Housing costs in Seattle get the headlines. But a more corrosive problem is hurting average people: a long-term decline in wage growth.

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When I was doing my regular guest segment on KUOW Monday, a woman tweeted, “My rent went up $800 in 1 year yet my salary stayed stagnant. i work at UW. why do i not deserve to live here?”

As Clint Eastwood’s character says in Unforgiven, “Deserve’s got nothing to do with it.” In fact, she cuts to the heart of one of the biggest problems facing average Americans, and not only in boomtowns such as Seattle.

Consider: a study late last year used Census Bureau data to analyze how wages for 218 common occupations had fared since the Great Recession. Most had stagnated as of 2014, the year for which the comprehensive information is available. Adjusted for inflation, those in low-wage jobs saw wages fall 2 percent; mid-range jobs down 1 percent, and high earners down 5 percent.

Computer and math occupations enjoyed the best performance, up 18 percent from their pre-recession peak. But many more jobs lost ground. You can use this interactive tracker here to see.

To be sure, there are many ways to slice the bologna.

The Federal Reserve Bank of Atlanta maintains a popular Wage Growth Tracker. It uses somewhat different methodology, but the outcome is basically the same. As of April 2016, median hourly wage growth was only finally reaching the level (up 3.4 percent overall) of the tepid rate seen in the 2000s. In the late 1990s, the rate was more that 5 percent.

And these are nominal rates, not adjusted for inflation. So in a place such as Seattle, where demand is driving prices higher, one feels slow or stagnant wage growth acutely (and it is well covered by the media). But it’s happening all over. We can’t talk about skyrocketing housing prices without also factoring in wage stagnation — and household income, which peaked in 1999 for most.

Nationally, this is not a new phenomenon. From 1948 to 1973, productivity and wages moved up together, virtually in lockstep. Then they diverged. According to the Economic Policy Institute, productivity increased 72.2 percent from 1973 to 2014. But hourly compensation grew 9.2 percent. The disconnection is also between those who mostly make money from their investments or occupy a few highly-paid professions and those who work for wages. Hence, one cause of our growing inequality.

So that fills in some of the answer, if not in 140 characters.

Today’s Econ Haiku:



Steel production row

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Who has a tin ear?