The Inconvenient Truth About Wages: They’ve Dropped 19% Since 1970 For Men and 6% for Women Since 2000

Huck/Konopacki Labor Cartoons

I have written repeatedly in this blog about the declining wages and living standards for American workers over the past 30-40 years (see here, here, here and here). A new report out by Michael Greenstone and Adam Looney (both fellows at the Brookings Institution) adds some more data to support this conclusion (the report was summarized in the New York Times).

According to their report, the earnings for male workers age 25-64 have declined by 4% since 1970 after adjusting for inflation, despite the fact that worker productivity has dramatically increased during this same time period. However, in 1970, 94% of men in this age group had employment, whereas by 2010 the number had fallen to only 81%. So not only have wages gone down for those who have jobs, there has also been a drop in the number of people who earn wages at all. Thus, when all working-age men are figured into the data, the median earnings of male workers have actually declined by 19% since 1970. However, for those who lack a high school diploma, wages dropped by a staggering 41% since 1970.

The authors note that this decline in employment is due in part to the recession and the currently high unemployment rate, as well as the large numbers of people who have given up looking for work. However, it is also the product have much higher rates of incarceration and higher enrollment in the Social Security Disability program. Furthermore, those who are incarcerated for the most part have employment within the prison system, but they can be forced to work for free or for much less than the minimum wage, making them de facto slaves.

Women, in contrast, have done much better over the past 40 years. Since 1970, the median female worker has seen her earnings increase by 71%, while the percentage of women in the workforce has increased from 54% to 71%. Yet even with these gains, women have seen their earnings drop by 6% since 2000.

While a college educated workers have higher employment rates and earn higher salaries on average, the percentage of men completing college has stagnated over the past 30 years. The percentage of women completing college has been steadily increasing. Yet with tuition rising significantly faster than inflation over the past decade, combined with state budget cuts, stagnating wages for professors, declining course offerings, furloughs and admissions moratorium, college is becoming a much less tenable road to material security.

The average student is now graduating with a debt of $24,000 or more. With slim job prospects and anemic entry level salaries, many graduates, even if they can find work, will retain large college debts for years, or even decades. Consequently, even with a “good” job, many college graduates will still have living standards far below those of their parents’ or grandparents’ generations.

In addition to declining wages, American workers are working longer hours and they are working harder and faster (one of the main reasons for their increased productivity). If anything, salaries should be significantly higher now than in the 1970s, even when adjusted for inflation, since American workers are doing such a better job at enriching their bosses. Even with higher wages, corporate profits are so high that the bosses would still end up richer than ever and the wealth gap would continue to grow.