPI analysis of data from The Distribution of Household Income and Federal Taxes, 2011, the Congressional Budget Office, 2014. Although wage growth has risen a little, real wage increases dropped away after the Brexit vote as inflation climbed well above the Bank of England’s 2 per cent target. The economic forces that underlie wage growth—that is, the increase in pay going to typical workers—essentially encompass all aspects of the economy. Yet, despite being more skilled and productive, the wages they earn are lower than wages earned in 1968. This figure tracks the ratio of pay of CEOs at the 350 largest public U.S. firms to the pay of typical workers in those firms’ industries. Womenâs weekly earnings at $706 in 2013 are about the same as they were in 2004, at $707. Policy choices have tilted the playing field toward the rich and corporations. In macroeconomics, wage growth is one of the main indications to measure economic growth for a long-term since it reflects the consumer's purchasing power in the economy as well as the level of living standards. Moreover, the rising pay of executives was the largest factor in the doubling of the top 0.1 percent and top 1.0 percent share of overall household income growth. The current base year is 2012. Ignored is the easy-to-understand root of rising income inequality, slow living-standards growth, and a host of other key economic challenges: the near stagnation of hourly wage growth for the vast majority of American workers over the past generation. This year, we noticed something new when we added the latest figure for median weekly earnings for men and women who work full-timeâa virtual standstill in womenâs real wages for the past ten years. Aside from employment data, the Bureau of Labor Statistics also compiles the Consumer Price Index (CPI), our primary inflation gauge. Board of Directors The changes needed fall into four areas: Starting with the last first, encouraging collective bargaining for workers, encouraging women to take leadership positions in labor unions, encouraging women to run for public office (public funding for elections would help! Real Wage Trends 9 – Consequences There are a number of consequences of falling real wages: i) Rising wage inequality takes on a greater significance in the presence of weak real wage growth. The average employment between 1970 and 2016 for construction was 2.0 million. * Low wage is 10th percentile, middle wage is 50th percentile, very high wage is 95th percentile. CEO pay gains help explain the growing divergence between pay and productivity. Over the entire 34-year period between 1979 and 2013, the hourly wages of middle-wage workers (median-wage workers who earned more than half the workforce but less than the other half) were stagnant, rising just 6 percent—less than 0.2 percent per year. As of 2013, they make just under 300 times typical workers’ pay. Adapted from Figure N in The Class of 2014: The Weak Economy Is Idling Too Many Young Graduates, Adapted from Figure N in The Class of 2014 The Weak Economy Is Idling Too Many Young Graduates by Heidi Shierholz, Alyssa Davis, and Will Kimball, Economic Policy Institute, 2014.