Low-Wage Workers See Largest Drop in Real Wages


September 4, 2015

Today’s jobs report saw unemployment fall again, down to 5.1 percent. While that’s great, it doesn’t say enough about the losses workers have been taking for far too long. Just in time for Labor Day, a new report from the National Employment Law Project shows that, after taking inflation into account, wages have actually declined for most U.S. workers since the Great Recession officially ended in 2009. But not all workers are affected equally:

“[O]n average, the lowest-paying jobs have experienced disproportionately greater wage declines.”

NELP report

The figure depicts NELP’s findings. As you can see, the lowest paid workers have seen their wages drop the most. Even within the bottom quintile, some workers were hit harder than others: food prep workers and cooks in restaurants saw their median hourly wage decline 7.7 percent and 8.9 percent respectively.

An article about NELP’s report in the New York Times also highlighted a report released this week by the Economic Policy Institute. The folks at EPI found that, despite a steady increase in labor productivity since 2000, nearly all of the benefits from the increased productivity have gone to corporations, CEOs and shareholders rather than the employees.

The productivity-pay gap, as depicted in their graph below, shows that net productivity grew 72.2 percent between 1973 and 2014. Yet the inflation-adjusted hourly pay of the median worker rose just 8.7 percent. And while net productivity grew by 21.6 percent from 2000 to 2014, the hourly compensation of a typical worker grew by just 1.8 percent.

EPI points to several policies that will shrink the growing wage inequality, including many that we at CHN and many of our coalition members support: raising the minimum leave, updating overtime rules, providing earned sick leave and paid family leave, and ending discriminatory practices that lead to race and gender inequalities. We might add a few other suggestions: limits on the tax breaks corporations get for stratospheric executive pay, ending the extra tax benefit for hedge fund managers and others, and making sure the current low-income tax credit levels do not expire (low-income workers stand to lose a lot if Congress fails to act).

The Labor Department describes Labor Day as a day “dedicated to the social and economic achievements of American workers.” These reports show workers are not sharing in the gains from their achievements. That’s not fair, and is ultimately counterproductive. We need – and the federal government should provide – policies and investments to raise worker pay and increase their opportunities.

To take action, use this tool from the National Partnership for Women and Families to tweet at your members of Congress and urge them to support the #RaiseTheWage Act to raise the federal minimum wage to $15 and hour by 2020. You can also share the tweet from NELP below to raise awareness.

Labor and Employment
minimum wage