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Economic growth not reaching middle- and lower wage earners

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Snapshot for January 28, 2004.

Economic growth not reaching middle- and lower wage earners

The lack of job growth over the current recovery has been amply documented (see EPI’s JobWatch.org for a detailed analysis of the job shortfall). Less well known is the toll that the persistently weak labor market is taking on the living standards of middle- and lower wage workers.

Change in real weekly earnings for full-time workers 25 years and older (2002q4-2003q4)

Each bar in the figure above represents the change in real weekly earnings of full-time workers age 25 and older, from the last quarter of 2002 to the last quarter of 2003. The trend reveals two notable facts: first, those in the middle of the earnings scale and below (at or below the 50th percentile) are losing ground—their weekly earnings were lower, after adjusting for inflation, at the end of 2003 than one year earlier. Second, the pattern of earnings changes is highly skewed: the losses are greatest for the lowest earners, while the weekly earnings of those at the top of the scale (the 90th percentile) grew by 1.1%. This pattern of earnings growth suggests that while the economy is expanding, the benefits of growth are flowing to those at the top of the wage scale.

Source: Bureau of Labor Statistics, “Usual Weekly Earnings of Wage and Salary Workers,” various issues.

This week’s snapshot was written by EPI economist Jared Bernstein.


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