Commentary | Economic Growth

For America’s workers, recession is not the only problem

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If the current recession ends with a return to the way things were, working families won’t have much to celebrate. Although the United States had a long expansion cycle that ran from 2001 to 2007 marked by strong gains in productivity and corporate profits, pay for the average worker actually declined.
The State of Working America 2008/2009 outlines the weak wage patterns and other trends in jobs and living standards that left so many American families treading water long before the recession began.
“Even before the perfect storm hit Wall Street, housing, and the banks, the economy was already broken for workers,” said Lawrence Mishel, EPI’s president and the book’s lead author. “That means our challenge won’t end when the recession does. Unless we fix our broken economy so that it will start to provide fair value for work again, working families will keep losing ground.” A recent Washington Post story echoed those concerns and said that while the country was eager for an economic recovery, new jobs remained the missing ingredient. The story said that a lack of new jobs could result in increased poverty and Black and Latino unemployment rates approaching 20% after the recession officially ends. It quoted Mishel saying there was still “a ton of pain in the pipeline.”
The State of Working America is a comprehensive look at the U.S. labor market and trends in income and employment levels, wages, poverty, and healthcare, which is published every other year by EPI and Cornell University Press. Some of the key findings in the 2008/2009 edition include:
–About 91% of all the income growth in the United States between 1979 and 2006 went to the top 10% of income earners. That left just 9% to be shared among the remaining 90% of workers.
–While worker output surged, pay trailed. Compensation has traditionally risen in sync with productivity gains, but during the 1970s, compensation gains started to lag productivity gains. That gap has widened dramatically in recent years as productivity kept climbing and wage growth stagnated.
–The gap between CEO and worker pay widened. In 1973, the average CEO was paid $27 for every dollar paid to a typical worker. In 2007, that ration was $275 to $1.
–Hourly pay for young college graduates declined between 2000 and 2007. Men in this category earned $.69 less per hour than in 2000 and women earned $.32 less per hour, even though the economy was in expansion mode and corporate profits were growing.
–Job growth in the latest cycle was dramatically slower than during past cycles. In previous periods of expansion, job growth averaged 1.8% per year, but between 2000 and 2007, it grew at an average annual rate of just 0.6%.
–Among 19 peer nations, the United States scored last in infant mortality, with 6.9 deaths per 1,000 live births.
–Four out of every 10 adult Americans forgo needed health care due to costs. Among those with below-average incomes, the portion was close to six out of 10.