In August of 2011, President Obama signed the Budget Control Act. It was as part of a deal to end a crisis Republicans manufactured the month before when they threatened to shut down the government if Democrats did not agree to future spending cuts. The law mandated sequestration and imposed strict fiscal controls at a moment when the economy still needed economic stimulus. Sequestration, which capped the discretionary portions of the federal budgets, further slowed the recovery and constrained the Obama administration’s ability to influence the economy. “The recovery since 2009 has been historically slow, and the disappointing pace can be explained almost entirely by the fiscal austerity imposed by the Republicans in Congress,” the Economic Policy Institute’s Josh Bivens said in 2016. “To be blunt, if public spending since the Great Recession had followed the path it took during the recovery presided over by Ronald Reagan in the early 1980s, the U.S. economy would have been fully healed for years now.”
The faster growth at the bottom is probably being fueled in part by recent minimum-wage increases in cities and states across the country. Research from the Economic Policy Institute, a liberal-leaning think tank, found that over the past five years, wages for low-wage workers rose 13 percent in states that raised their minimum wages, compared with 8.4 percent in states that did not.
Despite the possibility of last-minute spending, 40 percent of Americans are unable to afford a $400 emergency, while wages remain close to stagnant for most people, even as those at the top continue to see gains. Recent analysis from the Economic Policy Institute shows that labor income for the bottom 90 percent has shrunk by more than 10 percent since 1979—translating to about $10,800 of lost pay per household. With little sign of bipartisan cooperation on pro-worker policies, a tight labor market is the primary force that most workers can expect to reverse this trend in the coming year.
Companies were required to report median employee compensation for the first time last year, thanks to newly enacted Dodd-Frank rules, which were implemented as part of an overhaul of the consumer finance system following Wall Street’s financial crisis (the rule was adopted in 2015 and went into effect in 2017). So authoritative pay-ratio data, over time, is limited. However, the nonprofit think tank Economic Policy Institute (EPI), in a smaller analysis of the top 350 US companies, estimates that the ratio of CEO pay to that of a typical employee was more like 15 to 1 in 1965. The ratio among that grouping rose to 221 to 1 in 2017. (The disparity between this and the Equilar data has to do with sample size as well as methodology.)
Early in the morning on Nov. 26, 2018, Dave Green, the president of Local 1112 of the United Auto Workers, which represents workers at a General Motors plant in Lordstown, Ohio, received a call from the plant’s personnel director. Green needed to be at the plant at 9 a.m. for a meeting. The personnel director rarely called Green, and when he did, it was almost always bad news. Green got into his car — a silver Chevy Cruze — and sped toward the hulking 6.2-million-square-foot factory, which had manufactured nearly two million Cruzes since the car was introduced in 2011.
Some progressive economists dispute the estimate, however. Robert Scott, of the liberal Economic Policy Institute, which receives some labor union funding, questioned the report’s assumptions that new protections for Mexican workers would both come to fruition and produce the projected gains for U.S. workers.
Wages actually fell two percent, adjusted for inflation, from December 2017 to December 2018, reports the Economic Policy Institute. But it would have been fruitless to wait for the promised largesse. The Communications Workers of America made a gallant effort to get commitments for corporations to pass on the tax savings to their workers, to no avail, the Center For Public Integrity reports:
In addition, national assessments about the graying of the American workforce typically marginalize the staggering impact aging has on the livelihood of women of color workers. According to the AARP, age discrimination-related EEO complaints filed by African Americans have dramatically increased since the 1990s. Once Black women hit their fifties, they are at greater risk for job insecurity, career stagnation, unemployment, health challenges, bankruptcy, eviction, and homelessness. Older Black women who have spent most of their lives as sole or primary breadwinners (an estimated 80% according to the Economic Policy Institute) are also more likely to be saddled with caring for multiple generations, making retirement an elusive fantasy.
“You’re not going to solve the opioid crisis through minimum wage increases,” said David Cooper, an analyst at the Economic Policy Institute. “It’s not a silver bullet.”
“Minimum wage workers are falling further and further behind,” said Ben Zipperer, an economist at the Economic Policy Institute, a nonpartisan think tank focused on low to middle-income workers that is based in Washington, D.C. “Minimum wage increases have been too infrequent and not large enough in order to keep pace with the rest of the economy.”