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Workers: The poor orphans of the US economic boom

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It is one of the contradictions of the US economic boom: the unemployment rate has fallen to the lowest level in six years, but workers’ wages have remained almost flat.

The anomaly is troubling enough that it has sparked questions about whether the economy’s rebound from the 2008-2009 recession is all that strong.

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“Why is wage growth so slow?” the Federal Reserve’s San Francisco branch asked in a research study Monday, calling the stubbornness of wages amid surging growth “unusual behavior”, economically speaking.

In theory, the sharp fall in the jobless rate from 10 percent in October 2009 to 5.8 percent today should have sparked firm rises in the pay for the average American worker. With the supply of available workers falling, they should be in the position of forcing employers to pay more.

But the reality is that paychecks have barely risen, measured against inflation.

“In real terms, wages have been about flat, growing less than labor productivity,” said Fed Chair Janet Yellen last August, and nothing has changed since then. In November the annual growth of wages was just 2.1 percent, compared to the 3.9 percent rise in 2007 before the crisis.

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According to the San Francisco Fed study, some 15 percent of Americans saw no wage gain in the year to November 2014, compared to 12 percent in 2007.

Even while celebrating the fall in the jobless rate, the White House itself pointed to the problem in December.

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– Longstanding challenges –

“There is more work to be done to further boost wage growth and address longer-standing challenges around both the quality of jobs and the growth of wages,” it said.

Indeed, in constant dollars the average hourly salary of $20.67 is barely higher than the $19.18 of 1964.

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The problem is worse for those workers on the lower ends of the pay scale. Since 2000, the 10 percent of workers on the bottom of the scale have seen their weekly paychecks shrink 3.7 percent when measured against inflation, according to a recent study by the Pew Research Center.

Those at the top of the scale of wage workers saw gains of 9.7 percent.

“For most US workers, real wages — that is, after inflation is taken into account — have been flat or even falling for decades,” said Pew’s Drew DeSilver.

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The one comforting aspect is that inflation remains weak, not eating away more of workers’ household purchasing power.

According to a number of experts, the contradiction of economic growth and stagnant wages exposes certain flaws in the jobs market.

“The labor market is much weaker than it appears to be just by looking at the unemployment rate,” said Kelly Ross, deputy director of the policy department at the AFL-CIO labor federation.

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– Waning union power –

The market is not as tight as the official jobless rate suggests. The official jobless numbers do not include the rise of people stuck in temporary jobs and those who have dropped out of the jobs market in discouragement.

The Economic Policy Institute in Washington estimates those would add another 5.7 million Americans to the official unemployed number of 9.1 million.

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The rise in the power of finance and capital in the US economy and the weakness of workers’ unions has also contributed to the problem, according to Ross.

“With the decline of unions, we don’t have the ability to translate higher profits into higher growth in wages,” he said.

A rise in the official federal minimum wage rate, stuck at the current level since 2009, could help push paychecks higher.

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But the administration of President Barack Obama has faced tough opposition to such a move in the Republican-dominated Congress.

An increase “would have a limited effect given the low minimum wage rate,” Ioana Marinescu, an economist at the University of Chicago, told AFP.

But a spark to wages could come from the strength of the economy and the rising optimism of employers about the future. According to Careerbuilder, the online job search site, 82 percent of businesses expect to raise wages this year, compared to 73 percent last year.

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“There is always a delay between the fall in unemployment and the rise in salaries, and it appears that this period of adjustment is near its end,” predicted Marinescu.

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Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.



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Why was Jeffrey Epstein buying size 5 women’s panties — while in jail?

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The Miami Herald has another bombshell report on Jeffrey Epstein, who died in a Manhattan jail while waiting to stand trial on federal sex crimes charges.

"A decade ago, during a brief stint in Palm Beach County Jail, convicted sex offender Jeffrey Epstein made an odd purchase at the facility’s store: two pairs of small women’s panties, size 5," the Herald reported Saturday night.

The newspaper noted, "the panties raise questions about why a childless male inmate, accused of sexually abusing girls as young as 14, would be allowed to buy female undergarments so small that they wouldn’t fit an average-sized adult woman."

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White nationalist Republican ridiculed after only 2 people show up for his town hall meeting

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Embattled Rep. Steve King (R-IA) suffered further humiliation on Saturday when only two people showed up for his town hall meeting with Iowa constituents.

King, who was stripped of all committee assignments for his white nationalism, was been an embarrassment for Republicans with his constant racism and misogyny.

A photo of the town hall meeting was posted on Twitter by Reuters photo editor Corinne Perkins.

https://twitter.com/corinne_perkins/status/1162806565109473280

Rep. King was quickly mocked in the comments.

Here's some of what people were saying:

https://twitter.com/sedespres/status/1162811223186006018

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2020 Election

Democrats could flip the Texas state house in 2020 — and reshape the national map

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Blue Texas? Democrats have long dreamt of winning Texas’s 38 electoral votes in the presidential election. That may still be a long shot, but a recent “Texodus” from Congress has given new talk to a political transformation across the Lone Star State that could have massive ramifications down the ballot and for decades to come.

This article was originally posted at Salon.

Four of the state’s GOP members of Congress have announced their retirements in recent weeks, an unusual torrent of departures signaling that a storm is coming. And evidence shows that it’s not just hitting Texas’s federal delegation. It’s coming to Austin, too.

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