Occupy Chicago protesters gather in Chicago’s Grant Park on Wednesday, November 2, 2011. (AP Photo/Charles Rex Arbogast)
One of the obstacles to addressing poverty in this country is that too many people think of low-income people as different, flawed or less than, which often leads not only to a lack of empathy but to outright blame.
However, a new report from the Economic Policy Institute (EPI) shows just how much Americans across the economic spectrum have in common when it comes to stagnating wages.
“The bottom 99 percent may be a bit of an exaggeration but it’s not much,” said EPI president Lawrence Mishel, who co-authored A Decade of Flat Wages with economist Heidi Shierholz. “In an era when the only people moving ahead are those with an advanced degree—and that’s just 12 percent of the workforce—we shouldn’t partition off people at the low end as if they are totally distinct.”
The report demonstrates that during the recession and its aftermath, from 2007 to 2012, wages fell for the entire bottom 70 percent of workers despite productivity growth of 7.7 percent. But Mishel emphasizes that the cause of stagnating wages isn’t the recession.
“We need to be clear that these trends are really evident from 2002 to 2007, after the momentum of the strong wage growth of the late 1990s ended,” he said.
From 2000 to 2007, productivity increased by a robust 16 percent but a worker at the fiftieth percentile saw a wage growth of just 2.6 percent, a worker at the twentieth percentile saw a wage increase of 1 percent and the eightieth percentile saw a wage growth of 4.6 percent. Indeed, over the past ten years, wages were stagnant or declined for the bottom 70 percent.
“And even the wages of the worker at the eightieth percentile rose only 1.7 percent over the past ten years—that’s less than 0.2 percent annually, which in economic terms is zero, ” said Mishel. “Bascially, somewhere between 80 and 90 percent of workers in the last decade aren’t getting bupkis, as my grandmother used to say.”
Mishel and Shierholz examine President Obama’s July 24 speech regarding his “Better Bargain for the Middle Class” initiative and conclude that—while he correctly identified the “severed link” between increasing productivity and rising wages for workers—he “overlooked what it will take to solve the wage problem.” The president said, “With new American revolutions in energy, technology, manufacturing, and health care, we are actually poised to reverse the forces that have battered the middle class for so long, and rebuild an economy where everyone who works hard can get ahead.”
But Mishel and Shierholz note that there is nothing about innovation that guarantees either better jobs or broad-based wage growth.