Economy
3:22 pm
Wed August 21, 2013

Study Finds Stagnated, Declining Wages For Low Wage Earners

Originally published on Wed August 21, 2013 4:38 pm

Transcript

MELISSA BLOCK, HOST:

The president's education tour is part of a broader campaign aimed at boosting the fortunes of the middle class. A study out today shows just how widespread the nation's economic pain has been. It finds that over the past decade, wages have been flat or even declined for the bottom 70 percent of American workers. NPR's Jennifer Ludden has that story.

JENNIFER LUDDEN, BYLINE: The farther down the income scale you go, the worse it gets. The Economic Policy Institute, a liberal Washington think tank, finds the lowest wage earners saw income fall over the past decade. But EPI president Lawrence Mishel says across all kinds of measures - gender, race, even education - most people struggled.

LAWRENCE MISHEL: Wages for those in business occupations have been flat for 10 years. Those in science, technology, engineering and math - so called STEM occupations - have been flat. It's hard to look at the data and find that the real problem of wage growth is that people don't have enough education.

LUDDEN: The EPI study finds wages began stagnating well before the recent recession. In fact, since 1979, while productivity has grown 75 percent, average wages are up just five percent. Mishel says we've long known a high school diploma is no longer the ticket to a comfortable middle-class life. Likewise, he says a college degree no longer guarantees rising wages or job security.

MISHEL: People are having more education to end up with wages that are similar to what their parents had with less education, so that getting more education is, in some ways, running up and down the escalator.

LUDDEN: Mishel suggests a number of ways to, as he put it, restore the link between productivity and wages. Among them, strengthening unions and, as President Obama has urged, raising the minimum wage for those at the bottom.

MISHEL: And by helping their wages grow, we will help families get by, we will help grow the economy, we will help lift wages for everybody.

DAVID NEUMARK: I think there's often a failure to kind of distinguish between what we wished the world looked like and how we should get there.

LUDDEN: David Neumark of the University of California Irvine says, yes, inequality has grown, and that's a problem. But he says stubbornly low wages have been offset in part by expanding tax credits for poorer families. He thinks making businesses pay a higher minimum wage could backfire.

NEUMARK: Because if we simply require them to pay a higher wage, we can't also tell them how many people they're going to hire, and corporations will still make decisions based on the margin. And if the cost of low-skilled labor has gone up, they're probably going to use a little bit less of it.

LUDDEN: You can see the toll of the bad economy in public opinion. Even in 2010, people surveyed by Greenberg Quinlan Rosner Research described the American dream as owning a home, a good job, a vacation. But as the weak economy has dragged on, those expectations have been dramatically lowered. What's a good economy today? People say, being able to pay my bills, a trip to Outback Steakhouse. Still, not everyone reads today's report on flat wages with a sense of gloom.

KEITH HALL: I don't think you can look at these numbers and decide that the good times are permanently over.

LUDDEN: Keith Hall is an economist with George Mason University. He says for a long time, many white-collar workers haven't gotten raises because their employers have had to pay for spiraling health care costs instead. A new report this week finds those costs finally slowing.

Also, Hall is not yet convinced the economy is actually in a sustained recovery. As he sees it, the main drag on hiring and wages is nagging uncertainty over the new healthcare law, proposals to raise the minimum wage, a possible tax overhaul.

HALL: I think businesses have to have some idea of what's really going to happen. You know, sometimes the thought of what could happen is worse than knowing. And I think that's having an effect.

LUDDEN: The solution to that, not so much changes in the labor market, he says, as changing the political stalemate in Washington.

Jennifer Ludden, NPR News, Washington.

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