Thursday, July 16, 2015

You can add in the benefits, too, but stagnant wages are still stagnant for majority of Americans

You can add in the benefits, too, but stagnant wages are still stagnant for majority of Americans
The headline above is the sort that typically elicits responses of "sure, and water is wet" or "next you'll tell us the sun rises in the East." No dispute. But it's always good to have data confirming the details for the next time somebody tells you how great Americans have it.

In that light, Lawrence Mischel at the Economic Policy Institute points to a new report put together by Kristen Monaco and Brooks Pierce at the Bureau of Labor Statistics:

Their bottom-line results in the figure above show the growth of both hourly compensation (all wages and benefits, but excluding payroll taxes) and wages (straight-time wages plus shift pay and other wage premiums) from 2007 to 2014 for all civilian workers. Their analysis confirms that there has been very broad-based stagnant pay whether one examines just wages or a more comprehensive compensation measure that also incorporates changes in health, pension, and other benefits. The bottom 80 percent of workers had stagnant or declining hourly compensation while the bottom 88 percent of workers had stagnant or declining wages. Monaco and Pierce’s research provides an additional rebuttal to Columbia University’s Glen Hubbard’s claim that there is no pay stagnation if one includes benefits along with wages, which I challenged in a recentanalysis. [...]

Among the bottom 40 percent of workers there was an even greater decline in compensation than there was in wages, indicating that including benefits as well as wages in an analysis results in a more adverse trends—the opposite of Hubbard’s claim.

The pain behind these statistics is immense.

Mischel's earlier analysis notes:

The issue of wage stagnation, however, should focus on what the vast majority of workers have been experiencing for most of the post-1979 period. Hourly wages, inflation-adjusted, grew only 0.2 percent annually from 1979 to 2014 and did not grow at all if we exclude the 1995-2000 period. What happens if we add in benefits growth and examine hourly compensation growth? Not much. The growth of the hourly compensation of private-sector production, non-supervisory workers was 0.2 percent annually over the 1979-2014 period and just 0.1 annually if we exclude the 1995-2000 period.
So what to do? EPI takes a social democratic tweaking approach with several valuable, pragmatic and mostly familiar proposals, which I've condensed below:

Raise the minimum wage; update overtime rules; strengthen collective bargaining rights; regularize undocumented workers; provide earned sick leave and paid family leave; end discriminatory practices that contribute to race and gender inequalities; support strong enforcement of labor standards; prioritize very low rates of unemployment when making monetary policy; enact targeted employment programs and undertake public investments in infrastructure to create jobs; reduce our trade deficit by stopping destructive currency manipulation and use the tax code to restrain top 1 percent incomes.

All worthwhile. What's missing from that list are deeper changes, for instance, encouragement and support for workers' cooperatives, creating and capitalizing state infrastructure banks, expanding Social Security, reforming pensions and extending health care to every single American.

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