The United States Leads in Low-Wage Work and the Lowest Wages for Low-Wage Workers

Fast-food workers across the country are on strike today, as a way of demanding higher wages and calling attention to the extremely low wages of low-wage workers. As Elise Gould shows in her recent paper, Why America’s Workers Need Faster Wage Growth—And What We Can Do About It, the wages of low-wage workers (the 10th percentile of wage earners) declined by five percent over the 1979-2013 period, despite a generation of productivity gains (64.9 percent).

Low-wage workers in the United States also fare very poorly by international standards, as the OECD’s recent Employment Outlook report reminds us. In the United States, according to the OECD, 25.3 percent of workers had “low-pay”—earning less than two-thirds of the median wage—which was the highest incidence of low-pay work among the twenty-six countries surveyed and far higher than the OECD average of 16.3 percent. In fact, as the figure below shows, low-wage workers fare worse in the United States than any other OECD nation. Low-wage workers earned just 46.7 percent of that of the median worker—far beneath the OECD average of 59.9 percent in 2012. To catch up to the OECD average, U.S. low wage workers would need a 28 percent wage boost.

  • radwriter

    With worker productivity having been systematically stolen for about 40 years, it’s no wonder that almost all Americans are paid far lower than everywhere else. Had worker incomes continued to keep pace with productivity and cost of living, most Americans would be getting about 80% more than they currently are. The accumulated cost to demand runs into the tens of trillions of dollars.

    Talk of increasing the minimum wage to $10.10 is spectacularly disgraceful. It should be somewhere between $18 and $22.

    • dajobr

      not only are wages not keeping pace with productivity for those lucky enough to still be employed, but they are using productivity gains to fire people because they dont need as many working, and then using competition for jobs to make wages even lower

    • Eric377

      My sense is that people making the minimum or even a bit more than the minimum but still a low wage have to get a lot more aggressive with themselves about what they are offering prospective employers. As far as productivity goes, the increased use of, and improvements to, value analyses is diminishing what might have been the old notions that aggregate productivity increases impact wage levels across the board. Productivity went up X% but now there are people and systems whose specific job it is to say “and your contribution to that was Y%”. I have been one of those people and my experience has been that one pretty good way to make X% a high percent is to find ways to eliminate the need for skilled human labor in the productive activity. It can be depressing work if you understand that that skilled human labor is never going to be used again, which is often the case.

      • A Kaleberg

        This is a silly analysis. Basically, the guys who set the salaries declared that they wanted everything, the wage increases, the pensions, the hours, complete control of the workers’ time, control of the workers’ politics and so on. If the workers protested, they were summarily fired. If the workers went on strike, the government helped break the union.
        It’s all about political power.

  • greg scott

    When the beast known as government eats up a bigger chunk of the economies production every year, there is less and less for those at the bottom.

    • Celia

      Actually in the countries above who have more for ‘those at the bottom’, there are higher taxes. It’s not about taxes, it’s about corporate greed.

    • skayjo

      It is not government that is eating up a bigger chunk of the economies production every year, it is the shareholders and upper management that refuse to share the increase in production with the workers of the country. Only in the robber baron days did the wealthy and powerful steal from the productive members of society in the manner being done today. This must change.

      • greg scott

        Shareholders and upper management don’t steal from their customers at gunpoint and don’t deficit spend over 1 trillion a year.
        I agree corporations are part of the problem though but only because they co-opt government into doing their bidding. The rich always use government to their advantage as they can afford to buy control of it.

    • SuperTech86

      Actually labors share of the national income has been in steady decline for the last 40 years while U.S household debt increased from the 50 year average of about 55% of GDP to 100% in 2008.

      The capitalists at the top are grabbing a larger share of the “economic pie” which is going to profits. There are tons of books and studies out there on the negative effects of financialization and the lack of ideology adopted by corporate governance in the U.S where large firms bear no social responsibility

      The speculative based U.S financial sector is also too large and it’s not only suppresses labor wages but it competes for the same resources as the real economy..

  • todd Cronister

    There is enough in world for everybody. But there is not enough in the world for one mans greed. America is suffering from globalization. American corporations that owe their success from american workers are greedy. They take our jobs oversea to third world countries were they have no social or environmental responsibly and exploit these people who have no human rights. We have to compete with a 10 year old living in a sweat shop make 25 cents a day. We dont penalize these businesses because they run our government. We dont penalize these countries because we barrow money from them. Welcome to the Plutocracy of the United States of Serfdom. I say we all stop playing nice and run them out before we all have to speak Chinese.