A Decade of Flat Wages
A Decade of Flat Wages
By: Shannon Charles
Despite being one of the most affluent nations in the world, the United States still remains one of the countries with the most uneven distribution of wealth. Since President Barack Obama acquired his seat in office, the nation has shifted its focus towards the struggling middle class, which is comprised of white-collar and blue-collar workers. The overall goal of this approach is to create an economy in which we provide shared prosperity. This eliminates the idea of the “rich getting richer while the poor become poorer.” In a recently published paper titled “A Decade of Flat Wages,” the authors Lawrence Mishel and Heidi Sherholz examine this very issue and provide solutions for the failing middle class. According to this article, the central problem facing the United States is that, the wage and benefit growth of the vast majority, including white-collar and blue-collar workers, has become stagnant over the past decade. Wage growth has significantly underperformed productivity growth regardless of occupation, gender, race/ethnicity, or education level.
According to the article, between 2000 and 2007, the median worker saw wage growth of just 2.6 percent, despite productivity growth of 16.0 percent, while the 20th percentile worker saw wage growth of just 1.0 percent and the 80th percentile worker saw wage growth of just 4.6 percent. These numbers provide evidence that our economy is underperforming. The authors of this article make a very important argument, that an economy that does not provide shared prosperity is, by definition, a poorly performing one. Evidence suggests that corporate profits are at historic highs. Income growth has been captured by those in the top 1 percent, driven by high profitability and by the tremendous wage growth among executives and in the finance sector.
Last month the Bureau of Labor Statistics released figures indicating that the United States’ unemployment rate fell to its lowest level in almost four years, dropping to 7.4%, however, the addition of 162,000 new jobs to the world's biggest economy was lower than expected. Overall, the job count may have increased, however, for most working families and recent college graduates the situation is still grim. Recent graduates are now struggling to find well-paying occupations, even those who chose to pursue higher education and obtain graduate-level degrees. If you take into account the discouraged adults and part-timers that are actively seeking full-time employment, the unemployment rate reaches a staggering 14%. According to Joseph Brusuelas of Bloomberg LP, “the average duration of unemployment is 35.6 weeks, or roughly 8 months and has rendered some of these individuals unemployable in their former lines of work. These figures are alarming, and speaking from my own personal experiences I understand how discouraging this can be.
We must continue to make strides to lower unemployment and strengthen the middle class. Furthermore, as the article suggests, we need to pay closer attention to job quality and wage growth, as the key priorities in economic policy-making and as mechanisms for economic growth and economic security for the vast majority. Additionally, we also need to address the issues of education and tax reform. The new health insurance marketplace will provide some solutions to the rising cost of healthcare but this process will not make a drastic shift overnight. Hopefully in the coming years we can see some significant improvement made to our economy.
About the Author:
Shannon Charles is a graduate of Florida International University, where he obtained a masters degree in Public Health with a specialization in health policy & management. Since graduating from FIU, he has worked in the health field as a product service specialist for the University of Miami Tissue Bank, and as an area manager for Community Blood Centers of Florida. He enjoys all aspects of public health including: health disease and prevention, epidemiology, and health policy. He has aspirations of one day working for a health agency geared towards improving the quality of healthcare in the United States.