Breaking news alert! Wages fell at the fastest rate ever recorded during the first quarter of this year, the government’s Bureau of Labor Statistics reported.
Hourly wages fell 3.8 percent in the first quarter, the biggest drop since the BLS began tracking compensation in 1947. Productivity rose half a percentage point. The result was that what economists call “labor unit costs” fell 4.3 percent.
In plain English, that means paychecks overall shrank, but work output grew. If you are a business owner, that is news worthy of a toast with a bottle of the finest Cristal champagne, which at $595 is more than the $518 that a median-wage worker earns in a week.
If you have not heard this news about plummeting wages, it is not surprising. Except for right-wing websites, and an item at the liberal Huffington Post, the June 5 announcement went unreported.
The networks and the major newspapers all have staffs of business reporters, yet they missed the third paragraph of the official government announcement that contained this important news.
That is because they are mostly assigned to write about hedge funds, high finance and the latest smartphone app. Hardly any business reporters cover workers or work, and when they do, it is often from the perspective of company executives and investors.
My former employer, The New York Times, not only failed to report this awful news affecting the vast majority of Americans who work, but gave a misleading account in both a news report and a blog post:
Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department.
That is true, by the way. Misleading and incomplete, but true. It is also in line with that paper’s tradition of focusing readers on any silver lining in an economic storm.
What the Times reports matters a great deal, as every other news organization turns to it first because of its unmatched resources and talent. But that also means that when that newspaper misses, or muffs, a story, so does everyone else.
It is not like this new wage news can be dismissed as an anomaly, either. It is evidence of a troubling trend – falling incomes for the 99 percent.
Pay for most jobs has been falling because of a combination of anti-union rules that have reduced membership to its lowest level in almost a century, trade deals with China that have destroyed 2.8 million jobs and put pressure on workers to accept lower pay to compete with imports, and the severe cuts in welfare benefits over the past two decades, which have flooded the market with low-wage workers. America ranks second only to South Korea in the share of workers earning low wages, both at about one job in four.
At the same time, taxpayers have been giving ever-larger subsidies to employers, notably Walmart, many of whose workers need food stamps.
From 2007 to 2011 the average pretax income of the bottom 90 percent fell from $35,173 to $30,437. That is a drop of more than $4,500. It is also a decline of nearly 13 percent.
The 2012 data are likely to show that drop has worsened, with the vast majority’s average income likely to be down $5,000, or roughly $100 per week. We’ll see how well that gets reported in the fall when new data becomes available.
By the way, if you make a good living, or your household enjoys two above-average incomes, don’t think that you are exempt from this trend toward less.
During the same period, the threshold to enter the top 10 percent fell by 6.5 percent, a drop of $7,665 to $110,651, analysis of the latest IRS data by economists Emmanuel Saez and Thomas Piketty shows.
This drop in income is part of a long-term trend in which the economy grows, but nearly all the gains go to the top. From 2009 to 2011 the top 1 percent got 121 percent of all the gains, which was possible only because the 99 percent got less.