The “Great Wage Slowdown” Has Hindered American Workers
Despite recently-reported economic gains – including an unemployment rate that has dipped below 6 percent – one aspect that continues to trouble is wages. Paychecks have been stagnant, falling or only minutely increasing over the last 15 years.
New York Times Writer David Leonhardt refers to it as, “The Great Wage Slowdown of the 21st Century.” That’s a rather grand title, but it’s had a very real effect on all but the wealthiest Americans.
For example, the average family in the U.S. makes less money that it did 15 years ago. That wasn’t something we could say at any other point in our nation’s history – except during the Great Depression. The hourly pay rate climbed just 2 percent in the last year. After adjusting for inflation, that basically amounts to no pay increase. The only class of workers to see a real boost in wages were those at the 90th percentile. While median income growth began stagnating in the mid-1970s, it came to an almost grinding halt around 2000 and has yet to recover.
Our Miami consumer rights lawyers know this hasn’t been the only issue working against those in lower pay brackets.
To start, the number of jobs generated through new businesses was at an all-time high in 2000, but it’s been tumbling ever since. The labor share of income in the non-financial sector began slipping at that time too, and still has yet to bounce back. Additionally, household debt ballooned in 2000, and it only stopped when the Great Recession meant more people were filing for bankruptcy and banks weren’t giving out as many loans.The gains that have been made primarily have been funneled into the pockets of the wealthiest.
Despite all this, President Barack Obama recently laid out an optimistic plan for economic growth, and it has to do with energy and education – both of which have posed serious problems in recent years.
With regard to energy, the cost was soaring in the 1970s. It remained fairly steady through the 1980s and then fell temporarily in the 1990s. However, in the last 15 years, it was, as Leonhardt put it, “acting as a tax on the rest of the economy.” But in the last three years, oil prices have remained fairly consistent. Part of that has to do with fracking, and also with modest clean-energy initiatives. This has resulted in steady energy costs the world over.
With regard to education, this is in essence what fuels the economy. It’s what allows people to create and excel and generate profits. However, getting an education in the U.S. has been tougher than ever. The likelihood of amassing huge student loan debts kept a lot of people away.
The recession did result in some positive changes in this regard because it sent people back to school. Either they lost their jobs or the market was becoming more fierce and they needed to heighten their skill level to become a more desirable candidate. But also, educational institution standards and accountability have risen as well.
These factors together have played a role in the fact that the number of 25- to 29-year-olds with a four-year college degree rose from 31 percent to nearly 34 percent from 2008 to 2013. That figure could stand to be a lot higher, but it’s a substantial improvement.
Another element that could work in favor of ordinary Americans is the 2020 health care law. Certainly, there are flaws. However, there is no question that the cost of health care and health care insurance is significant for many families and businesses. When those costs climb, salaries don’t. It’s worth noting that when wages were at an all-time high in the late 1990s, health care costs were relatively stagnant. The health care reform has meant more people are insured and paying less for that coverage.
All of these are encouraging signs that pay may begin to increase.
Still, there are serious concerns that could counteract that. If we don’t initiate better policies with regard to educational accountability, reduction of medical waste, decrease in energy costs and demanding a more effective government, we may not see pay increases for the middle- and lower-classes realized to any significant degree.
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