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Economists: US Wages Stagnant for Over a Decade

Overall earnings in 'mostly downward slope' for past forty years

Common Dreams staff

Wages for median working-age men have decreased 4 percent since 1970. (Photo by Official U.S. Navy Imagery via Flickr)

As wages remain stagnant since 2002, the past ten years have been effectively been a "lost decade for workers," says writer Kevin G. Hall.

Despite adequate coverage of the rise and fall of employment rates, little has been said about the actual rate of earnings, which—after adjusting for inflation—have reportedly declined across most industries and sectors since the Great Recession.

"Equally troubling," Hall writes in the McClatchy report, is that "real wages are now about the same level as they were in December 2005."

According to researchers at the Brookings Institute's Hamilton Project, the median working-age man with a job earns about 4 percent less, when adjusted for inflation, than he did in 1970.

“A key thing is that from the 1970s up to 2000, middle income . . . families didn’t get their fair share, but they still saw some growth. Since 2000, nothing,” said Heidi Shierholz, a labor economist at the Economic Policy Institute. "This idea of a ‘lost decade,’ it’s already happened. We’re well into our next lost decade."


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McClatchy writes that there are a number of explanations for the declining earnings:

One is that the Federal Reserve successfully tamed inflation, so wages aren’t racing to keep pace with rising prices. Another is the decline in labor unions, whose members enjoyed higher wages and better benefits.

Yet another explanation is that productivity—a worker’s output per hour—has improved greatly thanks to computers, automation and other breakthroughs. Productivity’s role in falling real wages is a subject of debate in economic circles, partly because workers used to share in the benefits of rising productivity but have shared less so over the past decade.

Regardless, it seems that real wages have been on a mostly downward slope for more than 40 years which—according to New York economist Martin Kohli—makes economic recovery more difficult "because without wage growth, it’s harder for Americans to pay down their debts."

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