Sunday, November 18, 2012
The United States' high unemployment rate captures the headlines with each monthly jobs report, yet many Americans may be surprised to learn that real earnings, when adjusted for inflation, have declined across most industries and sectors since the Great Recession
Since 2002, in fact, it's effectively been a lost decade for workers. Equally troubling, real wages are now about the same level as they were in December 2005. Put another way, wages have clawed back from the Great Recession only to the level of seven years ago. The problem makes recovering from the Great Recession harder because without wage growth, it's harder for Americans to pay down their debts. In fact, real wages have been on a mostly downward slope for more than 40 years. Researchers at the Hamilton Project, part of the center-left research center the Brookings Institution, recently calculated that the median working-age man with a job earns about 4% less, when adjusted for inflation, than he did in 1970. The numbers look better for women, but they tell a different story, since women historically numbered fewer in the work force and earned less the further back you go. From the end of the 2001-02 recession to the start of the Great Recession in late 2007, the United States witnessed the weakest business-cycle recovery record for job growth. For reasons that economists don't fully understand, the only occupational category that's shown a significant increase in wages since December 2005 is office and administrative workers. Virtually every other occupational group is below the 2005 level or is 1.5 percentage points or less above that 2005 level.