Knowing how much the other person makes in the same office can be combustible if management hasn’t fairly set wage scales. Reading a survey such as you’ll find on these pages and in Sunday’s Parade magazine is harmless voyeurism, salary porn as it were.
But beneath this are serious questions amid a slow-growing economy, high unemployment and great challenges facing ordinary working people.
• Productivity has increased almost 23 percent since 2000, but the hourly wage of the median worker rose 0.5 percent. Median hourly compensation, which consists of all wages and benefits, increased 0.4 percent.
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• Going back to 1973, the trend is more pronounced, with productivity rising 80 percent as median hourly compensation grew by about 11 percent.
• If you worked for the lowest wages in 2011, you earned less than the workers in the same percentile in 1979.
• From 1979 to 2011, median wages increased 6 percent. All the growth happened during the 1990s expansion. During the same period, those with high earnings (in the 95th percentile), saw their wages rise 37 percent. Wages of the top 1 percent increased
• People who became unemployed between 2007 and 2009 but found new, full-time jobs took an average wage cut of 10.5 percent.
• In 2011, wages for males with college degrees were 5 percent greater than in 1979. For men with only high-school degrees, entry-level wages were 25 percent lower than in 1979.
• College-educated women saw gains of 15 percent over the same period for their first job, but the wage was still 9 percent below what a college-educated man made in 1979. Women with only high-school education worked for wages 10 percent below the poverty threshold and 14 percent worse than the wages of women with comparable education in 1979.
• In 1979, more than 63 percent of high-school graduates landed entry-level jobs with employer-provided insurance. In 2010, the number had dropped to 22.8 percent.
These are a few of the un-fun facts from the exhaustive State of Working America report from the Economic Policy Institute.
Having begun full-time work around 1979, I can attest that we are not the country I came of age in. We have smartphones and reality television. But the shared prosperity of mid-20th century America is largely gone. And with a few exceptions, the American dream that anyone who works hard can get ahead and do better than her parents is passing into myth.
If you’re a hedge-fund manager, software engineer or elite surgeon, good for you. Odds are you came from a moneyed family. The rest of us are likely to be struggling, a situation that has been made much worse by the Great Recession.
Loss of economic mobility in America is a growing concern across the ideological spectrum. The data keep growing and the message is grim.
The Pew Economic Mobility Project has conducted some pathbreaking research. It found, for example, that
42 percent of men whose fathers were in the bottom fifth of earnings stayed there as adults. In the State of Working America is this startling finding: 63 percent of African-American children born into the bottom quarter of income stayed there, vs. 32 percent of white children.
Such conclusions have been supported by numerous studies. Worse, the United States is turning in a worse performance in economic mobility than Scandinavian countries, Germany, Japan and the setting for class-strapped Downton Abbey, the United Kingdom.
For example, Swedish economist Markus Jantti reports that only 8 percent of American males born into the lowest income group made it to the highest. Britain saw 12 percent of its males rise from bottom to top, while Denmark’s number was 14 percent.
This reality is at complete odds of our self-image as the Land of Opportunity. It is also a change from a previous America. We’ve been losing ground. Some reasons are obvious, others are complex. Many are familiar to readers of this column, and a few are the subject of sharp debate.
Globalization, offshoring and technology have decimated the old blue-collar middle class. The economy has shifted to service jobs that not only tend to pay less but are increasingly part time and temporary.
Financialization of the economy has led to what economists call “rent seeking,” focusing on making government change the rules to make a business more profitable rather than investing in the production of real goods and services. It also offers the very wealthy a casino including $600 trillion worth of derivatives rather than having them invest in job-creating enterprises.
Highly consolidated industries also use their semimonopoly power to drive down wages and make unionization more difficult.
Intergenerational wealth has diverged, with the rich doing better than ever while most households, struggling since 2000, saw a huge part of their wealth destroyed in the Great Recession.
In addition, educational attainment has faltered since 1980. What’s our response? Lay off teachers and raise tuition for universities.
But none of this just happened because of a supposedly flawless free market. As Nobel Prize-winning economist Joseph Stiglitz writes in his book, “The Price of Inequality,” “Markets are shaped by laws, regulations and institutions.”
Whatever the causes, little is being done to correct our trajectory into historic high inequality that is greater than other advanced nations.
Things may have to get worse before change happens. One thing is clear: Our situation is unsustainable and un-American.
You may reach Jon Talton at email@example.com