Employers are slowly expanding payrolls as the recovery inches forward. By and large, though, they haven’t yet begun to bump up wages.
It’s part of a trend that’s persisted long before the recession began. Data shows wages for the U.S. workforce recorded only meager growth leading up to the recession, meaning wages have remained stagnant for more than a decade. At the same time, productivity has climbed nearly 25 percent since 2000.
The Economic Policy Institute (EPI) has published a series of papers examining the issue, most recently highlighting the fact that many workers have endured weak wage growth for more than three decades.
Those at the bottom of the pay scale and with the lowest education levels aren’t receiving a pay raise, while top earners have fared better. From 2007 to 2012, the bottom 70 percent saw a decrease in real wages, according to EPI.
Like the recovery, wage growth across the country has been uneven.
Governing analyzed mean weekly wages for all industries reported in the Labor Department’s Quarterly Census of Employment and Wages, adjusting for inflation using CPI. In the five-year period from 2007 (the recession officially started in December of that year) to 2012, the following states recorded the largest declines in real wages:
- Nevada: -6.5%
- New York: -4.8%
- Connecticut: -3.3%
- Idaho: -2.7%
- Michigan: -2.7%
- Florida: -1.8%
- New Jersey: -1.8%
- Delaware: -1.2%
- Illinois: -1.1%
- Georgia: -0.9%
Not surprisingly, oil-rich North Dakota recorded the largest growth: 25 percent. Wages in a few other western states held up over the five-year period, but still didn’t increase all that much.
Flat wages also underscore the ever-widening gap in income disparity. Since 2000, those holding advanced degrees saw inflation-adjusted average wages rise about 5 percent. Wages for all other college graduates rose only 1 percent, while those with high school diplomas registered declines. Notable wage growth hasn’t even occurred for college graduates in the science, technology, engineering and mathematics fields, according to EPI research.
But when assessing the wage of a typical worker, average wages aren’t the best measure since they’re subject to being skewed by top earners.
Disparities in wage growth become much more clear in measuring median values. Select a state below to see changes in median hourly wages over the past 10 years and you’ll notice that it’s the high income earners whose wages are faring best:
The above data was compiled from the Occupational Employment Statistics program, the Labor Department’s only publicly released data set that reports median wages for states. One caveat to note here is that not all data was collected in the corresponding reference year, so it’s not as responsive to shifts as other surveys.
More recent indicators point to continuing wage stagnation. EPI’s analysis of two data sources found average inflation-adjusted private sector wages increased 0.5 percent and 0.3 percent from the first half of 2012 to the first half of 2013. Much of the slight uptick, though, can be largely attributed to a drop in inflation.
The EPI report forecasts flat wages for the next few years.
With unemployment levels still high, most employers don’t need to boost wages to attract and retain talent. Until that changes, it’s likely wages will continue to remain relatively flat.