For All the Work Available, Pay Raises Remain Anemic
leverage to get a good deal from their bosses, individually and collectively,” said Lawrence Mishel, president of the Economic Policy Institute, a labor- oriented research organization in Washington. “People who have a decent job are happy just to hold on to what they have.”
In the United States, the jobless rate fell to 4.2 percent in September, less than half the 10 percent during the worst of the Great Recession. Still, for the average worker, wages had risen by only 2.9 percent over the previous year. A decade ago, when the unemployment rate was higher, wages were growing at a rate of better than 4 percent a year.
In Britain, the unemployment rate ticked down to 4.3 percent in August, its lowest level since 1975. Yet wages had grown only 2.1 percent in the past year. That was below the rate of inflation, meaning workers’ costs were rising faster than their pay.
In Japan, weak wage growth is both a symptom of an economy dogged by worries and a force that could keep the future lean, depriving workers of spending power.
In Norway, as in Germany, modest pay raises are a result of coordination between labor unions and employers to keep costs low to bolster industry. That has put pressure on Italy, Spain and other European nations to keep wages low so as not to lose orders.
In November 2016, a week after Donald J. Trump was elected president on a pledge to bring jobs back to America, the people of Elyria, Ohio — a city of 54,000 people about 50 kilometers west of Cleveland — learned that another local factory was about to close.
The plant, operated by 3M, made raw materials for sponges. A union t hat represented t he workers claimed the closing was a result of production being moved to Mexico. Management said it was merely cutting output as it grappled with a glut coming from Europe. Either way, 150 people would lose their jobs, Larry Noel among them.
Mr. Noel, 46, had begun working at the plant seven years earlier as a general laborer, earning $18 an hour. He had worked his way up to batch maker, mixing the chemicals that congealed into sponge material, a job that paid $25.47 an hour.
Now, he would have to start over. The unemployment rate i n the Cleveland area was then down to 5.6 percent. Yet most of the jobs that would suit Mr. Noel paid less than $13 dollars an hour. He ultimately found a nonunion job that paid only slightly less than he had been mak- ing. “A lot of us wish it were union,” he said, “because we’d have better wages.”
Last year, only 10.7 percent of American workers were represented by a union, down from 20.1 percent in 1983, according to Labor Department data. Many economists see the decline as a key to why employers can pay lower wages.
In 1972, so- called production and nonsupervisory workers — some 80 percent of the American work force — brought home average wages equivalent to $738.86 a week in today’s dollars, after adjusting for inflation, according to an Economic Policy Institute analysis. Last year, the average worker brought home $723.67 a week.
Until three years ago, Lyndsey Martin worked at Janesville Acoustics, about 80 kilometers west of Cleveland. The plant made insulation and carpets for cars. She put products into boxes, earning $14 an hour. That, combined with what her husband, Casey, earned at the plant, was enough to allow them to rent a house where their front porch looked out on a leafy street.
Then, i n summer 2013, word spread that the plant was shutting down, putting 300 people out of work. Ms. Martin eventually took a job at a gas station, ringing up purchases for $9 an hour. “It almost feels degrading,” she said. Her hours fluctuated. Some weeks she worked 35; most weeks, 24.
Ms. Martin recently took a new job at a beer and wine warehouse. It also paid $9 an hour, but with the potential for a $1 raise in 90 days.
For the past 10 years, Kuniko Sonoyama has worked in Tokyo, inspecting gear for major electronics companies. After decades of decline and stagnation, the Japanese economy has expanded for six straight quarters. Corporate profits are at record highs. And Japan’s population is declining. Unemployment is just 2.8 percent. Yet, Ms. Sonoyama, 36, is employed through a temporary staffing agency. “I’m always wondering if it’s O.K. that I never make more money,” she said. “I’m anxious about the future.”
Average wages in America rose by only 0.7 percent last year, after adjusting for the costs of living. The government has pressed companies to pay higher wages, aware that too much economic anxiety translates into a deficit of consumer spending, limiting paychecks for all.
But companies have mostly sat on their increased profits rather than share them with employees. Many are reluctant to take on extra costs. Ever since Japan’s monumental real estate investment bubble burst in the early 1990s, that country has grappled with a pernicious residue of that era: deflation, or falling prices.
What hiring companies do increasingly involves employment agencies that on average pay two- thirds of equivalent full- time work. Today, almost half of Japanese workers under 25 are in part-time or temporary positions.
No one is supposed to worry in Norway. The Nordic model has been engineered to provide comfortable living standards. Workers enjoy five weeks of paid vacation a year. Everyone receives health care. Universities are free. When babies arrive, parents split up a year of shared leave. All of this is affirmed by a deep social consensus and underwritten by oil wealth.
Yet even in Norway, global forces are exposing growing numbers of workers to competition that limits pay. Immigrants from Eastern Europe are taking jobs. Temporary positions are increasing.
Employers are supposed to pay temporary workers at the same scale as permanent ones. But union leaders representing more than half of the country’s work force, aware that companies must cut expenses or risk losing work, have reluctantly signed off on employers hiring growing numbers of temporary workers who can be dismissed with little trouble. Last year, companies from Spain and Italy won many of the contracts to build tunnels south of Oslo, bringing in lower-wage workers from those countries.
When Mr. Karlsson, the painter, came to Norway from his native Sweden in the mid-1990s, virtually everyone in the trade was a full-time worker. Recently, while painting the offices of a government ministry, he encountered Albanian workers. He was making about 180 kroner per hour, or about $23, under his union scale. The Albanians told him they were being paid barely a third of that. “They work extra hours without overtime,” Mr. Karlsson said.“They work weekends. They have no vacations. It’s hard for a company that’s running a legitimate business to compete.”
He added: “I have no problem with Eastern Europeans coming. But they should have the same rights as the rest of us, so all of us can compete on equal terms.”
Starting in mid-2014, a descent in global oil prices ravaged Norway. That year, Norwegian wages increased by only 1 percent after accounting for inflation, and by only a half percent the next year. In 2016, wages declined in real terms by more than 1 percent.
Peder Hansen did not like the idea of a smaller raise, but neither was he terribly bothered. He works at a nickel refinery in Kristiansand. Much of what the refinery produces is destined for factories in Japan that make cars and electronics. Lately, nickel prices have been weak. This year, Mr. Hansen’s union accepted an increase of about 2.5 percent — a tad above inflation.
“If they were to increase our wages too much, the company would lose customers,” he says. “It’s as simple as that.”