wages

The media’s obsession over the 3.1 percent increase in wages is an insult to American workers, most of whom never recovered from the recession.

Republicans are hoping to convince voters to keep them in power on Tuesday, citing the 3.7 percent unemployment rate and the year-over-year wage increase in the latest jobs report as evidence that their economic agenda is working. But these numbers fail to account for the fact that the unemployment rate is only so low because most Americans have to work more than one job just to meet basic needs. And when accounting for rising costs of living, the wage increase is actually just 0.4 percent.

wages
Inflation-adjusted change in wages (data by Bureau of Labor Statistics, chart by Mother Jones)

For the vast majority of working people across America, the recession never really ended. In 2009, at the height of the recession, median American household income was $56,180/year. When adjusting for inflation, that would amount to $65,557 in today’s dollars. However, median household income as of late 2017 was just over $59,000, according to U.S. Census figures. Earlier this year, inflation hit a six-year high, essentially wiping out the small increase workers saw in their wages.

And of course, the stagnation of everyday workers’ wages has been a decades-long trend. In 1977, for example, median income was $13,570/year, or $55,791 in today’s dollars. This means that over a 40-year period, wages remained relatively flat. So where has all the money gone from the last 40 years of economic growth? The answer is obvious to anyone paying attention.

While workers’ wages have been flat for the last four decades, the wealthiest one percent of Americans saw their incomes grow by 157 percent between 1979 and 2017. This is a rate of growth nearly four times higher than even the richest ten percent of Americans saw over the same time frame. By the end of 2017, CEO pay hit a new record high, with executive compensation for the top 100 companies hitting a median of $15.7 million.

A chart by the Economic Policy Institute illustrates just how lopsided gains for the top one percent have been over the last 40 years compared to everyone else:

The Trump administration and Republicans in Congress are desperately trying to tie the anemic wage growth to the recent tax bill passed at the end of 2017, which was overwhelmingly tilted toward corporations and the wealthy.

As Grit Post reported in August, the news of corporate profits hitting a record high at the end the second quarter of 2018 came at the same time the Urban Institute found that 40 percent of Americans couldn’t afford basic necessities, like food, housing, and medicine. The Center for American Progress compared the increase in corporate profits since the passage of the tax bill to wages, and their visualization of the data speaks for itself.

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Workers wages vs. corporate profits since the passage of the Republican tax bill (data by Federal Reserve, chart by Center for American Progress)

The reason workers aren’t getting ahead is likely due to the fact that the cost of living in America is rising at breakneck pace. Most of that cost is in housing: A Reuters poll from June found that home prices are rising faster than wage growth, and even inflation, meaning the affordable housing crisis will only worsen over the next several years.

For parents, the economy is even worse. Child care costs have outpaced all other expenses, with a family making $87,000/year still having to shell out approximately 10 percent of their monthly income, and a single parent having to spend almost 40 percent of their monthly income on child care, according to a recent study from Child Care Aware of America. In some cities, child care costs nearly equal rent.

Republicans have repeatedly demonstrated that they aren’t the party of working Americans — just recently, White House economic adviser Larry Kudlow hinted that he’d be in favor of abolishing the federal minimum wage, calling it a “terrible idea” that hurts small business. This would mean corporations would no longer have a floor for how low they can pay workers.

This attitude is reflected in Republican-controlled legislatures across the country. As The New Republic reported last year, the Koch Brothers-funded American Legislative Exchange Council (ALEC) — a partnership between corporate lobbyists and Republican legislators — has successfully passed model legislation blocking cities from raising their minimum wage in two dozen states. In Iowa, an ALEC model bill passed in March that not only blocked cities from raising wages, but voided increases passed in four different counties, which actually lowered 65,000 workers’ wages.

If Americans want to see a real increase in their wages, they should aggressively mobilize against any politician — whether they be Republicans or Democrats — trying to convince you to be happy with a few more dollars in your pocket while the vast bulk of economic growth flows into the bank accounts of CEOs and investors.

 

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