The Economic Policy Institute delivers an annual analysis of the “State of Working America,” and this year’s version was released today. In their key findings, they lament the rise of “policy-driven inequality,” a condition that, even when the job market improves, leads to the bulk of our economic growth funneling up to the 1%, while those who can find work cannot get a decent wage.
Despite an increase in productivity of more than 22 percent by 2010, typical wage earners made roughly the same amount per hour as in 2000.
Median family income was 6 percent lower in 2010 than in 2000.
This lost decade of no wage and income growth began well before the Great Recession—which started in Dec. 2007—battered wages and incomes. In the historically weak economic expansion following the 2001 recession, hourly wages and compensation failed to grow for either high school– or college-educated workers.
Consensus forecasts predict that unemployment will remain high for many more years, suggesting that typical Americans are in for another lost decade of living standards growth. For example, as a result of persistent high unemployment, the incomes of families in the middle fifth of the income distribution in 2018 will likely still be below 2000 levels.
These are bracing predictions, based on the clear data from the past ten years. And much of it can get traced back to inequality. If the top 1-5% continue to take home virtually all the benefits of economic growth, the rest of us can do nothing but stagnate on wages. Productivity has grown 69% from 1979 to 2011, but compensation has increased just 7%. The incomes at the median range have practically not moved at all over that post-1979 period.
EPI blames this on policy choices, including: deregulation of industries, particularly finance, which fostered massive profits and led to the creation of asset bubbles; reductions in tax rates at the individual and corporate level; the declining value of a minimum wage not indexed to inflation; and the decline of collective bargaining rights.
EPI adds:
These sobering data could be mitigated by the ability of Americans to move freely up and down the income or wealth ladders (mobility). There is no evidence, however, that mobility has increased to offset rising inequality.
Further examination of the data through the lenses of race and ethnicity finds the overall data obscure the dramatically worse outcomes minorities face.
Gender gaps have been reduced in many of our labor market analyses. While due in large part to substantial gains for women, part of the closing of the gap has occurred because men have lost significant ground.
The mobility angle is critical, because it’s one of the myths we tell ourselves. State of Working America’s mobility page shows that less than 1% of those making under $28,000 a year would rise above $117,000 ten years later. In addition, 73% of those in the top 1% stayed within the top 5% within that ten-year period. The top stay at the top, and the bottom stay at the bottom. Welcome to the new caste system. And education DOES NOT solve this: EPI finds that “high-scoring students of low socio-economic status are no more likely to complete college than low-scoring students of high socio-economic status.”
The State of Working America has a lot of data to take in, and I’m sure to be noodling around it for a while.




5 Comments

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Looks like Barry’s economic policies are a resounding success.
One place where salary increase has shown up is in the tech/computer field. In the last few months, contract work in those industries are showing 15+% increase, at least in the circles in which I run.
But that still leaves a huge drop from similar jobs around 2000, a 50 to 60% drop from that point, in actual dollars.
ummmm …
3% of $100 is 3 bucks.
3% of $10,000 is 300 bucks.
3% of $1,000,000 is 30 grand.
YAWN … can you accomplish MORE with 30 grand that 300 bucks?
what if you’re getting 10% of 100 … or 10% of 100 grand?
THE PROBLEM isn’t all this … weep weep sniffle sniffle … mean meanies are mean and lack Justical Ethical Caring … kleenex.
THE PROBLEM is money and math. Too much money in too few hands = the rest of us are screwed … and blaming isms is like blaming guns or like blaming gambling or like blaming alcohol – It’s The People And Their Closed Processes, Stupid.
(not the best soundbite, I’ll admit)
rmm
I can accomplish more with 10 grand, which is approx what the 15% difference means.
Now I just have to get the job!
The key challenge for the US economy is that it’s about to collapse. Of course if you are well off you can still afford to be delusional about that fact, but those of us out in the real world who can see the crap going down already know.