New Earnings Info Highlights Concerns about Flat Wages and Growing Inequality

Friday, August 30, 2013 at 2:56 PM by

A new resource posted online today helps illustrate Wisconsin’s stagnant earnings for workers in general and a decline for lower wage workers.  Governing.com  posted an interactive database showing state-by-state figures for average and median real wages for each year from 2002 through 2012. 

The user-friendly database graphically displays the trend lines in each state, including not only the wages for people at the 50th percentile (i.e., the median wages), but also the trends for people in the middle of the top half (the 75th percentile) and for the middle of the bottom half of earners (the 25th percentile).  All of the figures are converted to 2012 dollars to adjust for inflation.

The national data show that mean wages have essentially been unchanged  (+0.1%) over the last 5 years (2007 to 2012), when they are adjusted for inflation.  Because much of the wage growth has been at the upper end, the trends are worse when one examines median wages, rather than the mean. 

Turning to the state-level figures, here’s what they reveal about wage trends in Wisconsin:

  • Our state is one of 16 where mean hourly wages have declined since 2007 (-0.4% in Wisconsin, versus +0.1% nationally). 
  • Over the past 10 years, mean wages have grown just 1.3% in Wisconsin, vs. 5.1% nationally.
  • During that period, median wages (earnings for a typical Wisconsinite) have fallen by 3.1%. 
  • For people at the 25th percentile (i.e., those at the middle of the bottom half of wage earners), the drop has been 7.7%. 

Keep in mind that these are just wage figures, which don’t include other sources of income.  Other data sources that also include investment income and zero in on top earners show a far more pronounced growth in the divide between lower wage workers and the top earners.  A fundamental aspect of the problem is that the economic benefits of rising productivity are almost exclusively going into profits, yielding  a sharp divergence between the prospects of hourly workers and those of investors.   A chart in a today’s blog post by Jared Bernstein vividly illustrates that trends.  

Though it understates the problem, the wage data in the new interactive database underscore the importance of trying to provide a boost to Wisconsin’s struggling low-wage workforce.  That could be accomplished by raising the minimum wage and boosting supports for low-wage workers, rather than by types of policies in the last two state budgets that are adding to the struggles of that portion of the workforce. 

Jon Peacock

Categories: Blog, income, income inequality | Comments Off

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