The top charts of 2015

On some fronts, the economy is steadily recovering from the Great Recession. The unemployment rate is down, and the pace of monthly job growth is healing some of the damage inflicted by the downturn. But as EPI’s top charts of 2015 illustrate, the economy remains far from fully recovered—and is still failing ordinary Americans, who have endured decades of stagnant wages despite working more productively than ever.

But the charts also make clear that it doesn’t have to be this way. They show that policies that enhance low- and middle-income Americans’ economic leverage—such as keeping interest rates low, raising the minimum wage, making it easier for workers to bargain collectively, expanding access to overtime pay, and eliminating discriminatory practices that contribute to gender inequality—can go far toward creating an economy where prosperity is broadly shared.

1

Share of prime-age workers with a job hasn’t recovered from the recession: Employment-to-population ratio of workers age 25–54, 1989–2015

Employment-to-population ratio
Jan-1989 80.0%
Feb-1989 79.9
Mar-1989 79.9
Apr-1989 79.8
May-1989 79.8
Jun-1989 79.8
Jul-1989 79.8
Aug-1989 79.9
Sep-1989 80.0
Oct-1989 79.9
Nov-1989 80.2
Dec-1989 80.1
Jan-1990 80.2
Feb-1990 80.2
Mar-1990 80.1
Apr-1990 79.9
May-1990 79.9
Jun-1990 79.8
Jul-1990 79.6
Aug-1990 79.5
Sep-1990 79.4
Oct-1990 79.4
Nov-1990 79.2
Dec-1990 79.0
Jan-1991 78.9
Feb-1991 78.9
Mar-1991 78.7
Apr-1991 79.0
May-1991 78.6
Jun-1991 78.7
Jul-1991 78.6
Aug-1991 78.5
Sep-1991 78.6
Oct-1991 78.5
Nov-1991 78.4
Dec-1991 78.3
Jan-1992 78.4
Feb-1992 78.2
Mar-1992 78.2
Apr-1992 78.4
May-1992 78.4
Jun-1992 78.5
Jul-1992 78.4
Aug-1992 78.4
Sep-1992 78.3
Oct-1992 78.2
Nov-1992 78.2
Dec-1992 78.2
Jan-1993 78.2
Feb-1993 78.1
Mar-1993 78.2
Apr-1993 78.2
May-1993 78.5
Jun-1993 78.6
Jul-1993 78.6
Aug-1993 78.8
Sep-1993 78.6
Oct-1993 78.7
Nov-1993 79.0
Dec-1993 79.0
Jan-1994 78.9
Feb-1994 78.9
Mar-1994 78.9
Apr-1994 79.0
May-1994 79.2
Jun-1994 78.8
Jul-1994 79.1
Aug-1994 79.2
Sep-1994 79.6
Oct-1994 79.6
Nov-1994 79.8
Dec-1994 79.8
Jan-1995 79.7
Feb-1995 80.0
Mar-1995 79.9
Apr-1995 79.8
May-1995 79.7
Jun-1995 79.5
Jul-1995 79.7
Aug-1995 79.6
Sep-1995 79.8
Oct-1995 79.8
Nov-1995 79.7
Dec-1995 79.7
Jan-1996 79.8
Feb-1996 79.9
Mar-1996 79.9
Apr-1996 79.9
May-1996 80.0
Jun-1996 80.1
Jul-1996 80.4
Aug-1996 80.5
Sep-1996 80.4
Oct-1996 80.6
Nov-1996 80.5
Dec-1996 80.5
Jan-1997 80.5
Feb-1997 80.4
Mar-1997 80.6
Apr-1997 80.7
May-1997 80.6
Jun-1997 80.9
Jul-1997 81.1
Aug-1997 81.3
Sep-1997 81.1
Oct-1997 81.1
Nov-1997 81.0
Dec-1997 81.0
Jan-1998 81.0
Feb-1998 81.0
Mar-1998 81.0
Apr-1998 81.1
May-1998 81.0
Jun-1998 81.0
Jul-1998 81.1
Aug-1998 81.2
Sep-1998 81.3
Oct-1998 81.1
Nov-1998 81.2
Dec-1998 81.3
Jan-1999 81.8
Feb-1999 81.5
Mar-1999 81.3
Apr-1999 81.3
May-1999 81.4
Jun-1999 81.4
Jul-1999 81.2
Aug-1999 81.3
Sep-1999 81.3
Oct-1999 81.5
Nov-1999 81.6
Dec-1999 81.5
Jan-2000 81.8
Feb-2000 81.8
Mar-2000 81.7
Apr-2000 81.9
May-2000 81.5
Jun-2000 81.5
Jul-2000 81.3
Aug-2000 81.1
Sep-2000 81.1
Oct-2000 81.1
Nov-2000 81.3
Dec-2000 81.4
Jan-2001 81.4
Feb-2001 81.3
Mar-2001 81.3
Apr-2001 80.9
May-2001 80.8
Jun-2001 80.6
Jul-2001 80.5
Aug-2001 80.2
Sep-2001 80.2
Oct-2001 79.9
Nov-2001 79.7
Dec-2001 79.8
Jan-2002 79.6
Feb-2002 79.8
Mar-2002 79.6
Apr-2002 79.5
May-2002 79.4
Jun-2002 79.2
Jul-2002 79.1
Aug-2002 79.3
Sep-2002 79.4
Oct-2002 79.2
Nov-2002 78.8
Dec-2002 79.0
Jan-2003 78.9
Feb-2003 78.9
Mar-2003 79.0
Apr-2003 79.1
May-2003 78.9
Jun-2003 78.9
Jul-2003 78.8
Aug-2003 78.7
Sep-2003 78.6
Oct-2003 78.6
Nov-2003 78.7
Dec-2003 78.8
Jan-2004 78.9
Feb-2004 78.8
Mar-2004 78.7
Apr-2004 78.9
May-2004 79
Jun-2004 79.1
Jul-2004 79.2
Aug-2004 79
Sep-2004 79
Oct-2004 79
Nov-2004 79.1
Dec-2004 78.9
Jan-2005 79.2
Feb-2005 79.2
Mar-2005 79.2
Apr-2005 79.4
May-2005 79.5
Jun-2005 79.2
Jul-2005 79.4
Aug-2005 79.6
Sep-2005 79.4
Oct-2005 79.3
Nov-2005 79.2
Dec-2005 79.3
Jan-2006 79.6
Feb-2006 79.7
Mar-2006 79.8
Apr-2006 79.6
May-2006 79.7
Jun-2006 79.8
Jul-2006 79.8
Aug-2006 79.8
Sep-2006 79.9
Oct-2006 80.1
Nov-2006 80
Dec-2006 80.1
Jan-2007 80.3
Feb-2007 80.1
Mar-2007 80.2
Apr-2007 80
May-2007 80
Jun-2007 79.9
Jul-2007 79.8
Aug-2007 79.8
Sep-2007 79.7
Oct-2007 79.6
Nov-2007 79.7
Dec-2007 79.7
Jan-2008 80
Feb-2008 79.9
Mar-2008 79.8
Apr-2008 79.6
May-2008 79.5
Jun-2008 79.4
Jul-2008 79.2
Aug-2008 78.8
Sep-2008 78.8
Oct-2008 78.4
Nov-2008 78.1
Dec-2008 77.6
Jan-2009 77
Feb-2009 76.7
Mar-2009 76.2
Apr-2009 76.2
May-2009 75.9
Jun-2009 75.9
Jul-2009 75.8
Aug-2009 75.6
Sep-2009 75.1
Oct-2009 75
Nov-2009 75.2
Dec-2009 74.8
Jan-2010 75.1
Feb-2010 75.1
Mar-2010 75.1
Apr-2010 75.4
May-2010 75.1
Jun-2010 75.2
Jul-2010 75.1
Aug-2010 75
Sep-2010 75.1
Oct-2010 75
Nov-2010 74.8
Dec-2010 75
Jan-2011 75.2
Feb-2011 75.1
Mar-2011 75.3
Apr-2011 75.1
May-2011 75.2
Jun-2011 75
Jul-2011 75
Aug-2011 75.1
Sep-2011 74.9
Oct-2011 74.9
Nov-2011 75.3
Dec-2011 75.4
Jan-2012 75.6
Feb-2012 75.6
Mar-2012 75.7
Apr-2012 75.7
May-2012 75.7
Jun-2012 75.7
Jul-2012 75.6
Aug-2012 75.7
Sep-2012 75.9
Oct-2012 76
Nov-2012 75.8
Dec-2012 75.9
Jan-2013 75.7
Feb-2013 75.9
Mar-2013 75.9
Apr-2013 75.9
May-2013 76
Jun-2013 75.9
Jul-2013 76
Aug-2013 75.9
Sep-2013 75.9
Oct-2013 75.5
Nov-2013 76
Dec-2013 76.1
Jan-2014 76.5
Feb-2014 76.5
Mar-2014 76.6
Apr-2014 76.5
May-2014 76.4
Jun-2014 76.8
Jul-2014 76.6
Aug-2014 76.8
Sep-2014 76.8
Oct-2014 76.9
Nov-2014 76.9
Dec-2014 77
Jan-2015 77.2
Feb-2015 77.3
Mar-2015 77.2
Apr-2015 77.2
May-2015 77.2
Jun-2015 77.2
Jul-2015 77.1
Aug-2015 77.2
Sep-2015 77.2
Oct-2015 77.2
Nov-2015 77.4%
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Note: Shaded areas denote recessions.

Source: Adapted from Elise Gould, "What to Watch on Jobs Day: Job Growth Has Only Been Fast Enough to Keep Up with Population Growth," Working Economics (Economic Policy Institute blog), November 5, 2015

EPI analysis of Bureau of Labor Statistics Current Population Survey public data

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While the headline unemployment rate has fallen nearly to pre–Great Recession levels, other measures show much less progress. In particular, the share of 25- to 54-year-olds with a job is a crucial measure of how far from full recovery the economy truly is. From its peak before the Great Recession to its trough following the downturn, the share of 25- to 54-year-olds with a job fell 5.6 percentage points. Since then, it has clawed back less than half of this decline. It currently sits at 77.4 percent, 2.9 percentage points below its pre–Great Recession peak. Even more striking, this measure is a whopping 4.5 percentage points below the peak reached in 2000.

This provides strong evidence that the U.S. economy hasn’t yet achieved a full recovery from the Great Recession. It also illustrates that we’re far from the genuine full employment that prevailed in the late 1990s, which was the last time that nearly all American workers saw healthy wage increases. Until the labor market is tighter—in other words, until the share of Americans age 25–54 with a job has fully recovered—employers won’t need to pay higher wages to get and keep the workers they need.

2

The gap between what wages are, and what they would be in a healthy economy, is growing: Cumulative nominal average hourly earnings, actual and hypothetical had they grown 3.5% annually since the recession began, 2007–2015

Average hourly earnings of all private employees Hypothetical, assuming 3.5% growth* 
Jan-2007 $20.6000
Feb-2007 $20.6800
Mar-2007 $20.7700
Apr-2007 $20.8200
May-2007 $20.8800
Jun-2007 $21.0000
Jul-2007 $21.0000
Aug-2007 $21.0300
Sep-2007 $21.0800
Oct-2007 $21.1100
Nov-2007 $21.1500
Dec-2007 $21.2200 $21.2200
Jan-2008 $21.2400 $21.2809
Feb-2008 $21.3200 $21.3420
Mar-2008 $21.4100 $21.4033
Apr-2008 $21.4200 $21.4647
May-2008 $21.5100 $21.5264
Jun-2008 $21.5600 $21.5882
Jul-2008 $21.6300 $21.6501
Aug-2008 $21.7300 $21.7123
Sep-2008 $21.7600 $21.7746
Oct-2008 $21.8100 $21.8371
Nov-2008 $21.9200 $21.8998
Dec-2008 $21.9800 $21.9627
Jan-2009 $22.0000 $22.0258
Feb-2009 $22.0100 $22.0890
Mar-2009 $22.0800 $22.1524
Apr-2009 $22.1100 $22.2160
May-2009 $22.1200 $22.2798
Jun-2009 $22.1600 $22.3437
Jul-2009 $22.1900 $22.4079
Aug-2009 $22.2500 $22.4722
Sep-2009 $22.2700 $22.5367
Oct-2009 $22.3200 $22.6014
Nov-2009 $22.3700 $22.6663
Dec-2009 $22.3800 $22.7314
Jan-2010 $22.4300 $22.7967
Feb-2010 $22.4500 $22.8621
Mar-2010 $22.4700 $22.9277
Apr-2010 $22.5100 $22.9936
May-2010 $22.5500 $23.0596
Jun-2010 $22.5400 $23.1258
Jul-2010 $22.6000 $23.1922
Aug-2010 $22.6400 $23.2587
Sep-2010 $22.6800 $23.3255
Oct-2010 $22.7400 $23.3925
Nov-2010 $22.7400 $23.4596
Dec-2010 $22.7700 $23.5270
Jan-2011 $22.8600 $23.5945
Feb-2011 $22.8700 $23.6623
Mar-2011 $22.8900 $23.7302
Apr-2011 $22.9400 $23.7983
May-2011 $23.0000 $23.8667
Jun-2011 $23.0200 $23.9352
Jul-2011 $23.1100 $24.0039
Aug-2011 $23.0700 $24.0728
Sep-2011 $23.1200 $24.1419
Oct-2011 $23.2200 $24.2112
Nov-2011 $23.2000 $24.2807
Dec-2011 $23.2200 $24.3504
Jan-2012 $23.2600 $24.4203
Feb-2012 $23.3000 $24.4905
Mar-2012 $23.3700 $24.5608
Apr-2012 $23.4000 $24.6313
May-2012 $23.4200 $24.7020
Jun-2012 $23.4700 $24.7729
Jul-2012 $23.5200 $24.8440
Aug-2012 $23.4900 $24.9154
Sep-2012 $23.5800 $24.9869
Oct-2012 $23.5700 $25.0586
Nov-2012 $23.6400 $25.1306
Dec-2012 $23.7300 $25.2027
Jan-2013 $23.7600 $25.2751
Feb-2013 $23.7900 $25.3476
Mar-2013 $23.8200 $25.4204
Apr-2013 $23.8700 $25.4934
May-2013 $23.8900 $25.5666
Jun-2013 $23.9700 $25.6400
Jul-2013 $23.9700 $25.7136
Aug-2013 $24.0200 $25.7874
Sep-2013 $24.0600 $25.8614
Oct-2013 $24.1000 $25.9357
Nov-2013 $24.1700 $26.0101
Dec-2013 $24.1800 $26.0848
Jan-2014 $24.2200 $26.1597
Feb-2014 $24.3000 $26.2348
Mar-2014 $24.3400 $26.3101
Apr-2014 $24.3400 $26.3856
May-2014 $24.4000 $26.4614
Jun-2014 $24.4600 $26.5374
Jul-2014 $24.4700 $26.6135
Aug-2014 $24.5500 $26.6899
Sep-2014 $24.5500 $26.7666
Oct-2014 $24.5900 $26.8434
Nov-2014 $24.6800 $26.9205
Dec-2014 $24.6200 $26.9978
Jan-2015 $24.7600 $27.0753
Feb-2015 $24.7800 $27.1530
Mar-2015 $24.8500 $27.2310
Apr-2015 $24.8900 $27.3091
May-2015 $24.9500 $27.3875
Jun-2015 $24.9500 $27.4662
Jul-2015 $25.0100 $27.5450
Aug-2015 $25.1000 $27.6241
Sep-2015 $25.1200 $27.7034
Oct-2015 $25.2100 $27.7829
Nov-2015 $25.2500 $27.8627
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Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income

Source: Adapted from EPI's "Nominal Wage Tracker"

EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series

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Another measure that highlights the still-precarious state of the U.S. economy is the slow growth of nominal wages (wages unadjusted for inflation). Nominal wages of private-sector employees have only risen between 2 and 2.5 percent this year—and every other year since the recovery began. In a healthy economy, nominal wages should grow roughly 3.5 percent annually. Each year that wage growth misses this target just widens the gap that needs to be filled to restore wages to pre–Great Recession levels.

The deceleration of nominal wage growth—and the failure so far to reverse this trend—is the clearest sign that the American economy remains weak because it is still starved of aggregate demand (spending by households, businesses, and governments). It is thus the clearest signal that policymakers—particularly the Federal Reserve—should hold off on intentionally slowing economic growth in 2016.

3a

Workers’ pay is no longer rising along with productivity: Growth in economy-wide productivity and a typical worker’s hourly compensation, 1948–2014

Year Hourly compensation Net productivity 
1948  0.0% 0.0%
1949 6.3% 1.5%
1950 10.5% 9.3%
1951 11.8% 12.3%
1952 15.0% 15.6%
1953 20.8% 19.5%
1954 23.5% 21.6%
1955 28.7% 26.5%
1956 33.9% 26.7%
1957 37.1% 30.1%
1958 38.2% 32.8%
1959 42.5% 37.6%
1960 45.5% 40.0%
1961 48.0% 44.3%
1962 52.5% 49.8%
1963 55.0% 55.0%
1964 58.5% 60.0%
1965 62.5% 64.9%
1966 64.9% 70.0%
1967 66.9% 72.0%
1968 70.7% 77.2%
1969 74.7% 77.9%
1970 76.6% 80.4%
1971 82.0% 87.1%
1972 91.2% 92.0%
1973  91.3% 96.7%
1974 87.0% 93.7%
1975 86.8% 97.9%
1976 89.7% 103.4%
1977 93.1% 105.8%
1978 96.0% 107.8%
1979 93.4% 108.1%
1980 88.6% 106.6%
1981 87.6% 111.0%
1982 87.8% 107.9%
1983 88.3% 114.1%
1984 86.9% 119.7%
1985 86.3% 123.4%
1986 87.3% 128.0%
1987 84.6% 129.1%
1988 83.9% 131.8%
1989 83.7% 133.6%
1990 82.2% 137.0%
1991 81.9% 138.9%
1992 83.0% 147.5%
1993 83.4% 148.4%
1994 83.8% 150.7%
1995 82.7%  150.8%
1996 82.8% 156.9%
1997 84.8% 160.5%
1998 89.2% 165.7%
1999 91.9% 172.1%
2000 92.9% 178.5%
2001 95.6% 182.9% 
2002 99.5% 190.7%
2003 101.6% 200.2%
2004 101.0% 208.3%
2005 100.0% 213.6%
2006 100.2% 215.6%
2007 101.7% 217.8%
2008 101.8% 218.3%
2009 109.7% 224.9%
2010 111.5% 234.4%
2011 109.1% 234.8%
2012 107.3% 236.6%
2013 108.3% 236.9%
2014 109.0% 238.7% 
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Note: Data are for average hourly compensation of production/nonsupervisory workers in the private sector and net productivity of the total economy. "Net productivity" is the growth of output of goods and services minus depreciation per hour worked.

Source: Adapted from Figure A in Josh Bivens and Lawrence Mishel, Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s RealEPI Briefing Paper #406, September 2, 2015

Source: EPI analysis of data from the Bureau of Economic Analysis National Income and Produce Accounts and the Bureau of Labor Statistics Consumer Price Indexes and Labor Productivity and Costs programs

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Anemic wage growth is nothing new—American workers have had to contend with stagnant wages for decades. From 1973 to 2014, the hourly pay (wages and benefits) of typical workers increased only 9.2 percent over 41 years (after adjusting for inflation). Over this same period, net productivity (how much workers produce per hour) rose 72.2 percent. This means that although Americans are working more productively than ever, the fruits of their labors have primarily accrued to managers and executives at the top of the pay scale and to corporate profits. In contrast, for two-and-a-half decades beginning in the late 1940s, the pay of typical workers rose in tandem with productivity.

3b

Inequality explains 70% of the pay–productivity gap: Growth of productivity, real average compensation (consumer and producer), and real median compensation, 1973–2014

Year Median hourly compensation Consumer avg. hourly compensation Net productivity  Producer avg. hourly compensation
1973 0.0% 0.0% 0.0% 0.0%
1974 -2.0% -0.9% -1.6% 0.1%
1975 -0.5% 1.0% 0.6% 1.2%
1976 0.4% 2.8% 3.4% 3.1%
1977 1.3% 3.9% 4.6% 4.5%
1978 2.5% 5.0% 5.6% 5.4%
1979 1.9% 4.9% 5.8% 6.6%
1980 1.1% 4.1% 5.0% 7.9%
1981 -1.2% 4.5% 7.2% 8.6%
1982 0.5% 5.6% 5.7% 9.7%
1983 0.4% 5.8% 8.8% 10.0%
1984 0.7% 6.0% 11.7% 10.8%
1985 1.7% 7.7% 13.6% 12.6%
1986 3.8% 11.2% 15.9% 16.3%
1987 3.4% 11.9% 16.5% 18.1%
1988 2.7% 13.3% 17.8% 19.9%
1989 2.6% 12.1% 18.8% 19.1%
1990 2.6% 13.4% 20.4% 21.8%
1991 3.6% 14.6% 21.4% 23.4%
1992 5.2% 18.0% 25.8% 27.3%
1993 4.5% 17.1% 26.2% 26.5%
1994 2.4% 16.3% 27.4% 25.7%
1995 0.7% 15.7% 27.5% 25.6%
1996 -0.4% 17.1% 30.6% 28.0%
1997 1.4% 18.4% 32.4% 29.8%
1998 4.0% 22.7% 35.0% 34.7%
1999 7.1% 25.3% 38.3% 38.2%
2000 6.8% 29.1% 41.6% 43.8%
2001 9.6% 31.2% 43.8% 46.6%
2002 11.3% 32.5% 47.8% 47.9%
2003 13.3% 35.1% 52.6% 51.1%
2004 13.6% 37.7% 56.7% 53.9%
2005 12.5% 37.9% 59.4% 54.6%
2006 12.3% 38.7% 60.4% 56.1%
2007 11.0% 40.6% 61.5% 58.4%
2008 11.6% 39.3% 61.8% 59.8%
2009 14.0% 42.1% 65.1% 60.9%
2010 12.7% 42.6% 70.0% 61.9%
2011 9.6% 41.1% 70.2% 61.6%
2012 8.5% 41.6% 71.1% 62.4%
2013 9.6% 41.2% 71.2% 61.8%
2014 8.7%   42.5% 72.2% 63.3%  
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Note: Over 1973–2014, over half (58.9 percent) of the growth of the productivity–median compensation gap was due to increased compensation inequality, and about a tenth (11.5 percent) was due to a loss in labor’s income share—meaning that about 70 percent of the gap is attributable to inequality. All compensation data are in real terms. Data are for all workers. Net productivity is the growth of output of goods and services minus depreciation, per hour worked.

Source: Adapted from Figure C in Josh Bivens and Lawrence Mishel, Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s RealEPI Briefing Paper #406, September 2, 2015

EPI analysis of data from the Bureau of Economic Analysis National Income and Product Accounts, the Bureau of Labor Statistics Consumer Price Indexes and Labor Productivity and Costs program, and Current Population Survey Outgoing Rotation Group microdata

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The prosperity generated over the last four decades has failed to “trickle down” to the vast majority largely because policy choices have exacerbated inequality by allowing those with the most income, wealth, and power to capture these gains.

Indeed, more than 70 percent of the pay–productivity divergence over 1973–2014 can be explained by rising inequality. This inequality takes two forms: inequality within the pay structure, and the loss in workers’ share of income (in other words, income is increasingly going toward capital owners—for example, in the form of profits—instead of toward employee compensation). And since 2000, rising inequality explains more than 85 percent of the pay–productivity divergence.

For future productivity gains to lead to robust wage growth and widely shared prosperity, we need to institute policies that reconnect pay and productivity—such as those in EPI’s Agenda to Raise America’s Pay.

4

Had the minimum wage risen in line with productivity since 1968, it would be over $18: Real and nominal value of the federal minimum wage, and total economy productivity, 1938–2014

Real federal minimum wage (2014$) Projected under RTWA*  Productivity Projected Net Productivity  Nominal minimum wage Projected nominal minimum wage 
1938 $3.67  $       0.25
1939 $4.46  $       0.30
1940 $4.43  $       0.30
1941 $4.22  $       0.30
1942 $3.81  $       0.30
1943 $3.59  $       0.30
1944 $3.53  $       0.30
1945 $4.60  $       0.40
1946 $4.24  $       0.40
1947 $3.71  $       0.40
1948 $3.43 $5.39  $       0.40
1949 $3.48 $5.47  $       0.40
1950 $6.44 $5.89  $       0.75
1951 $5.97 $6.05  $       0.75
1952 $5.85 $6.23  $       0.75
1953 $5.81 $6.44  $       0.75
1954 $5.77 $6.55  $       0.75
1955 $5.79 $6.81  $       0.75
1956 $7.60 $6.82  $       1.00
1957 $7.36 $7.01  $       1.00
1958 $7.16 $7.15  $       1.00
1959 $7.11 $7.41  $       1.00
1960 $6.99 $7.54  $       1.00
1961 $7.96 $7.77  $       1.15
1962 $7.88 $8.07  $       1.15
1963 $8.45 $8.35  $       1.25
1964 $8.34 $8.62  $       1.25
1965 $8.21 $8.88  $       1.25
1966 $7.98 $9.16  $       1.25
1967 $8.67 $9.27  $       1.40
1968 $9.54 $9.54   $       1.60
1969 $9.13 $9.58  $       1.60
1970 $8.71 $9.71  $       1.60
1971 $8.35 $10.08  $       1.60
1972 $8.10 $10.34  $       1.60
1973 $7.62 $10.60  $       1.60
1974 $8.66 $10.43  $       2.00
1975 $8.40 $10.66  $       2.10
1976 $8.70 $10.96  $       2.30
1977 $8.18 $11.08  $       2.30
1978 $8.83 $11.19  $       2.65
1979 $8.81 $11.21  $       2.90
1980 $8.48 $11.12  $       3.10
1981 $8.37 $11.36  $       3.35
1982 $7.89 $11.20  $       3.35
1983 $7.57 $11.53  $       3.35
1984 $7.27 $11.83  $       3.35
1985 $7.03 $12.03  $       3.35
1986 $6.90 $12.28  $       3.35
1987 $6.68 $12.34  $       3.35
1988 $6.44 $12.48  $       3.35
1989 $6.18 $12.58  $       3.35
1990 $6.67 $12.76  $       3.80
1991 $7.20 $12.87  $       4.25
1992 $7.03 $13.33  $       4.25
1993 $6.86 $13.38  $       4.25
1994 $6.71 $13.50  $       4.25
1995 $6.56 $13.51  $       4.25
1996 $7.14 $13.84  $       4.75
1997 $7.57 $14.03  $       5.15
1998 $7.47 $14.31  $       5.15
1999 $7.32 $14.65  $       5.15
2000 $7.08 $15.00  $       5.15
2001 $6.89 $15.23  $       5.15
2002 $6.78 $15.66  $       5.15
2003 $6.63 $16.17  $       5.15
2004 $6.46 $16.60  $       5.15
2005 $6.25 $16.89  $       5.15
2006 $6.05 $17.00  $       5.15
2007 $6.68 $17.12  $       5.85
2008 $7.20 $17.15  $       6.55
2009 $8.00 $17.50  $       7.25
2010 $7.87 $18.01  $       7.25
2011 $7.63 $18.03  $       7.25
2012 $7.48 $18.15  $       7.25
2013 $7.37 $18.33  $       7.25
2014 $7.25 $18.42 $18.42  $       7.25  $       7.25
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Note: The productivity series is total economy productivity net depreciation, indexed to the 1968 real value of the minimum wage. Minimum-wage values are in 2014 dollars deflated by the CPI-U-RS. Projections for productivity growth use CBO Budget and Economic Outlook, 2015 to 2025.

Source: Adapted from Figure A in David Cooper, Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American WorkersEPI Briefing Paper #405, July 14, 2015

EPI analysis of Raise the Wage Act, Fair Labor Standards Act and amendments, Current Population Survey Outgoing Rotation Group microdata, unpublished Total Economy Productivity data from Bureau of Labor Statistics Labor Productivity and Costs program, and CBO Budget and Economic Outlook, 2015 to 2025

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One way to raise Americans’ wages is to increase the minimum wage. Today, a range of policy proposals to raise minimum wages at the federal, state, and local levels have proliferated. Many of them seem extraordinarily ambitious, but this is primarily because the economy has grown so unbalanced in recent decades. Had wage growth been equitable and strong in recent decades, today’s minimum wage would be far higher. For example, had the minimum wage kept pace with productivity gains after 1968, as it did from its enactment in 1938 to 1968, it would stand at $18.42 instead of $7.25. And had the minimum wage maintained its peak inflation-adjusted value (reached in 1968), it would be $9.54.

But unfortunately, wage growth hasn’t been distributed equitably in recent decades. This is because a multitude of policy decisions have sapped low- and moderate-wage workers’ power to bargain with their employers for higher pay. Restoring bargaining power to American workers will similarly require a range of policies. A good place to start is raising the federal minimum wage. In fact, increasing it to $12 by 2020 would boost wages for over 35 million workers—one-quarter of the American workforce.

5

States with the largest declines in collective bargaining have had slower pay growth: Median hourly compensation growth and change in state collective bargaining coverage, 1979–2012

States with the largest declines in collective bargaining have had slower pay growth: Median hourly compensation growth and change in state collective bargaining coverage, 1979–2012

Note: Excludes Alaska and the District of Columbia.

Source: Adapted from Figure B in David Cooper and Lawrence Mishel, The Erosion of Collective Bargaining Has Widened the Gap Between Productivity and Pay, EPI Report, January 6, 2015

EPI analysis of wage data from the Current Population Survey; compensation data from the Bureau of Economic Analysis, State/National Income and Product Accounts public data series; and collective bargaining data from the Current Population Survey

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Making it easier for workers to bargain collectively for higher pay is another way to raise Americans’ wages. Since 2010, Republican governors have attacked collective bargaining at the state level. These attacks are not just a narrow attack on unions—they are an ambitious attack on middle-class wages. And unfortunately, they have worked. States where collective bargaining has declined the fastest have seen the slowest growth (and in some cases, even declines) in median hourly compensation over 1979–2012. This illustrates why it’s crucial to restore and expand the right to collective bargaining—a key component of EPI’s Agenda to Raise America’s Pay.

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Expanding access to overtime pay could benefit over 9 million children: Number of fathers, mothers, and their children who would newly benefit from raising the overtime salary threshold to $933 per week from $455 per week, 2014

Newly covered under $933
Mothers 2,402,000
Fathers 2,219,000
Children (under age 18) 9,179,000
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Note: The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers.

Source: Adapted from Figure A in Ross Eisenbrey and Lawrence Mishel, Raising the Overtime Threshold Would Directly Benefit 13.5 Million Workers: Here Is a Breakdown of Who They AreEconomic Policy Institute Report, August 3, 2015

EPI analysis of Current Population Survey Outgoing Rotation Group microdata

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Making more Americans eligible for time-and-a-half overtime pay is yet another policy that will help working families get their fair share of economic growth. Earlier this year, new regulations from the Department of Labor proposed raising the overtime threshold—the salary level below which workers are automatically eligible for overtime pay—from less than $24,000 ($455 per week) to roughly $50,000 ($933 per week). This threshold had been changed only trivially since 1975, even as inflation eroded its effect. The rule change—which is expected to become law next year—will benefit approximately 13.5 million workers by making them newly eligible for overtime pay.

Because America’s workers are also America’s parents, this rule change could potentially raise living standards for more than 9 million children. This illustrates that policy decisions matter when it comes to American families’ wages—and that using policy to boost wages needs to be a top priority.

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CEOs make 300 times more than typical workers: CEO-to-worker compensation ratio, 1965–2014

Year CEO-to-worker compensation ratio
1965/01/01 20.0
1966/01/01 21.2
1967/01/01 22.4
1968/01/01 23.7
1969/01/01 23.4
1970/01/01 23.2
1971/01/01 22.9
1972/01/01 22.6
1973/01/01 22.3
1974/01/01 23.7
1975/01/01 25.1
1976/01/01 26.6
1977/01/01 28.2
1978/01/01 29.9
1979/01/01 31.8
1980/01/01 33.8
1981/01/01 35.9
1982/01/01 38.2
1983/01/01 40.6
1984/01/01 43.2
1985/01/01 45.9
1986/01/01 48.9
1987/01/01 51.9
1988/01/01 55.2
1989/01/01 58.7
1990/01/01 71.2
1991/01/01 86.2
1992/01/01 104.4
1993/01/01 111.8
1994/01/01 87.3
1995/01/01 122.6
1996/01/01 153.8
1997/01/01 233.0
1998/01/01 321.8
1999/01/01 286.7
2000/01/01 376.1
2001/01/01 214.2
2002/01/01 188.5
2003/01/01 227.5
2004/01/01 256.6
2005/01/01 308.0
2006/01/01 341.4
2007/01/01 345.3
2008/01/01 239.3
2009/01/01 195.8
2010/01/01 229.7
2011/01/01 235.5
2012/01/01 285.3
2013/01/01 303.1
2014/01/01 303.4

 

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Note: CEO annual compensation is computed using the "options realized" compensation series, which includes salary, bonus, restricted stock grants, options exercised, and long-term incentive payouts for CEOs at the top 350 U.S. firms ranked by sales.

Source: Adapted from Figure C in Lawrence Mishel and Alyssa Davis, Top CEOs Make 300 Times More than Typical Workers: Pay Growth Surpasses Stock Gains and Wage Growth of Top 0.1 PercentEPI Issue Brief #399, June 21, 2015

EPI analysis of data from Compustat's ExecuComp database, Current Employment Statistics program, and the Bureau of Economic Analysis NIPA tables

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In contrast to the vast majority of workers, CEOs have enjoyed extraordinary pay growth in recent decades. The gap between CEOs and typical workers has expanded enormously over the past 50 years. In 1965 CEOs made 20.0 times as much as typical workers. This ratio rose to 29.9 in 1979 and 58.7 in 1989—and now sits at 303.4. While this is down a bit from previous peaks in 2000 and 2007, CEO pay is recovering rapidly from the Great Recession.

There was perhaps a time when angst about CEO pay was largely symbolic. But CEOs now make so much—and set patterns of pay for other corporate managers and in other high-end labor markets (such as those in medicine and law, and in leadership positions in academia and large nonprofits)—that it is imperative that some competitive discipline be brought to CEO pay-setting. This would free up more income for the vast majority of workers whose pay has stagnated in recent decades.

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Eliminating the gender and inequality wage gap would raise women’s wages by more than 70%: Median hourly wages for men and women, compared with wages for all workers had they increased in tandem with productivity, 1979–2014

Wages for all workers Men’s wages Women’s wages Wages for all workers had they grown in tandem with productivity
1979 $16.00 $20.13 $12.61 $16.00
1980 $15.85 $19.83 $12.58 $15.88
1981 $15.43 $19.42 $12.47 $16.22
1982 $15.65 $19.27 $12.49 $15.98
1983 $15.57 $19.01 $12.65 $16.46
1984 $15.65 $18.92 $12.76 $16.89
1985 $15.79 $19.10 $12.82 $17.18
1986 $16.09 $19.64 $13.15 $17.53
1987 $16.10 $19.53 $13.49 $17.62
1988 $16.00 $19.16 $13.61 $17.82
1989 $15.91 $18.61 $13.60 $17.97
1990 $15.90 $18.32 $13.64 $18.22
1991 $16.00 $18.28 $13.70 $18.37
1992 $16.14 $18.13 $13.80 $19.03
1993 $16.02 $17.98 $13.96 $19.10
1994 $15.74 $17.66 $13.84 $19.28
1995 $15.62 $17.93 $13.75 $19.29
1996 $15.55 $17.81 $13.82 $19.75
1997 $15.92 $17.92 $14.16 $20.03
1998 $16.36 $18.56 $14.51 $20.43
1999 $16.87 $19.04 $14.64 $20.92
2000 $16.83 $19.16 $14.94 $21.41
2001 $17.18 $19.43 $15.26 $21.75
2002 $17.33 $19.52 $15.64 $22.36
2003 $17.54 $19.36 $15.68 $23.08
2004 $17.54 $19.13 $15.65 $23.70
2005 $17.33 $18.97 $15.54 $24.12
2006 $17.40 $18.93 $15.56 $24.26
2007 $17.26 $19.24 $15.69 $24.44
2008 $17.32 $19.13 $15.80 $24.48
2009 $17.61 $19.67 $16.07 $24.98
2010 $17.38 $19.16 $15.96 $25.71
2011 $16.91 $18.64 $15.67 $25.75
2012 $16.81 $18.60 $15.39 $25.88
2013 $16.97 $18.41 $15.35 $25.91
2014 $16.90  $18.35  $15.21   $26.04  
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Source: Reproduced from Figure G in Alyssa Davis and Elise Gould, Closing the Pay Gap and Beyond:
A Comprehensive Strategy for Improving Economic Security for Women and FamiliesEPI Briefing Paper #412, November 18, 2015

EPI analysis of unpublished Total Economy Productivity data from Bureau of Labor Statistics Labor Productivity and Costs program, wage data from the Current Population Survey Outgoing Rotation Group

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In recent decades, not only have most American women’s wages grown much slower than productivity, they have also remained considerably below men’s wages. Gender wage disparities are present at all wage levels and within education categories, occupations, and sectors—sometimes to a grave degree. If we had closed the gender wage gap and had wages for all workers grown in line with productivity over 1979–2014, the hourly wages of the median woman could be over 70 percent higher today—$26.04 instead of $15.21. This highlights the importance of ensuring gender wage parity and raising wages for all workers—the twin goals of EPI’s Women’s Economic Agenda.

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The share of prime-age women with a job has fared worse in the U.S. than in peer countries: Employment-to-population ratio of women workers age 25–54, select countries, 1995–2014

Canada Germany Japan United States
1995 69.434551% 66.360158% 63.233624% 72.189196%
1996 69.577146% 67.220440% 63.701741% 72.770073%
1997 70.971110% 67.399584% 64.566038% 73.541046%
1998 72.183646% 68.944387% 64.036077% 73.642970%
1999 73.245982% 70.253128% 63.551051% 74.147991%
2000 73.944309% 71.210539% 63.582090% 74.213847%
2001 74.297867% 71.607431% 64.124398% 73.421299%
2002 75.348504% 71.845950% 63.863976% 72.259684%
2003 76.000458% 71.981067% 64.407421% 72.006189%
2004 76.720415% 72.129055% 65.028791% 71.848458%
2005 76.488663% 70.969949% 65.733178% 71.963537%
2006 76.984912% 72.647765% 66.614235% 72.504467%
2007 78.190906% 74.045933% 67.370518% 72.501768%
2008 78.008148% 74.744854% 67.495987% 72.301570%
2009 77.114622% 75.420875% 67.595960% 70.208609%
2010 77.075022% 76.320711% 68.157788% 69.343654%
2011 77.207691% 77.892216% 68.459240% 68.967922%
2012 77.710148% 78.235789% 69.161920% 69.196894%
2013 78.090883% 78.625264% 70.773639% 69.253713%
2014 77.444969% 78.839200% 71.835052% 69.997790%
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Source: EPI analysis of OECD Labour Force Statistics

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Another sign the economy is failing many American women is that in recent years, the share of 25- to 54-year-old women with a job has fared worse in the United States than in peer countries. In 1995, this share was higher in America than in almost any other wealthy country. Since then (and particularly since the tight labor markets of the late 1990s faded away), this advantage has been decisively lost. Since 2000 this share has declined substantially in the United States—while it has risen significantly in Japan, Germany, and Canada.

Given that American families rely enormously on income earned by women from working, raising the share of women who are employed should be a policy priority. An obvious policy that would help working families—and disproportionately benefit women—would be a major national investment in early childhood care and education. This would make it easier for women to balance work and family.

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Achievement gaps rooted in socioeconomic status exist when children enter kindergarten: Reading and math achievement at the beginning of kindergarten, second through fifth socioeconomic quintiles as compared with lowest quintile

Reading

Unadjusted (M1S) 
Low-middle SES 0.269***(0.032)
Middle SES 0.489***(0.034)
High-middle SES 0.739***(0.037)
High SES 0.996***(0.039)
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Math

Unadjusted (M1S) 
Low-middle SES 0.240***(0.032)
Middle SES 0.504***(0.035)
High-middle SES 0.710***(0.036)
High SES 0.957***(0.039)
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Note: SES refers to socioeconomic status. Bars show the unadjusted standard deviation score for each socioeconomic group, relative to low-SES children.

Source: Adapted from Figure D1 in Emma Garcia, Inequalities at the Starting Gate: Cognitive and Noncognitive Skills Gaps Between 2010–2011 Kindergarten Classmates, Economic Policy Institute Report, June 17, 2015

EPI analysis of ECLS-K, Kindergarten Class of 2010–2011 (National Center for Education Statistics)

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Economic inequality leads to education inequalities. The large achievement gaps documented throughout children’s school trajectories don’t originate in school—rather, they are rooted in children’s socioeconomic status (SES). Indeed, performance gaps in reading and math are apparent when children enter kindergarten—and performance is closely associated with, and rises along with, SES. In fact, children in the highest socioeconomic fifth have reading and math scores that are significantly higher (by a full standard deviation) than those of their peers in the lowest SES fifth.

This illustrates the need to weaken the link between inequality and education, and to ensure that all children are prepared for kindergarten. This will require not only expanding access to high-quality early education programs, but also pursuing policies to reduce economic disparities.