Low-income workers see drop in pay
Take-home pay for many American workers has effectively fallen since the economic recovery began, a
Despite steady gains in hiring, a falling unemployment rate and other signs of an improving economy, take-home pay for many American workers has effectively fallen since the economic recovery began in 2009, according to a study by an advocacy group that is to be released on Thursday.
The declines were greatest for the lowest-paid workers in sectors where hiring has been strong — home health care, food preparation and retailing — even though wages were already below average to begin with in those service industries.
“Stagnant wages are a problem for everyone at this point, but the imbalance in the economy has become more pronounced since the recession,” said Irene Tung, a senior policy researcher at the National Employment Law Project and co-author of the study.
Jasmin Almodovar, a home health care aide in Cleveland, knows all about that.
She has worked for the same health care agency since 2003, and for the first four years she received an annual wage increase of 25 cents an hour. But since 2007, her hourly pay has been stuck at $9.50 an hour.
Despite an improving economy, wages adjusted for inflation have declined across the economic spectrum since the recession ended in 2009. Workers in the lowest-earning jobs have been hardest hit.
“I’ve asked for raises several times, and each time I get the runaround,” said Almodovar, who is
licensed by Ohio as a nurse’s assistant. Bills for natural gas, electricity, food and other necessities have gone up since her last raise, she noted, leaving little extra money for her and her 12-yearold son.
In many ways, Almodovar’s predicament encapsulates the contradictions evident each month when the government reports the latest figures on hiring and unemployment.
And the report by the National Employment Law Project, a leftleaning research and advocacy group, underscores why so many Americans are still angry about the state of the economy and with what they see as the inability of Democratic and Republican leaders alike in Washington to do anything to improve living standards for many ordinary workers.
One explanation may lie in the findings of another study released on Wednesday by the Economic Policy Institute, also a liberal research group. Its report showed that even as labor productivity has improved steadily since 2000, the benefits from improved efficiency have nearly all gone to companies, shareholders and top executives, rather than rank-and-file employees.
Labor Department data released on Wednesday indicated that productivity in the American economy in the second quarter rose at an annual rate of 3.3 percent, the biggest quarterly gain since late 2013 and much better than first estimated.
The Labor Department’s next batch of data on hiring and unemployment, for the month of August, is due out on Friday. The fall in the unemployment rate to 5.3 percent this past July from a postrecession high of 10 percent is certainly good news, Tung said, but her group’s analysis showed that once inflation was taken into account, median wages across all occupations fell by 4 percent between 2009 and 2014.
Wage declines in the lowestpaid occupations were much worse, dropping 8.9 percent for restaurant cooks and 6.2 percent for home health aides.
Along with stagnant or falling wages, one of the most persistent complaints about the current economic expansion is that many of the jobs created so far have been low-paying ones. That has changed recently, with more hiring in better-paying fields like business and professional services.
An earlier study by the group was criticized by economists for exaggerating the extent of the socalled low-wage recovery. Tung said the analysis in the report to be released on Thursday was different from the earlier report, focusing on actual wage trends within occupations, not the proportion of jobs created in different fields.
Income inequality
The findings come at a time when income inequality and the failure of many workers to gain ground during the recovery are coming to the political fore. Candidates from both parties have sought to address the worries of middle-income Americans, while trying not to be too closely identified with Wall Street and other symbols of corporate America.
The past year has been the best for the job market since the end of the recession. Employers have added, on average, 243,000 people to their payrolls each month. That would normally constitute a “hot” job market, said Torsten Slok, economist for Deutsche Bank Securities in New York.
“When you see all those jobs being added per month, you think, ‘Come on, how can this be bad?’ ” Slok said. “But there has been a lot of pain and suffering, and people have been losing their skills or have not been able to reskill.”
The roots of wage stagnation are deep, according to Slok.
Some of it is linked to what he calls the “glacial changes” wrought by macroeconomic forces like automation, demographics and globalization.
Other factors are specific to the U.S. economy, including the real estate boom and bust, consumer debt levels and continuing slack in the labor market because of relatively low demand compared with the still-large numbers of people who are looking for work or would return to the labor force if they had a better chance of finding a good job.
For Almodovar, 36, acquiring new credentials and skills is a big obstacle.
When she talked with her employer’s human resources department about how to increase her long-frozen salary, their advice was to go back to school. Although Almodovar took the G.E.D. test and earned the equivalent of a high school diploma in her late 20s, taking classes would be a tough proposition now.
“I’m living with roommates, and if I don’t go to work, I don’t get paid,” she said. “Even one day makes a big difference.”
Military veteran
Many other workers in some low-paid sectors are worse off than they were a couple of decades ago.
While attending high school in the mid-1990s, Derrell Odom worked at KFC, earning $5.50 an hour. That’s the equivalent of $8.61 today. After two years of college, two military tours in Iraq and other jobs, he is back working as a cook at an Atlanta location of the fried chicken chain. His hourly pay now is only $7.25 an hour.
That is barely enough to support himself, let alone his fiancee and two sons.
“I have leadership skills and led missions in Iraq,” Odom said. “Right now, I’m trying to survive.”