There’s been a lot of talk about raising the minimum wage lately, and it is good that workers at Wal-Mart, T.J. Maxx and Marshalls will soon have a little more money in their paychecks. Now, what about the rest of the country? Stagnant wages are a chief component of The Restless Project.
Another comprehensive report issued by the Economic Policy Institute revealed recently that Americans’ wages are stuck in neutral — have been since the recession began — and if you look at the long haul, American workers really haven’t gotten a raise since 1979.
That’s depressing enough, but what’s really disturbing about this latest report is that the wage stagnation applies across all demographics and education levels. Critically, even college graduates have seen their wages drop slightly since 2007, which suggests something that’s hard for many economists to get their heads around: We aren’t going to educate our way out of wage stagnation.
“In fact, among all education categories, the greatest real wage losses between 2013 and 2014 were among those with a college or advanced degree,” the report says. “Workers with a four-year college degree saw their hourly wages fall 1.3 percent from 2013 to 2014, while those with an advanced degree saw an hourly wage decline of 2.2 percent.”
While the headline unemployment rate has continued to improve, leading to a lot of backslapping in Washington, D.C., and elsewhere, the real story of the economy remains much more muddy.
More highlights from the ECI report
- From 2013 to 2014, real hourly wages fell at all wage levels, except for a miniscule 3-cent increase at the 40th percentile and a more significant increase at the 10th percentile.
- Wages grew at the 10th percentile because of minimum-wage increases in 2014 in states where 47.2 percent of U.S. workers reside. This illustrates that public policies can be an important tool for raising wages.
- Only those at the top of the wage distribution have real wages higher today than before the recession began.
- Across the distribution, men’s wages remain higher than women’s, but women have seen a slightly bigger increase than men since 2007.
- Workers of color continue to have hourly wages far below those of their white counterparts. In 2014, the median black and median Hispanic wages were only about 75 percent and 70 percent, respectively, of the median white wage. All three groups have median wages in 2014 lower than in 2007.
- Looking at wages by educational attainment, the greatest real wage losses between 2013 and 2014 were among those with a college or advanced degree. This demonstrates that poor wage performance cannot be blamed on workers lacking adequate education or skills.
- Those with the least education actually saw a reversal in trend, likely related to the state-level minimum-wage increases.
- Despite wage declines in both 2013 and 2014, those with an advanced degree are the only ones who have returned to 2007 real wage levels.
- Nominal wage growth, by any measure, is far below wage growth consistent with the Federal Reserve Board’s 2 percent inflation target.
- There is no evidence of upward pressure on wages — let alone acceleration of wages — that would signal that the Federal Reserve Board should worry about incipient inflation and raise interest rates in an effort to slow the economy.