Monday, February 25, 2013

Americans Working Longer, Harder and Paid Less

Huck/Konopacki Labor Cartoons

The working and living standards for the majority of Americans have been on a downward spiral since the 1970s. While workers’ productivity is up, allowing their bosses to bring in greater profits, most workers have been working longer hours and doing more work per hour, while their wages have remained stagnant, according to the recent report State of Working America, 12th Edition (Mishel et al. 2012)

Below are some of the report’s findings (summarized by the Economic Policy Institute, where Mishel is president):

In 2007, the average American worker toiled 1,868 hours, 181 hours longer (10.7% more) than in 1979—the equivalent of an extra 4.5 weeks per year. This growth was most pronounced among women, who are now working 20.3% longer than they did in 1979. However, this is primarily because there were far fewer women being paid for their labor in 1979. Overall, men saw a 4.4% increase in their working hours, and this was primarily over and above what they were already working. There was also a large increase in working hours among the lowest 20% of wage earners, whose working hours increased 22% (compared with a 7.6% increase for the top 5% of earners), again due mostly to hours over and beyond what they were already working.

One reason for the increased working hours was, of course, increased demands by employers. However, workers’ wages were stagnant during the period, in many cases not keeping up with inflation, forcing people to work longer hours to make ends meet. Thus, in terms of spending power and the value of their paychecks, workers living standards were either stagnant or declined during this period.

For example, annual income increased during this time period, but for the majority of workers this was the result of their longer working hours—not from any significant increase in hourly wages. For the lowest-wage workers, hourly wages rose only 7.7% over the past three decades. However, for the past decade, their wages have actually declined 3.2%. In contrast, the hourly wages of the top 5% of wage earners increased by 30.2%, and this does not even include the bulk of their income, which comes from non-wage compensation and investments (e.g., stock options, capital gains).

What little growth American workers have seen in hourly wages was concentrated in the late 1990s, when unemployment was low and the minimum wage was increased. Even for middle wage earners, whose overall hourly wages increased 15.8% between 1979 and 2007, total hourly wage growth was only 5.3% when 1995-2000 is excluded.

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