Wage inequality continued to increase in 2020: Top 1.0% of earners see wages up 179% since 1979 while share of wages for bottom 90% hits new low
Key numbers:
- In 2020, annual wages rose fastest for the top 1.0% of earners (up 7.3%) and top 0.1% (up 9.9%) while those in the bottom 90% saw wages grow by just 1.7%.
- The top 1.0% earned 13.8% of all wages in 2020, up from 7.3% in 1979.
- The bottom 90% received just 60.2% of all wages in 2020, the lowest share since data began in 1937 and far lower than the 69.8% share in 1979.
- Over the 1979–2020 period:
- Wages for the top 1.0% and top 0.1% skyrocketed by 179.3% and 389.1%, respectively.
- Wages for the bottom 90% grew just 28.2%.
Newly available wage data from the Social Security Administration allow us to analyze wage trends for the top 1.0% and other very high earners as well as for the bottom 90% during 2020. The upward distribution of wages from the bottom 90% to the top 1.0% that was evident over the period from 1979 to 2019 was especially strong in the 2020 pandemic year, yielding historically high wage levels and shares of all wages for the top 1.0% and 0.1%. Correspondingly, the share of wages earned by the bottom 95% fell in 2020.
Job openings rose and quits fell in Job Openings and Labor Turnover Survey for October
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for October. Read the full Twitter thread here.
Job openings increased to 11.0 million in October, just below the series high of 11.1 million in July. The job openings rate also increased to 6.9%, just below the series high of 7.0% in July. The largest increase in job openings in October was in accommodation and food services. pic.twitter.com/bWRUJCovOJ
— Elise Gould (@eliselgould) December 8, 2021
With the increase in job openings in accommodations and food services in October, hires also ticked up while quits ticked down. The public sector saw an uptick in hiring in October, while job openings fell and quits were unchanged.
— Elise Gould (@eliselgould) December 8, 2021
State attorney general addresses extreme underpayment of immigrant detainees: A snapshot of state and local enforcement actions to protect workers
Series: The New Labor Law Enforcers
State attorneys general, district attorneys, and localities like cities are increasingly key players in protecting workers’ rights. This new series by Terri Gerstein provides snapshots of enforcement and other actions to protect workers’ rights by these new and emerging labor law enforcers at the state and local level. Gerstein is an EPI senior fellow and director of the state and local enforcement project at the Harvard Labor and Worklife Program, who has chronicled the growing influence of these new enforcers.
Recent cases brought by state and local enforcers address a host of violations. These include extreme underpayment of immigrant detainees; failure to pay overtime or provide paid sick leave to home health aides; unsafe working conditions at Amazon; failure to provide hotel workers with advance notice of a jobsite closure; and underpayment of construction workers on a public university building. State and local enforcers also weighed in on federal policy issues, sending a letter to the Department of Homeland Security (DHS) about how DHS enforcement could facilitate labor protections, and announcing the resolution of a lawsuit challenging a Trump-era rule weakening tipped workers’ rights.
Here’s a snapshot of some enforcement actions across the country:
Protecting the labor rights of immigrant detainees in Washington: The Washington State Attorney General’s Office in late October obtained a unanimous federal jury verdict determining that GEO Group, a for-profit prison company, violated state minimum wage laws by paying immigrant detainees as little as $1/day. The company owes workers over $17 million in back wages, plus $5.9 million in unjust enrichment restitution, for a total exceeding $23 million.
Ensuring paid sick leave and overtime pay for 12,000 home health aides in New York: On November 16, the New York State Attorney General and the New York City Department of Consumer and Worker Protection jointly announced an agreement resulting in recovery of up to $18 million for 12,000 home health aides. The case involved two large home health agencies that underpaid workers and failed to provide required paid sick leave. The agencies were jointly owned and operated as a single enterprise but failed to combine all hours worked (for both agencies) for purposes of calculating overtime pay.
Ensuring that Amazon notifies workers and public health agencies of COVID-19 cases in California: The California State Attorney General on November 15 announced a stipulated judgment with Amazon, based on the AG’s complaint alleging that the company failed to notify warehouse workers and local health agencies of COVID-19 case numbers. The judgment requires Amazon to modify its notifications to workers and local health agencies, submit to monitoring about these practices, and pay $500,000.
Recovering restitution for New York hotel workers laid off without required warning: On October 27, the New York State Attorney General announced the recovery of $2.7 million for 250 Westchester hotel workers who were laid off without the notice required by the state’s Worker Adjustment and Retaining Act (WARN Act), which requires employers with 50 or more employees to give 90 days of notice to workers and to the state labor department before a mass layoff.
Criminally prosecuting wage theft in Maryland: On November 5, the Maryland Attorney General announced the guilty plea of a labor broker in the office’s first criminal labor case. Workers performed public construction on a state university building and the payroll records appeared to be compliant with prevailing wage laws. But in reality, workers were required to kick back money to the labor broker each week. (Prevailing wage laws require contractors on government construction projects to pay workers on those projects at a rate higher than minimum wage, specifically, the wage and benefits that are commonly paid in the region for a given type of work. These laws ensure that contractors cannot gain an unfair advantage in bidding for government contracts by paying sub-par wages.)
Advocating for workers in federal policy: On November 15, a coalition of 11 attorneys general and eight local labor enforcement agencies and prosecutors sent a letter to the Department of Homeland Security (DHS) supporting the agency’s plan to change its approach to worksite enforcement to support labor rights, and recommending changes to DHS policies and practices to facilitate the ability of state and local labor officials to enforce workplace laws. The letter was in response to a recent DHS memorandum to Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and U.S. Citizenship and Immigration Services (USCIS) calling on them to adopt practices and policies to deliver more severe consequences to exploitative employers and increase workers’ willingness to report violations of worker protection laws.
Lastly, on November 16, the attorneys general of Pennsylvania and Illinois announced the stipulated dismissal of a lawsuit filed by a multi-state attorney general coalition against the U.S. Department of Labor challenging a Trump-era rule that would have allowed employers to pay workers a lower “tipped” minimum wage for significant time spent doing non-tipped work. A new Biden administration regulation adopts the 80/20 rule, under which workers can be paid the tipped minimum wage only for tasks that directly support tipped work and take up no more than 20% of a worker’s time. In other words, the new regulation allows payment of the lower tipped wage only when the vast majority of their work generates tips. The new regulation removes the need for the attorney general lawsuit challenging the prior rule.
Jobs report tells two different stories of the November labor market
Below, EPI economists offer their initial insights on the November jobs report released this morning.
From EPI senior economist, Elise Gould (@eliselgould):
Read the full Twitter thread here.
Even with the weaker than expected November payroll numbers, job growth so far has already topped 6.1 million for 2021. As long as Nov is a blip, the 2021 average rate of 555,000 per month still means we are on track for a full recovery by the end of 2022.https://t.co/FqVVDDfXEN
— Elise Gould (@eliselgould) December 3, 2021
What to watch on jobs day: 2021 job growth on pace to exceed 6 million jobs by November
Job growth will likely top 6 million this year by November, putting us well on track for a full recovery by the end of 2022. Ahead of Friday’s release of the jobs report, I want to put the pace of this recovery in perspective compared with the much slower recovery from the Great Recession. Spoiler: If we continue with the average job growth we’ve seen already in 2021—581,600 per month—we would return to pre-pandemic labor market conditions by December 2022 (while also absorbing population growth). This job growth would be at a pace more than twice as fast as the strongest 10-month period in the recovery from the Great Recession (4.9% job growth versus 2.3%).
In October, job growth was 531,000. Even with the slower job growth in late summer due to the Delta-driven five-fold increase in caseloads, the overall pace of the recovery is promising. Back in June, my colleague Josh Bivens and I wrote that restoring pre-COVID labor market health by the end of 2022 would require creating 504,000 jobs each month from May 2021 until December 2022. In 2021 so far, job growth has averaged 581,600 jobs, and it’s been an even greater 665,500 jobs per month since May.
State and local enforcers standing up to protect workers: Misclassifying workers ‘a pattern of deceit’
Series: The New Labor Law Enforcers
State attorneys general, district attorneys, and localities like cities are increasingly key players in protecting workers’ rights. This new series by Terri Gerstein provides snapshots of enforcement and other actions to protect workers’ rights by these new and emerging labor law enforcers at the state and local level. Gerstein is an EPI senior fellow and director of the state and local enforcement project at the Harvard Labor and Worklife Program, who has chronicled the growing influence of these new enforcers.
Recent cases brought by state and local enforcers include a host of violations: construction companies engaging in “a pattern of deceit” to misclassify and underpay workers; unsafe working conditions at Amazon; failure to provide paid sick leave; and the chronic problem of employers misusing interns and not paying for their work.
Here’s an snapshot of some enforcement actions across the country:
Up to 390,000 federal contractors will benefit from a $15 minimum wage starting in January
Below, EPI economist Ben Zipperer responds to the U.S. Department of Labor’s final rule requiring federal contractors to pay a minimum wage of $15 per hour starting January 30, 2022. Zipperer estimates the rule will benefit up to 390,000 federal contractors, half of whom are Black or Hispanic.
States are choosing employers over workers by using COVID relief funds to pay off unemployment insurance debt: Policymakers shouldn’t be afraid to increase taxes on employers to improve unemployment insurance
Because the COVID-19 pandemic and ensuing recession led to skyrocketing unemployment rates in early 2020, 23 states were forced to take out federal loans to continue paying out unemployment insurance (UI) benefits. While interest was initially waived on these loans, these debts started to collect interest after Labor Day of 2021. In recent months, many states have chosen to use federal fiscal relief funds given to state and local governments by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the 2021 American Rescue Plan (ARP) to pay off accumulated UI trust fund debt.
This blog will detail why this is a poor use of federal recovery funds. Our main arguments are:
- Paying off UI trust fund debt accumulated in the past with fiscal relief funds means that these funds are not being used to support current investment or employment,
- Several key areas of state and local government investment have been deprived of funding for over a decade—using ARP relief funds to make up for this past investment deficit would spread the benefits of the fiscal aid much more broadly.
- State and local government employment remains steeply depressed from the COVID-19 economic shock. Restoring these jobs—and the full value of services these workers provided—should be a much higher priority for these governments than paying off UI debt.
- Paying down accumulated trust fund debts should be done by collecting more revenues from the employer payroll taxes earmarked for the UI system. These taxes have been kept far too low for too long and the result has been a dysfunctional UI system in many states.
The Post Office at a crossroads
Politics and special interests, not economic constraints, are what’s keeping the U.S. Postal Service from becoming a hub for affordable banking and other valuable community services in the 21st century. But we’ll need a new regulatory structure and new leadership to move forward.
USPS has a public service mandate to provide a similar level of service to communities across the country regardless of local economic conditions. In addition to daily mail delivery to far-flung locations, the Postal Service maintains post offices even in low-income urban neighborhoods and small towns that lack other basic services. The Postal Service is able to fulfill its mission while keeping postage rates low due to economies of scale.
Once the fixed costs of post offices and delivery are covered, the additional cost of new services is often minimal. If it weren’t prevented from doing so, the Postal Service could take advantage of underused capacity and build on Americans’ trust in the Postal Service to offer new services to the public while bringing needed revenue to the agency. But first we need to jettison a regulatory framework that protects private-sector rivals at the expense of consumers.
Fiscal policy and inflation: A look at the American Rescue Plan’s impact and what it means for the Build Back Better Act
Inflation has jumped up beyond what many expected earlier in this year. While there are plenty of good reasons to think it will begin decelerating by early 2022 and settle into more normal ranges rather than continuing to spiral upward, it has already proven more stubborn than many (well, at least I) expected.
This raises two key questions: Does rising inflation mean critics of the American Rescue Plan (ARP) have been vindicated, as is often claimed lately? And does this mean that the Build Back Better Act (BBBA) currently being debate should be shelved and/or radically trimmed down in size?
The respective answers to these questions are “mostly not” and “absolutely not.”