Five Causes of Wage Stagnation in the United States

Five Causes of Wage Stagnation in the United States

A series of recent reports from the Economic Policy Institute (EPI) make clear the case for why wages have stagnated in the United States.

Before digging into the details, it’s important to note a few things. First off, wage stagnation is not a small problem, it’s something that affects 90% of all workers. As one of the authors of these reports, Lawrence Mishel, says: “Since the late 1970s, wages for the bottom 70 percent of earners have been essentially stagnant, and between 2009 and 2013, real wages fell for the entire bottom 90 percent of the wage distribution.” Second, while the Great Recession made things worse, the problem goes back 35 years. And third, and most importantly, wage stagnation is a matter of choice, not necessity.

Here are five real reasons why wages have stagnated in the United States.

1.  The abandonment of full employment: For a variety of reasons, policy makers largely have focused on keeping inflation rates low, even if that meant high unemployment. A large pool of unemployed workers means companies are under less pressure to offer good wages or benefits in order to attract workers. Since the Great Recession, austerity measures at all levels of government have made this problem worse. EPI says excessive unemployment “has been a key cause of wage inequality, since research shows that high rates of unemployment dampen wage growth more for workers at the bottom of the wage ladder than at the middle, and more at the middle than at the top.”

2. Declining union density: As extreme pro-business interests have pushed policies that lower union membership, the wages of low- and middle-wage workers have stagnated. Higher unionization leads to higher wages, and the decrease in unionization has led to the opposite effect. The decline in the density of workers covered by collective bargaining agreements not only has weakened the ability of unionized workers to fight for their own wages and benefits, but also their ability to set higher standards for nonunion workers. EPI notes: “The decline of unions can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.” Read much more about the connection between the decline of collective bargaining and wage stagnation.

3. Changes in labor market policies and business practices: EPI argues: “A range of changes in what we call labor market policies and business practices have weakened wage growth in recent decades.” Among the numerous changes they describe include: the lowering of the inflation-adjusted value of the federal minimum wage, the decrease in overtime eligibility for workers, increasing wage theft (particularly affecting immigrant workers), misclassification of workers as independent contractors, and declining budgets and staff for government agencies that enforce labor standards.

4. Deregulation of the finance industry and the unleashing of CEOs: The deregulation of finance has contributed to lower wages in several ways, including the shifting of compensation toward the upper end of the spectrum, the use of the financial sector’s political power to favor low inflation over low unemployment as a policy goal, and the deregulation of international capital flows, which has kept policy makers from addressing imbalances, such as the U.S. trade deficit. EPI adds: “Falling top tax rates, preferential tax treatment of stock options and bonuses, failures in corporate governance, and the deregulation of finance all combined to increase the incentive and the ability of well-placed economic actors to claim larger incomes over the past generation.”

5. Globalization policies: Decades spent in pursuit of policies that prioritized corporate interests over worker interests led to lowering of wages for middle- and lower-income workers in the United States. EPI concludes: “International trade has been a clear factor suppressing wages in the middle of the wage structure while providing a mild boost to the top, particularly since 1995.”

EPI has also provided nine charts that lay out the picture of U.S. wage stagnation very clearly.

Reposted from AFL-CIO NOW

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AFL-CIO to Take Raising Wages Campaign to States and Cities

At the AFL-CIO’s National Summit on Raising Wages last week, President Richard Trumka announced two important new parts of the labor federation’s agenda.  This spring, the federation will sponsor Raising Wages summits in four key states. Additionally, the AFL-CIO will organize projects in seven cities to focus on raising wages in those locales.

Trumka explained the reason for the stepped-up efforts:

American workers are beginning to say “enough.” We are beginning to rise up, to come together, to reject the idea that there is nothing we can do about falling wages. We are tired of people talking about inequality as if nothing can be done. The answer is simple—raise the wages of the 90% of Americans whose wages are lower today than they were in 1997.  Families don’t need to hear more about income inequality—they need more income.

AFL-CIO’s state labor federations in the first four presidential primary states—Iowa, Nevada, New Hampshire and South Carolina will take place in the spring. These summits will bring together diverse voices to lay out the entire raising wages platform and establish state-based standards of accountability. Trumka talked about the significance of those states: “Raising wages is the single standard by which leadership will be judged. That means accountability, and it starts with something we all understand—presidential politics.”

After working with affiliates and community partners, the AFL-CIO identified the 10 cities for raising wages campaigns where they could have the most significant impact. The cities include Atlanta, Columbus, District of Columbia (Metro), St. Louis, Philadelphia, Minneapolis & St. Paul, Houston, Miami, Dallas and San Diego. In each city, the labor movement will stand together with those already at work and bring important energy, ideas and resources to critical battles.

These new campaigns are the beginning of the federation’s efforts to expand the raising wages agenda.

Reposted from AFL-CIO NOW

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Overtime Pay Rule Needs ‘Bold’ Action, says Trumka

President Barack Obama needs to “go bold” with the upcoming revision of overtime pay rules expected shortly from the Department of Labor, says AFL-CIO President Richard Trumka. In the video above, he says:

Raising wages is the issue of our time. And President Obama has a tremendous chance to raise the wages of millions of Americans out there. We’re urging him to go bold and to not dilute the overtime regulation that’s about to come out.

In March, Obama directed the Labor Department to update overtime eligibility rules to restore the overtime protection workers have lost to inflation since 1975.

Under federal overtime regulations, workers who earn less than a certain salary level are generally entitled to overtime protection. For decades after enactment of the federal overtime law in 1938, this salary threshold was updated every few years as a routine matter. However, the last regular adjustment to the salary level was made by President Gerald R. Ford in 1975, and workers’ overtime protections have been steadily eroded by inflation.

The current federal threshold is $455 per week—or $23,660 per year—and to simply make up for inflation, Trumka said it should be raised to $51,168. He told the Washington Post’s Greg Sargent:

The spotlight is now on raising wages. Raising wages is the key unifying progressive value that ties all the pieces of economic and social justice together. We think the president has a great opportunity to show that he is behind that agenda by increasing the overtime regulations to a minimum threshold of $51,168. That’s the marker.

As Trumka said the $51,168 is the least the administration should do. Some members of Congress have called for a $54,000 threshold, and in a recent Politico column Seattle entrepreneur and billionaire Nick Hanauer wrote the threshold should be set at $69,000.

Business groups are adamantly opposed to raising workers’ wages with a new overtime pay rule and have lobbied the White House against raising the threshold. There has been speculation the Obama administration may settle on a lower adjustment that falls far short of what’s needed to make up for 30 years of inflation.

Trumka told Sargent that business groups will oppose the move no matter where Obama sets the threshold.

Why would you settle for a figure that excludes millions of people when they’re not going to support that, either? The president should go full throttle on restoring the 40-hour workweek and not dilute this opportunity for raising wages.

More than 6.1 million workers would become eligible for overtime pay if the threshold was raised to $51,168. But 2.6 million would still be left out of overtime protection if the figure was set at the $42,000, which some suspect the Labor Department is eyeing. Click here for an Economic Policy Institute (EPI) chart showing how many workers would get a raise under various proposed thresholds.

When the proposed revision was announced, EPI Vice President Ross Eisenbrey said many of the workers who would benefit from restored overtime protection are insurance clerks, secretaries, low-level managers, social workers, bookkeepers, dispatchers, sales and marketing assistants and employees in scores of other occupations.

Reposted from AFL-CIO NOW

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With 252,000 New Jobs, December Unemployment Drops to 5.6%

The economy added 252,000 jobs in December and the unemployment rate dropped to 5.6% from November’s 5.8%, according to figures released this morning by the U.S. Bureau of Labor Statistics.

Over the year, the unemployment rate has dropped by 1.1 percentage points and the number of jobless workers has decreased by 1.7 million.

Job growth in 2014—2.95 million new jobs—was the best since 1999. But as speakers at this week’s AFL-CIO National Summit on Raising Wages pointed out, even with better job growth this year, wages remain stagnant. Sen. Elizabeth Warren (D-Mass.) and Secretary of Labor Thomas Perez outlined the defining economic fact of the past generation: productivity has gone way up and wages have stayed flat. (Read more about the summit here and here.)

The number of long-term unemployed (those jobless for 27 weeks or more) was unchanged from November at 2.8 million, and over the past 12 months, the number of long-term jobless workers has decreased by 1.1 million.

Last month’s biggest job gains were in professional and business services (52,000), construction (48,000), food services (44,000), health care (34,000) and manufacturing (17,000).

Other sectors that showed increases included financial activities (20,000), construction (20,000) and transportation and warehousing (17,000). Employment in wholesale trade and financial activities showed slight gains.

Employment in other major industries, including retail trade, mining and logging, information, warehousing and government, showed little change over the month.

Among the major worker groups, the unemployment rates in November for adult women (5%) decreased from November’s 5.2%. The rates for men (5.3%), teenagers (16.8%), blacks (10.4%), Latinos (6.5%) and whites (4.8%) showed little change in December.

Reposted from AFL-CIO NOW

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#ChangeZara Campaign Shows Results for New York Retail Workers

#ChangeZara Campaign Shows Results for New York Retail Workers

The #ChangeZara campaign began for workers at the retail clothing chain’s stores in New York City last May, with employees asking for more pay and for the company to treat them with dignity and respect. The efforts finally paid off when the company texted the workers that they would be receiving a wage increase this January. Zara also is increasing the number of full-time positions in its stores. For many employees, the raise is significant. Valery Jourdan, for instance, will see her salary increase by $2.50 an hour.

The campaign, sponsored by the Retail Action Project and Retail, Wholesale and Department Store Union (RWDSU), was started by Zara employees, who began organizing because they said that too many of them were part-time and couldn’t afford to buy the clothes that they sold. They asked for more hours, better pay, advanced notification of schedules and opportunities for professional growth. Nearly a year later, their organizing efforts paid off.

Reposted from AFL-CIO NOW

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Chicago to Raise Minimum Wage to $13 Per Hour

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In the wake of federal and state inaction, Chicago Mayor Rahm Emanuel (D) recently proposed raising the minimum wage within the city limits to $13 per hour. A key City Council committee advanced the measure on a 16–3 vote Monday and the broader council passed it 44–5 Tuesday. The current wage of $8.25 will move to $10 early next year and will rise in increments until it reaches the full $13 in 2019.

The increase could affect more than 400,000 workers in the city. Emanuel fast-tracked the higher wage out of fears that the legislature and governor might pre-empt local increases. A bill to raise the statewide minimum wage recently stalled.

Emanuel said:

A higher minimum wage ensures that nobody who works in the city of Chicago will ever struggle to reach the middle class or be forced to raise their child in poverty. Today, Chicago has shown that our city is behind a fair working wage.

Action Now, a local working families organization that championed the measure, applauded the measure and noted that it included domestic workers, unlike previous laws:

Reposted from AFL-CIO NOW

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Trumka: Labor Prepared to Combat Assaults on Workers’ Rights

While conservative legislators across the country are gearing up to propose extreme legislation, AFL-CIO President Richard Trumka issued a statement that working families and the labor union are prepared to fight back and make sure that harmful and unpopular policies don’t pass. He said the labor federation would continue to focus on the agenda that working families want, one of raising wages and creating an economy that works for all Americans.

Trumka’s full statement:

In the wake of last Tuesday’s elections, many state and local politicians have already begun to signal their intent to wage assaults on working people in their states. While national political pundits debate outcomes, the AFL-CIO and its allies also have a keen eye on the developments at state and local levels.

We have no illusions there are radical politicians who are far more concerned with appeasing their corporate donors and being a tool for groups like ALEC than standing for working family issues. This is despite the fact that the Raising Wages agenda remain of utmost importance to most Americans. A majority of the electorate are struggling economically and 68 percent of voters agree that raising wages is good for workers and the economy. The majority of people want rights at work. We want the ability to stay home if we’re sick. We want fair and equal pay. And we believe if you work for and earn a pension, you should get it.

Make no mistake that the labor movement is more prepared and ready to combat these attacks than ever before.

We also know that this fight will not be the labor movement’s alone. We are fully engaged with our allies in the community and more importantly know that the values we stand for are in complete sync with the majority of Americans. It will take a collective effort to preserve and expand our values, and we are up to the task.

Reposted from AFL-CIO NOW

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Walmart Wouldn’t Make a Dime Without Its Workers

Walmart Wouldn't Make a Dime Without Its Workers

A group of Walmart associates marched today from the AFL-CIO to the Washington, D.C., Walton Family Foundation’s offices to deliver more than 15,000 signatures from workers asking Walmart to pay $15 an hour and provide full-time hours.

Shouts of “We’re fired up! Can’t take it no more!” rang out as the workers and hundreds of supporters and allies marched down I Street and made their way to the foundation offices. Before the workers attempted to deliver the petitions, AFL-CIO President Richard Trumka reminded everyone that Walmart, which rakes in billions every year, wouldn’t make a dime without its workers, yet pays wages so low that many of its workers need to rely on public assistance and food stamps to get by.

One Walmart worker, Isaiah, shared heartbreaking stories of seeing co-workers cry in the Walmart break room when they found out their hours had been cut, making it impossible to provide for their families.

When the workers got inside the office, the building manager claimed no one from the Walton Family Foundation was working today (um, OK) and said they couldn’t call the office because they didn’t know the number. “We’ll be back,” shouted the determined workers, including Bene’t Holmes who was leading some of the chants. Holmes said they weren’t going to leave the petition with the front desk and promised this is not the last time they would attempt to hand deliver those signatures.

Following the demonstration outside the office, 15 Walmart workers and supporters sat down in a cross section of the street in front of Walmart heir Alice Walton’s condo and took arrest. See some aerial views from the action below:

The workers were accompanied by union members and allies from the United Food and Commercial Workers (UFCW), AFSCME, AFT, Jobs with Justice, UNITE HERE, Restaurant Opportunities Centers United, Amalgamated Transit Union (ATU), UAW, United Steelworkers (USW), the Coalition of Black Trade Unionists and many others. 

See more tweets here and some photos from a similar action in New York City today:

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Reposted from AFL-CIO NOW

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Walker Says Minimum Wage Serves No Purpose

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Wisconsin Gov. Scott Walker (R) doesn’t believe the minimum wage “serves a purpose.” Yes, that’s what he told the Milwaukee Journal Sentinel editorial board Tuesday. It should come as no surprise then that Walker also opposes raising the federal minimum wage from the $7.25-an-hour level where it’s been stuck since 2009.

Wisconsin Gov. Scott Walker (R) doesn’t believe the minimum wage “serves a purpose.” Yes, that’s what he told the Milwaukee Journal Sentinel editorial board Tuesday. It should come as no surprise then that Walker also opposes raising the federal minimum wage from the $7.25-an-hour level where it’s been stuck since 2009.

For the 700,000 Wisconsin workers who earn less than living wages and would like to be able to support their families, Walker has some sound and sage advice. He says those workers in fast food and retail and other low-wage jobs just have to get better jobs. He suggests welding. Hand me my helmet and spot welder. Then beam yourself up, Scotty. Obviously you’re from another planet. Here’s proof.

Earlier this month, a group of low-wage workers filed a complaint with the state that the $7.25-an-hour minimum wage actually violates a state law that says the minimum wage must be a living wage.

According to the Walker administration, $7.25 an hour is a living wage. Who knew? This is what the state’sDepartment of Workforce Development said in rejecting the workers’ claim of poverty wages:

The department has determined that there is no reasonable cause to believe that the wages paid to the complainants are not a living wage.

You can’t make this stuff up.

The group Wisconsin Jobs Now said after that decision that Walker’s “political stance against raising minimum wage is one thing.”

But for the governor to brazenly say to the working families of Wisconsin that $7.25 an hour is enough to sustain themselves is not only misguided, it is incredibly ignorant and willfully obtuse.

We agree. So does Mary Burke who is running to unseat Walker. Burke, who supports increasing the minimum wage to $10.10 an hour, said the wage law does indeed serve a purpose.

It’s important that people who are working full-time are able to support themselves without government assistance. That’s just sort of common sense.

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Reposted from AFL-CIO NOW

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AFL-CIO Executive Vice President Tefere Gebre: ‘We Will Get $10.10, but It’s Not Enough’

Photo by Joe Kekeris/AFL-CIO

Workers across the country are using the symbolism of Oct. 10 to amplify the call for raising the federal minimum wage to $10.10.

AFL-CIO Executive Vice President Tefere Gebre commemorated the day by meeting with low-wage workers from the D.C. region who would be impacted by a minimum wage increase. Over lunch, the workers talked about what it’s like to raise their families on low pay and the challenges they face every day to make ends meet.

Here are two of their stories:

Fatmata, an immigrant from Saudi Arabia and mother of two, works at Walmart for $8 an hour. She used to dream of coming to America and providing a good life for her family, but her life doesn’t feel like the American dream. She cannot afford to feed her children without government assistance, and she frequently is forced to borrow money to pay for transportation to work and for rent. She doesn’t want to depend on outside assistance—she wants to be financially independent—but she has no choice. For Fatmata, a $2 an hour increase would be significant in many ways.

She’s asked her manager to make her full-time, but her hours vary from one week to the next, which is common practice throughout the retail industry. The United Food and Commercial Workers has strived for years to bring more attention to this problem, particularly at Walmart. This has led many Walmart employees to speak out and advocate for scheduling improvements and other workplace rights through the Our Walmart campaign.

Akofa is a taxi cab driver in Montgomery County, Md. Every day is a challenge. She’s raising three children on a single source of income. Her husband is sick and can no longer work, so she works long hours to make ends meet for her family. After deducting for gas, insurance, credit card fees and the daily expenses the cab company charges, Akofa barely takes any money home. She has no ability to save, and she struggles to even pay her rent. She described her daily life as “slavery, not work” and told Gebre, “Something is wrong if a job can’t feed you,” especially when you work more than 12 hours a day.

Akofa is grateful for the labor federation’s support and is joining her fellow drivers in organizing a union, which has already made a big difference in the way she has been treated by the cab company. A higher minimum wage would make life less burdensome, and give her and her co-workers more leverage in contract negotiations.

After hearing the workers’ stories, Gebre thanked them for having the courage to speak out. He reminded the workers that these struggles are not new, telling them, “There has been economic injustice throughout the history of our country…but it’s important to remember that things like slavery, sharecropping and child labor did not end because corporations came together and suddenly decided to. Workers came together to make the change, and the bravery of everyone here today gives me hope that it will change again.”

“The minimum wage will not be raised if politicians are not held accountable,” Gebre continued. But, as he reminded the room, a higher minimum wage is not enough. “Wages have been stagnant for a generation, and tens of millions of families live in economic insecurity. It will take political intervention to change the course of our nation, and it will take a wave of workers who are willing to stand up for their rights.”

Having heard the conviction in each of the workers’ voices and seen the look of determination in their eyes, Gebre told the room he was confident justice is coming. And, he said, it will arrive soon.

Stand with workers who want to raise the federal minimum wage and sign the petition. 

Reposted from AFL-CIO NOW

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