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Thursday, October 27, 2016

A new report released Wednesday by Lawrence Mishel and Heidi Shierholz of the Economic Policy Institute confirms what millions of Americans already know: The vast majority of workers have seen their wages stagnate for years, severely hampering their economic security and the nation’s economic growth.

The study, which tracks wage trends using both employer-based and household-based survey data, concludes that “the vast majority of wage earners have already experienced a lost decade, one where real wages were either flat or in decline.” Among many other findings, the authors show that even before the Great Recession in 2007, average wage and compensation growth lagged far behind productivity growth (a trend that accelerated after the financial crisis.)

EPI chart1

The problem dates back decades; according to the report, the median worker saw an average wage increase of just 5 percent between 1979 and 2012, despite productivity growth of 74.5 percent throughout the same period.

Not everyone’s wages have been stagnating; perhaps unsurprisingly, the richest of the rich have seen more growth.

EPI chart2

Mishel and Shierholz conclude that the weak wage growth “is the result of intentional policy decisions—including globalization, deregulation, weaker unions, and lower labor standards such as a weaker minimum wage — that have undercut job quality for low- and middle-wage workers.” Although President Barack Obama has recently redoubled his efforts to fight inequality and grow the middle class, few of the above policies are likely to change as long as Republicans control the House of Representatives.

One potential remedy does have a chance to gain some political traction, however: increasing the minimum wage. As Alec McGillis points out in The New Republic, “there are few issues better designed to split the GOP coalition than the minimum wage.” A recent Pew poll finds that 71 percent — including 50 percent of Republicans — favor raising the minimum wage from $7.25 per hour to $9.00 per hour. If the president is really committed to reversing wage stagnation and growing the American economy from the middle out, then increasing pressure on Congress to raise the minimum wage may be his most politically potent option.

Read Mishel and Shierholz’s full report here.

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Copyright 2013 The National Memo
  • John Pigg

    Minimum wage is not a tool to battle inequality. Most of those on minimum wage are youthful employees under 25. Raising the wage of entry level positions at fast food restaurants will not improve the lives of the workers there.

    I say tax the rich more, stop signing free trade deals, support unions, and invest in America. All those would do far more good than Min Wage.

    Min wage is an outdated 20th century industrial policy. The real secret enemy of the poor and working class is inflation and lack of jobs. Min Wage contributes to both.

    • dtgraham

      I agree with some of what you say but have issues with other things. According to the United States Dep’t of Labour: Bureau of Labour Statistics, 50% of those making the minimum are under 25…not ‘most’ according to them, although we’re splitting hairs here I know.

      I look around the world, John, and I just fail to see how raising the minimum to $9.00 would not have a beneficial effect on minimum wage workers. Your premise is that raising the minimum would cause such an inflation and unemployment spiral that it either wouldn’t help, or it would make their situation even worse. I had this debate with another poster, not too long ago, concerning a bump in the minimum and it’s possible effects. I did a lot of on-line research on employment, inflation, and consumer price index levels in countries with far higher minimums than the U.S., over decades. I didn’t see the relationship that you’re talking about insofar as the minimum wage’s contribution to those things, even after correlating it with the exchange rate and controlling for other factors.

      I do know that Germany has no official overall minimum wage but that’s deceptive. They do have one for construction workers, electrical workers, janitors, roofers, painters, and letter carriers…for some reason. They have a highly unionized economy, and that effects the wage rate for every other occupation outside of those listed ones. That addresses your point concerning “support unions”. As well, the German legal system has decreed it to be illegal to pay an “immoral wage” (low wage), however they define immoral.

      I particularly liked your idea on “stop signing free trade deals”. I don’t agree with some of the right (and some of the centre/left) that it’s impossible to prevent the unabated flow of international capital to low wage areas, with it’s subsequent de-industrialization of the areas that it’s come from. In particular the Germans, Scandinavians, Koreans, and Japanese have disproved that…especially the Germans.

      As I said once before John, you seem to be a throwback to an earlier era. You’re a reasonable, thinking man’s conservative who appears to honestly care about people. You just have a different approach to most liberal/progressives on how to solve problems. Because I know where you’re coming from, I’m willing to at least consider your ideas on the minimum wage even if I disagree initially.

      • John Pigg

        I got my numbers from the same place so we are right on target. Now if you eliminate waitresses and hostesses and similar tipping jobs the share of youth increases in MW.

        You might be right about the Min Wage not having a correlation on CPI. It sounds like you know what you are talking about. I think corporations and other entities could afford to raise the Min Wage without making everyone’s life difficult but I don’t think they will. And I believe that at the end of the day the demographic that depends on low wage jobs the most will be the hardest hit. True, this demographic is rather small but isn’t helping them the point to raising it in the first place.

        I believe that industry, economy and American society have changed drastically since the inception of Min Wage. While Min Wage was once a valued protection for the working man it has since become the standard to decide how much to pay for youth labor. I think there are better ways to help the working poor than instituting something which best case scenario only makes their life marginally better.

        Now you have been very candid with me which I deeply appreciate and I do love a conversation, so I will be candid with you. I think the Democrats turn towards NAFTA during the Clinton administration ruined protectionist thinking within the Democratic Party. And once protectionism was no longer a value of Democrats they began organize their Party to deal with the symptoms of globalization. The real problem with Health Care is that our country gutted manufacturing to keep costs down. What manufacturing was left is far to weak to get organized as a consequence they are losing their benefits. I believe our country is weak because people with great work ethics and great drive and zeal can’t find work. And if they do find it, it is much more likely to be 12-14 dollar and hour than it is 7. But as soon as we up it to 9 his/her 12-14 is worth less.

        Sorry, extremely long. But I do enjoy the discourse.

        • clarenceswinney

          A problem with 44 Million on Minimum wage

          • John Pigg

            You are right to suggest that we do have a high amount of hourly paid employees. Something like 79 mil, but of that only 3.8 mil are making Min Wage or less.

        • Sand_Cat

          My understanding is that the minimum wage does not apply to waitresses and other restaurant employees, many of whom get even less.

          • John Pigg

            You are right,

            but as far as statistics go they are included as hourly wage employees that make below Min Wage. The assumption being that they make up the rest in gratuity. Which is still not a lot but it beats what the “back of the house” people make (Dishwashers).


    • clarenceswinney

      John the second paragraph hits target. Jobs jobs jobs

    • RobertCHastings

      John, It looks like you have not been to Mickey D’s in a while. In every fast food store I have been in over the past few years, several oldsters are on the staff, and that includes middle-aged. Security jobs (notoriously low paying), Walmart, K-Mart, Walgreen, etc. have a workforce majority middle-aged or beyond. And a lot of those are folks who once had decent paying jobs that went – somewhere. 1/3 of the children in this country (about 18-20 million?) will go to bed hungry tonight because their parents cannot feed them. Notice, I said CANNOT, as in are not able. As for your “outdated 20th century industrial policy” gibberish, the economy works pretty much the way it did in the 20th century, especially with the repeal of Glass-Steagall and the implementation of Gramm-Rudman, which is exactly why we just went through the worst economic collapse since 1929, a collapse that, to many, looked eerily similar to the one in 1929, simply because the same system is operating.

      • John Pigg

        *Yes, my friend you are indeed correct I do not often frequent MCD. But when I do, I tend to notice that the majority of employees are youth. I know there are a variety of jobs that pay Min Wage that do tend to have an older workforce. Specifically, the grocery stores you mentioned but I know there are others. The majority of Min Wage workers are youth. This is a fact, Min Wage workers represent only a small fraction of workers, of those more than half tend to be young people. Eliminate restaurants and we are talking about a increasingly small segment of the population.

        “The proportion of hourly-paid workers earning the prevailing Federal minimum wage or less declined from 6.0 percent in 2010 to 5.2 percent in 2011. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. ”

        *The economy is nothing like what it was in the 20th century at all. When Min Wage started it was intended to be the average salary of a worker supporting a family. This was under the assumption that he had a wife and kids to feed. During this time, I would argue that youth labor was getting paid lower wages under the table, or were too expensive to hire. Min Wage has since transitioned to youth labor wage. Are there underemployed people working at groceries and fast food? Yes, but is that because they thought a career in fast food would be great? No, its because they have no other options. The model and way we look at Min Wage is outdated.

        *I do love the poor, and my heart goes out to the 18-20 million children that you mention. I just think Min Wage is not the way to do it. Give people jobs. Bring back manufacturing, End Free Trade. Encourage unionization in grocery stores.

        Making peoples lives only marginally slightly less awful will not help feed their kids or build a better life. Providing other options will.

        • RobertCHastings

          And the minimum hourly wage is – what? When someone is at that level of compensation, what are his prospects of getting ahead, or even of staying even?
          Every journey begins with the first step. Small steps, like minimum wage, are just a beginning, but they ARE a beginning. There is much more to the equation than just the wages earned by middle class workers and the jobs available to them.
          Prior to WWII (the first half of the Twentieth Century), unions and good wages were strongly resisted, even by the federal government. By the end of WWII, we were finally out of the Depression and the middle class was growing out the hole that had sucked them up, a hole created by the same greed and corruption that created the same kind of hole in 2007. Wealth equality was very nearly achieved in the period of 1945 to 1980, a period of great progress in wealth creation for middle AND upper classes. When Reagan came along, the taxation of the wealthy was altered, deregulation was being vigorously pursued, unions were being destroyed (remember Reagan and the Air Traffic Controllers’ Union) – a process that finally came to fruition near the end of Clinton’s administration and resulted a mere 8 years later in the collapse of the American economy(and most of the rest of the world with it).
          Corporations are sitting on over $2T that they SHOULD be reinvesting in their companies – thus the need for the government to step in with stimulus programs. The middle class doesn’t need to come back, they need to be brought back. Tax rates need to return to what they were at the end of WWII.

          • John Pigg

            You seem to write like we are in opposition, I agree with most of what you said. I just think you are wrong on Min Wage.

            Where we argue is with the first paragraph of your response. Nobody is meant to thrive at Starbucks, or a Fast Food Franchise. The only reason people are there is because they can’t find work elsewhere. So lets concentrate on making alternatives to low income entry level positions.

            How do we do this? Maybe by making trade deals that are in line with American interests instead of corporate ones. Maybe, by declaring Wal-Mart to be a Monopoly. Maybe by helping Unions. I don’t know, but Min Wage increase does nothing.

            You seem to think that because I oppose Min Wage increase that I oppose the working man. I am of the contention that raising the Min Wage at best does nothing to help him at worst, decreases his hours, and his buying power.

            I honestly want to make the life of working people better. I support Unions, I oppose Free Trade. But I don’t think that raising the wage of youth labor is the way to do this.

          • RobertCHastings

            The fact that the people who are employed in low-wage jobs because there are no other jobs available is PRECISELY the point. 17 years ago I went to work at a manufacturing plant that employed over 1,000, with two satellite plants in the same are employing an additional 200, making, with seniority and OT, in the neighborhood of $40K, PLUS benefits. Today, that same plant is still making the same products for the same customers with the same raw materials, same distribution, etc. However, with the same level of production, fewer than 600 hourly workers are employed, many as temps. or part time, with NO benefits and the full timers have reduced benefits. This was NOT a union plant, and it is not an unusual situation. It is happening all over the country in manufacturing, the former staple of our economy. Some of the folks I used to work with are now in fast food, while a few, after having been laid off, are back at the same jobs as TEMPS, doing the same work they did before their lay off at lower wages and with no benefits. Once again, this is NOT isolated to my particular neck of the woods. Thank God that come October of this year these folks will get insurance, one way or another. Raising the minimum wage won’t affect these people because they are already over the proposed minimum; however, the folks among my former fellow workers who are having to struggle in fast food (or other similar low-paying jobs) are losing their homes, their cars, and their dreams. To be sure, the jobs are out there, millions of them, even in well-paying high tech areas. However, in a real and practical sense, those good jobs really are NOT available, simply because so many people are not qualified for them, either due to education or acquired skills. As you indicate, raising the minimum wage MAY be a short term fix, only, but that is precisely what these folks need, the additional cash flow to keep them ahead until they can upgrade their skills, move into a better-paying job, and rekindle their dream. I am not talking about youth labor, although they need the boost, also. ANYBODY who cannot earn a living wage in forty hours a week NEEDS the boost of increased minimum wages.

          • John Pigg

            Well at the end of the day we both want to help the same people. I want manufacturing back in this country so people can make an honorable living.

            But we aren’t going to agree that Min Wage is the best path to get there.

            Thanks for the replies.

          • RobertCHastings

            Sorry for appearing too aggressive. Yes, we disagree on minimum wage, and that will stand. Robert Reich’s “Aftershock” is an interesting little book, if you are interested. It pretty much says it all.

      • John Pigg

        Coincidentally, I love measures like this and will support them electorally.

  • charleo1

    The minimum wage. Increase it.? Don’t increase it.? I’m not entirely sure.
    My inclination is to defer to economists like Robert Reich, or Paul Krugman,
    who diagnose our problem as one of weak consumer demand. And say,
    doing things like increasing the minimum wage, that puts more money in the
    pockets of consumers, would go a long way in combating this core problem.
    They also say, that claims that this would tend to inflate the cost of goods,
    and services, and cost jobs at the low end of the pay scale, has not been
    borne out in the wake of previous increases in the minimum wage. The fact of
    the matter is, the reason it’s taking longer to recover from this latest recession,
    has been the explosion of jobs with wages at or near the minimum wage mark.
    Then, adding to that, the double hammer blows of losing the better paying
    factory jobs to the slave wages of Asia. If we then add to this, our skyrocketing
    costs for energy, and healthcare, it becomes the perfect economic storm that
    has brought the once mighty Middle Class to it’s knees. But here again, it was
    other factors, separate and apart from wages, that inflated the cost of these
    items. Which in, and of themselves, bolster the case for ending the sub par
    wages, that have more than 40 million of the working poor working full time,
    and living below the Federal poverty line. So, I would say to those who want to
    scale back the size of government, broaden the tax base, and reduce the so
    called entitlement, expenditures. Raising the minimum wage, closer to a living
    wage, would serve to do all three of those things.

    • dtgraham

      I sure agree with weak consumer demand. The U.S. is actually an export superpower right there with China and Germany. Nothing the matter with that aspect of the economy. Domestic is the problem. An increase in the minimum is an obvious answer as it will have a spin off effect on other lower wages.

      You can look at data from around the world, but my own native Canada is not a bad case example. The hourly minimum is roughly $10.25, depending on where you live. I think having an extra $240.00 every two weeks in your full time job paycheck ($7.25-$10.25) would make quite a substantial difference in a low wage worker’s life. You can imagine.

      What would that do to price levels? Apparently not much. I’ve vacationed and shopped in the United States and I don’t see the huge difference. There are plenty of thrift shops, Dollar stores, Walmarts, and the like in Canadian cities where great bargains can be had. Even without factoring in the lack of health insurance premiums in almost all Provinces, the difference would hardly be enough to seriously negate an extra $6,240.00 a year.

      • charleo1

        Well, with the price of gas at $3.50, more or less, an extra $24.00
        per week, before taxes would help. According to the U.S. D.of Labor,
        the average wage earner hasn’t had a true wage increase since
        1972! In terms of the buying power, then, and now. So, wages are
        severely low. In a consumer based economy, where 70/80% of
        economic growth depends on the consumer’s ability to purchase
        things. It is no mystery why the economy is flat.

  • tax payer

    Minimum wage jobs are for students that are in school and want to earn extra income. No one with a family can make it earning minimum wages. I know many people that are happy earning minimum wages because they get a Big Refund at the end of the year from the IRS since they have three or more children as dependents.