Americans may be surprised to learn that real earnings, when adjusted for inflation, have declined across most industries and sectors since the Great Recession. Since 2002, in fact, it’s effectively been a lost decade for workers.
“Since 2002, few have seen wage growth. . . . This idea of a ‘lost decade,’ it’s already happened. We’re well into our next lost decade,” said Heidi Shierholz, a labor economist at the Economic Policy Institute. “A key thing is that from the 1970s up to 2000, middle income . . . families didn’t get their fair share, but they still saw some growth. Since 2000, nothing.”
Equally troubling, real wages are now about the same level as they were in December 2005. Put another way, wages have clawed back from the Great Recession only to the level of seven years ago.
"The stagnation of wages has really been going on for some time,” said Martin Kohli, the chief economist of the New York office of the Bureau of Labor Statistics. In fact, real wages have been on a mostly downward slope for more than 40 years.
Researchers at the Hamilton Project, part of the center-left research center the Brookings Institution, recently calculated that the median working-age man with a job earns about 4 percent less, when adjusted for inflation, than he did in 1970.
There are many explanations for the declining earnings. One is the decline in labor unions, whose members enjoyed higher wages and better benefits. Another explanation is that productivity – a worker’s output per hour – has improved greatly thanks to computers, automation and other breakthroughs.
For economist Neil Dutta, the head of economic research at Renaissance Macro Research, the answer to why wages have remained flat for so long isn’t complicated. “To me, it’s very simple. There is just such a massive amount of slack in the labor market. You are getting less incrementally in earning power for each job created . . . that’s across the board, across industries,” Dutta said. That’s a fancy way of saying that with so many Americans out of work or looking for better jobs, employers have the upper hand. “This is a very depressed labor market. . . . When you have that many people competing for every job that’s available, it’s going to keep wages flat," Dutta said.
“Since 2002, few have seen wage growth. . . . This idea of a ‘lost decade,’ it’s already happened. We’re well into our next lost decade,” said Heidi Shierholz, a labor economist at the Economic Policy Institute. “A key thing is that from the 1970s up to 2000, middle income . . . families didn’t get their fair share, but they still saw some growth. Since 2000, nothing.”
Equally troubling, real wages are now about the same level as they were in December 2005. Put another way, wages have clawed back from the Great Recession only to the level of seven years ago.
"The stagnation of wages has really been going on for some time,” said Martin Kohli, the chief economist of the New York office of the Bureau of Labor Statistics. In fact, real wages have been on a mostly downward slope for more than 40 years.
Researchers at the Hamilton Project, part of the center-left research center the Brookings Institution, recently calculated that the median working-age man with a job earns about 4 percent less, when adjusted for inflation, than he did in 1970.
There are many explanations for the declining earnings. One is the decline in labor unions, whose members enjoyed higher wages and better benefits. Another explanation is that productivity – a worker’s output per hour – has improved greatly thanks to computers, automation and other breakthroughs.
For economist Neil Dutta, the head of economic research at Renaissance Macro Research, the answer to why wages have remained flat for so long isn’t complicated. “To me, it’s very simple. There is just such a massive amount of slack in the labor market. You are getting less incrementally in earning power for each job created . . . that’s across the board, across industries,” Dutta said. That’s a fancy way of saying that with so many Americans out of work or looking for better jobs, employers have the upper hand. “This is a very depressed labor market. . . . When you have that many people competing for every job that’s available, it’s going to keep wages flat," Dutta said.
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