For decades, wages of the majority of American workers have barely moved. And, in income and wealth, we've seen a tremendous concentration in the top economic tier over that same period. This is so even though worker productivity has soared.
The disparity isn't a consequence of natural law, some kind of economic physics. On the contrary, it's a perfectly predictable result of rotten policies, union-busting, weakened labor standards, a fall in the value of the minimum wage, wage theft including overtime theft, and an overall business approach in which no longer is even lip service paid by the corporate powers-that-be in favor of a fairer distribution of economic gains.
Unfortunately, the situation is not getting better.
On December 17, the Bureau of Labor Statistics released its Consumer Price Index for November. What it shows, as has been the case now since the economy started expanding in June 2009, is that average, real (inflation-adjusted) wages have remained stagnant over the past five years.
As the chart above shows, real wages fell from the start of the recession in 2007 until near the end of 2008. Then they briefly soared in a counterintuitive fashion. That leap was not a consequence of higher pay but rather a fall in inflation. As Elise Gould at the Economic Policy Institute explains, when inflation falls and nominal wages remain steady, the mathematical effect is to raise the value of those inflation-adjusted wages.
Read more about this situation below the fold.
Since that leap, wages have been flat. Here's Gould:
In the past month, we have also started to see falling prices, particularly with respect to gas prices. If nominal wage growth holds in the coming months, it may mean a rise in real wages. But so far, the data indicates that over the last year, real wage growth has continued to be stagnant. Average hourly earnings of private sector workers were $24.66 in November, and real hourly earnings averaged $24.51 over the last year. These wages are no better than we saw in the year ending November 2009 or November 2010, where average hourly earnings were $24.60 and $24.61, respectively. As shown in the figure below, real wage growth has been about zero on average for the last five years, and there is no sign of acceleration.
For production and non-supervisory workers, the situation has been no better. In October 2010, their average earnings were $20.86 an hour (in November 2014 dollars). Last month they were $20.74 an hour.
One immediate way to boost everyone's wages is to get a hefty boost to the minimum wage. So far, that's something only a few cities have done, with a few states giving a gentle the minimum wage a gentle boost. But the ultimate solution will require some considerable restructuring of the economic system, and the resistance to that will be, unsurprisingly, immense.