Wallet feeling a bit lighter, lately? Your figures appearing on your paycheck might not be inspiring a lot of confidence about your future, either. It’s undeniable: things are still tough out there for a significant segment of the working population. Though the economy has, more or less, found solid footing, auxiliary factors like rising rents and student debt has kept many people from finding prosperity.
The one big reason that’s being cited by analysts and economists? We’re still not seeing much, if any, progress in terms of wage growth.
Research published recently by the National Employment Law Project, real median household wages have actually declined, not just seen slower growth, over the past five years. By looking at data collected between 2009 and 2014 — or, from the midst of the Financial Crisis and Great Recession until last year — the NELP found that wages are down, and depending on what type of job you have, your could have been hit hard, or really hard.
“Averaged across all occupations, real median hourly wages declined by 4.0 percent from 2009 to 2014,” the NELP data brief says. “Between 2009 and 2014, occupations in the bottom three-fifths saw median wage declines of 4.0 percent or greater. By contrast, median wages in the two highest quintiles declined by an average of 2.6 and 3.0 percent, respectively.”
But here’s the real killer: “Real median wages in the bottom quintile declined by an average of 5.7 percent between 2009 and 2014, the highest rate for any quintile.”
In other words, everybody’s paycheck has taken a hit over the past five years. But the economy’s lowest earners, or, the bottom quintile in the NELP’s research, took the biggest hit. Here’s a visualization of the NELP’s findings:
As demonstrated above, the average percentage change in occupational wages across all occupations came in at $8.84, and $10.97 came in at the high end of the spectrum. Conversely, the highest earners have suffered the least, with only a 2.6% decline. What this data supports is the notion that the economic gains since the Great Recession have ended have, by and large, gone to the country’s higher-earners.
But that’s not really news to anyone.
What this does clear up, however, is that your paycheck is lower than it should be, in all likelihood. Everyone across the economic spectrum has evidently suffered in terms of wage growth, and this has been the one big elephant in the room despite all of the positive economic news over the past few years. Yes, the unemployment rate has been halved since the height of the recession, and confidence has, by and large, returned, people still aren’t earning enough to be comfortable.
We’ve dug into the reasons that wage growth has stagnated previously, and the primary factor is that it’s still a buyer’s market for labor, for the most part. This is why economists have been predicting wages to actually start growing again in the near future — as the unemployment rate continues to drop, the supply of available labor dwindles, putting pressure on employers to pay more.
The problem is, per the NELP’s data, we’re still not seeing it.
It’s important to keep in mind, however, that the NELP’s data doesn’t track individual workers. So, you may have actually seen a raise or two in the past few years, but that doesn’t necessarily mean that the overall economic picture is quite as rosy.
Also, because the data looked at in this particular data brief are from 2009-2014, more recent figures aren’t taken into account. And when we do throw those into the mix, things look a bit better. Just this month, when the unemployment rate ticked down to 5.1%, there were some positive signs in terms of wage growth. That’s good news, for sure, but it was also not enough to persuade the Fed to raise interest rates — which could be another telling sign that regulators aren’t quite seeing what they want in terms of economic stability. At least not yet.
Wage stagnation is still a huge issue facing America, and could stymie growth in the future if not addressed. As the NELP concludes, it’s something that lawmakers will need to start taking very seriously.
“Addressing wage declines, especially for workers in the lowest-paid occupations, is urgent and critical; it should be a central focus of policymaking efforts at the federal, state, and local level in coming years,” the NELP writes.”
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