Economic Snapshot | Raising America's Pay

Pay Is Stagnant for Vast Majority, Even When You Include Benefits

Raising America's Pay

A newly released Bureau of Labor Statistics research paper by Kristen Monaco and Brooks Pierce provides important new data analysis of wage and compensation trends over the 2007–2014 period, updating earlier analyses by Pierce. This study draws on data from the Employer Costs for Employee Compensation (ECEC), an employer survey that provides detailed information on wage and benefits.

Economic Snapshot

Pay Is Stagnant for Vast Majority, Even When You Include Benefits: Percent change in real hourly compensation and wages for civilian workers, by percentile, 2007–2014

Percentile Wage Compensation
5 -0.33 -2.21
10 -3.43 -4.6
20 -5.73 -7.42
30 -5.2 -6.28
40 -4.68 -4.56
50 -3.84 -2.84
60 -3.19 -1.13
70 -2.86 -0.95
80 -2.69 -0.04
90 0.58 4.9
95 1.65 3.72
98 1.96 5.18
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Source: EPI analysis of Monaco and Pierce (2015)

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Their bottom-line results in the figure above show the growth of both hourly compensation (all wages and benefits, but excluding payroll taxes) and wages (straight-time wages plus shift pay and other wage premiums) from 2007 to 2014 for all civilian workers. Their analysis confirms that there has been very broad-based stagnant pay whether one examines just wages or a more comprehensive compensation measure that also incorporates changes in health, pension, and other benefits. The bottom 80 percent of workers had stagnant or declining hourly compensation while the bottom 88 percent of workers had stagnant or declining wages. Monaco and Pierce’s research provides an additional rebuttal to Columbia University’s Glen Hubbard’s claim that there is no pay stagnation if one includes benefits along with wages, which I challenged in a recent analysis.

As the figure shows, between 2007 and 2014 the median worker’s wages and compensation declined, respectively, by 4.0 and 1.9 percent. Among the bottom 40 percent of workers there was an even greater decline in compensation than there was in wages, indicating that including benefits as well as wages in an analysis results in a more adverse trend—the opposite of Hubbard’s claim. Monaco and Pierce’s analysis does not probe these trends, but they must result from some combination of low-paid workers being less likely to receive employer-provided benefits and a worsening quality of the benefits received.

Monaco and Pierce’s research is based on the most comprehensive wage and compensation data available and should fuel the emerging policy debate on how to address the broad-based wage and compensation stagnation they document.

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