Wage Stagnation Is Devastating the Middle Class

Source: Thinkstock

Source: Thinkstock

The struggles of the middle class have been well documented and oft-reported. Faced with a tough economy — including hard fights for jobs, adequate pay, and adjustments to compensate for the Affordable Care Act — members of what is supposed to be America’s backbone are finding that the post-recession world is more difficult than many imagined.

Of course, it also looks as though most Americans haven’t had a raise in a decade and a half, so that’s another factor playing into the woes of the middle class.

That’s the conclusion of a recent slice of research from FiveThirtyEight, anyway. Taking a cue from Census numbers that were recently released, it seems that FiveThrityEight’s headline, “The American Middle Class Hasn’t Gotten a Raise in 15 Years,” is more or less right on the money. By digging into the numbers, it was found that the typical American family’s median household income is still 8 percent below where it was prior to the recession, and remarkably 9 percent lower than it was in 1999.

That’s right, in 1999, the typical family was better off. Despite all of the monstrous steps we’ve taken as a country, with all the innovation, social progress and everything else, America looks like it actually peaked during the late 1990s. How did we get there? Basically, through wage stagnation, inflation, and incredible gaps in income inequality, which is still growing at a rapid pace. We’ve been aware for a while that even though our politicians and business leaders tell us that the economy is back on track, things are considerably worse than before.

The economic gains since the recession have gone towards the richest Americans in an incredibly lopsided manner, and it’s easy to drag politics into the discussion. There are definitely some fingers to point in terms of fiscal and monetary policy, but our elected officials can’t seem to do anything except blame each other.

So why have wages stagnated, and why has the middle class been hung out to dry?


Source: The Economic Policy Institute

The stagnation of wages isn’t really news to anyone anymore but it’s still a huge problem, and one of, if not the main driver behind the decline of the middle class. Jobs that were lost to the recession have returned, but are paying a fraction of what they were previously. Essentially, everyone has had to make sacrifices to return the country to economic prosperity. But the sacrifices have been levied on those in the working class almost exclusively.

According to research from The Economic Policy Institute, flat-lining wages has not only put enormous burdens on the lower classes, but they are the result of specific policies. Not only that, but since labor groups have such a low influence, employers now hold all the cards in terms of setting things back on course.

“A decade of flat wages is evidence that the current economic system is not fair to working Americans,” said the Economic Policy Institute’s president Lawerence Mishel. “The economy has been designed to produce these results. Right now, employers hold all the cards. The wage-setting mechanism is broken.”

The short of it is that it’s not as simple as stagnating wages, though that has been a part of the problem, other issues have played separate roles. Namely, rising costs of living, including food and housing expenditures, and rising levels of student debt. Many young adults are unable or unwilling to take the step of buying a vehicle or house with thousands of dollars in student loan debt, and no good prospects to make enough money to pay it off.

The economy has shifted to more service-based jobs, unions, and labor groups are losing power, and increased calls for raised minimum wages or increased social services are being met with fierce opposition, although there has been some isolated success. With this kind of economic handicap resting on the shoulders of America’s middle class, it’s not entirely surprising that things are not as stellar as they once were. For the United States to finally get back in step, investing in and growing the nation’s middle class needs to be a priority, and it needs to happen soon.

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