The wealthiest percent of Americans have never seen wages this high before. Their average wage hit $719,000 per year in 2017 — a new record. But the rest of America isn’t nearly so fortunate.

“On the face of it, these should be heady times for American workers. U.S. unemployment is as low as it’s been in nearly two decades,” wrote the Economic Policy Institute (EPI), a progressive economic policy think tank, in a recent report. “In fact, despite some ups and downs over the past several decades, today’s real average wage — after accounting for inflation — has about the same purchasing power it did 40 years ago.”

EPI compiled wage data that showed while real annual wages climbed only 22 percent for 90 percent of Americans since 1979 (right around the time organized labor began declining), the top one percent saw wages skyrocket by 157 percent. The minuscule gains the American working class saw in wage growth have been mostly wiped out by rising costs of living.

During the economic recovery that began after 2008’s financial crisis and resulting Great Recession, wages for 90 percent of Americans grew only 5.4 percent. Meanwhile, the top tenth of a percent of income earners brought home whopping 29.8 percent. 2017 wasn’t a record year for the top tenth of a percent, but it was their second-best year ever.

“Astonishingly, real wages remain well below where they were a decade ago. We have not experienced anything like it for at least 150 years,” wrote Paul Johnson, director of the Institute for Fiscal Studies.

Some economists have argued that the gig economy is another factor in wage stagnation. Because employees fear losing the gig that keeps them able to pay bills, there is little pressure to adjust wages, and this fundamentally breaks the supply-and-demand model of the labor market. But there are other reasons as well.

“Some of this real wage stagnation can be explained by an uptick in energy prices, but even the underlying pace of nominal wage growth has yet to pick up in the way it historically has as labor markets tightened,” wrote EPI.

And it would be hard to ignore the increasingly regressive tax policies that help boost the wealthy at the expense of the average worker, or the political efforts to prevent increases in the minimum wage.

Regardless of reason, the data is clear. In 1979, almost 70 percent of earnings went to 90 percent of Americans. In 2017, that fell to just over 60 percent. In the same span of time, the earnings gathered by the top percent nearly doubled.

And Trump’s tax cuts are gasoline on the fire of this income inequality.


Katelyn Kivel is a contributing editor and senior legal reporter for Grit Post in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.

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