wages

American workers are some of the hardest-working in the world in terms of how much profit their labor makes for employers. But workers’ wages have been slow to climb with profits.

A recent New York Times Magazine article explored how the productivity boom hasn’t translated to hourly workers earning higher wages despite companies’ soaring profit margins and stock prices. Author Matthew Desmond — who has explored the plight of working-class American poverty in the Pulitzer Prize-winning book Evicted: Poverty and Profit in the American City — found a particularly disturbing piece of data: Productivity is growing more than six times higher than wages.

“Since 1973, American productivity has increased by 77 percent, while hourly pay has grown by only 12 percent. If the federal minimum wage tracked productivity, it would be more than $20 an hour, not today’s poverty wage of $7.25,” Desmond wrote, citing the Bureau of Labor Statistics (BLS).

“American workers are being shut out of the profits they are helping to generate. The decline of unions is a big reason,” he continued. “During the 20th century, inequality in America decreased when unionization increased, but economic transformations and political attacks have crippled organized labor, emboldening corporate interests and disempowering the rank and file.”

Desmond also pointed out that most people who meet the BLS’ definition of “working poor” are not high school kids working fast food registers, but adults trying to provide for their families in a tenuous economy:

The Bureau of Labor Statistics defines a “working poor” person as someone below the poverty line who spent at least half the year either working or looking for employment. In 2016, there were roughly 7.6 million Americans who fell into this category. Most working poor people are over 35, while fewer than five in 100 are between the ages of 16 and 19.

This data flies in the face of President Trump’s argument that the economy is booming due to the stock market’s performance and low unemployment numbers. But that only tells part of the story.

As Grit Post editorial board wrote in June, low unemployment numbers can be attributed to the growth of industries that traditionally pay low wages, like the fast food and retail industries. In August of 2018, the Bureau of Labor Statistics found that over 7.5 million Americans worked at least two jobs — up 600,000 from August of 2017.

Additionally, a July study by Reuters found that the vast bulk of American economic growth has been from Americans piling up more and more debt just to keep their households afloat. Reuters found that between 2012 and 2017, expenses consistently outpaced before-tax income for the poorest half of Americans, showing that wages are not keeping up with rising costs of living.

This data suggests that the economic growth Trump is touting as proof of his policies working is not sustainable, as it’s built on the backs of workers toiling away for pay that isn’t sufficient to meet their needs. Without swift action from Congress to dramatically increase wages, a crash seems more and more likely.

 

Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.

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