Even if the economy is on a roll, many Americans aren’t feeling the benefit.
Real wages effectively declined in 2018, according to figures from the PayScale Index, a formula from the Seattle-based salary comparison site. PayScale said the median increases, when adjusted for inflation, were only 1.1% in the last quarter and 1% over the past year. In fact, when adjusted for cost of living increases, real wages declined 1.3% in 2018, PayScale found.
That runs counter to the latest Bureau of Labor Statistics data, which showed an annual increase of 3.2% in average hourly earnings in December, but that’s before accounting for inflation. The PayScale data also stand in contrast to otherwise encouraging news about the labor market. The U.S. unemployment rate remained near a 49-year low of 3.9% in December.
‘This is a turbulent period for the U.S. economy which means uncertain wage growth across many jobs and industries as well as a continual decline in real wages for most workers.’
PayScale looks at median, not average, “so outlier growth doesn’t bias the results,” though it does not dispute the results of the Bureau of Labor Statistics. “A decline in real wages means the average person can purchase even less today than they could last year when wages are measured against inflation,” said Katie Bardaro, chief economist at PayScale.
“There is no question this is a turbulent period for the U.S. economy which means uncertain wage growth across many jobs and industries as well as a continual decline in real wages for most workers,” she added.
There are other issues at play, too. Many components of the economy have major effects on people’s purchasing power, but they aren’t easily captured in official inflation data, said Mark Hamrick, senior economic analyst at Bankrate.com. That includes the high costs of college and university attendance and health care as well as housing costs.
Average monthly rents have risen 28% over the last 10 years, according to a November 2018 report from real-estate website RentCafe and data-analytics firm Yardi Matrix. At the same time, the average size of a newly-built rental apartment has shrunk by 52 square feet, or 5%, to 941 square feet. Health-care costs have also soared: Employer-sponsored insurance premiums increased from an average of $6,000 in 1999 to more than $18,000 in 2016, according to an October 2018 report by the Economic Policy Institute, a progressive Washington-based economic think tank.
‘Inflation broadly can be viewed as low, but outsized impacts from education and health care expenses can be quite damaging.’
“Inflation broadly can be viewed as low, but outsized impacts from education and health care expenses can be quite damaging,” Hamrick said.
Wage growth was higher in some areas than others, the PayScale Index showed. San Francisco again experienced the largest increase in wages with a 4.9% increase since last year and wages grew 3.3% in San Jose and 3.0% in San Diego. As of Jan. 1, some 5.3 million hourly workers in the U.S. received raises as a result of minimum wage increase ballot measures passed in Missouri, Arkansas, California, Massachusetts, Arizona, Colorado, Washington, and Maine
However, more than 60% of Americans said they did not get a pay raise in the last year, a December survey from personal-finance site Bankrate found, despite other data that’s shown modest wage growth over the past year, helped by a shrinking pool of labor, more competition among companies to hire workers and retiring baby boomers.
Executive pay is an entirely different story
As millions of Americans struggle to make ends meet, compensation for executives has surged. Pay ratios of Fortune 500 company CEOs to their employees range from 2 to 1 to nearly 5,000 to 1, according to a 2018 report by the staff of Keith Ellison when he was the Democratic congressman for Minnesota; Ellison is now the Attorney General-elect of Minnesota. The average CEO/worker ratio is 339 to 1, it added.
Median-salaried employees in all but six companies would need to work for 45 years to earn what their CEO makes in one year.
U.S. publicly-listed companies have begun releasing how much their CEOs make compared to the rest of their staff as required under a 2015 rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. At 188 of the 225 companies analyzed by the researchers a single CEO’s pay could be used to pay more than 100 workers. Median-salaried employees in all but six companies would need to work for 45 years to earn what their CEO makes in one year.
Income inequality has soared in the U.S. over the last five decades, despite increases in worker productivity, the report said. “Incomes for most Americans have been stagnant for four decades,” the researchers wrote. “Instead, this increase in income inequality was almost entirely driven by soaring compensation levels for the top 1% of income earners.”
U.S. publicly-listed companies have begun releasing how much their CEOs make compared to the rest of their staff as required under a 2015 rule in the Dodd-Frank Wall Street
As the PayScale data suggests, the gap between the rich and everyone else continues to grow, compounding a polarized political climate, experts say.
Reform and Consumer Protection Act of 2010. As congressman, Ellison requested that his staff examine the ratios of the first 225 Fortune 500 companies to publicly disclose their CEO pay. These companies collectively employ more than 14 million workers and generated at least $6.3 trillion in revenue.
As the latest data by PayScale suggests, the gap between the rich and everyone else continues to grow, compounding an already polarized political climate, Hamrick said. “This has produced many of the political, economic and societal strains that we see playing out on a nearly daily basis,” he added. “This is the impact of a widening chasm among classes which are able to enjoy luxury experiences and those who are struggling just to get by, or aren’t getting by.”
Inflation is the OTHER tax;
Politicians and the mass media want everyone to believe that inflation is the condition of rising prices. They want all of us to blame the grocer, the gas station, or the landlord for wanting more dollars for goods and services. But inflation isn’t rising prices; it’s an increase in the quantity of money. Who increases the quantity of dollars? The government and its partner in crime — the Federal Reserve.
yep, can’t have inflation without an unnecessary increase in the money supply. debt can create some inflation but eventually comes to a halt. too much money chasing to few goods.
The article talks about increases in worker productivity. If I take a shovel from an employee, and fund the purchase of a bulldozer instead, does that mean I have to pay him more because he now moves more dirt because of my investment, which had zero to do with him in any way?
My employees are more productive because of investments I make, not because of anything they do themselves. If they actually work harder and faster, I will pay them more.
But I sure as hell will not pay them more simply because I pay for them to have better tools.
The entire argument about worker productivity is bullshit. Workers generally are lazier, less skilled, more poorly educated than ever. And I sure will not pay more for that. My workers are more productive because of my investments, and it has zero to do with their efforts.
If they want more, they can get more skills, and get more education. My investments are for my benefit, not for anyone else’s.
Admin – Ebeneezer was my initial role model. Then I found out he went soft. Bah. Humbug.
When the hordes start a-rioting, will you be wearing a noose?
The hordes will not make it to where I am. The hordes should be making better decisions. They should educate and skill themselves, and should save and invest – same as I did. If not, then they get what they get.
Sometimes it can be worth tour while to invest in your workers additional education.
splurge – when and if it is, then I do so. But then again, do you think if it is my money and my initiative used to do that that the employee then should be paid more?
Right and wrong, one day, ain’t gonna matter. I could be wrong.
Donkey – and no matter what I do, if the day comes it will not matter. The politics of envy would be at work as opposed to what is right and wrong.
Envy and greed are sins. Both lead to bad things.
Certainly not until you have earned a return on the investment.
Llpoh If you really do have people working for your enterprise and all you see is their cost to the company and not an asset that contributes to your success and their own . You must be a real joy to work for and with . I have done a great deal of contract work in my working time and my small company viewed us as assets and true team members . We produced and were compensated well and bonuses for making projects more profitable which was in all our best intrest . You sound like the type of operator that can’t hold onto good people and you assume it’s because your so great and nobody is worth a shit but you . My bet is when something goes wrong your people just bail on you so you can continue to be a legend in your own mind
Boat – you have zero idea. Your assumptions are ignorant.
1) I pay well. I do not pay more though when I add capital equipment at my cost and risk.
2) I have very little employee turnover. What turnover happens happens early, when the new employee does not work out. Otherwise, I simply do not lose employees, save to retirement. Turnover among those triple digit employees with more than a year of service would be no more than a percent or two a year. Literally. A third of my employees have perfect attendence each year. Absenteeism total is about 1.5% – or three days a year on average, which includes those with long-term absences for cancer treatment, etc.
My bet is that you are an ignoramus.
Employees are indeed assets – just like any assets. I treat them with respect, and give them autonomy. I let no one abuse them.
But make no mistake – they are assets. They are there for one reason alone – to make me money, same as any company asset. And I employ them for no other reason. And I do not pay them more when I invest my capital to make the business more efficient. That is bullshit to even consider.
If my employees want real wage growth, above inflation , then THEY have to do more for me to generate more profit. They do not get real wage growth any other way. They must improve their skills and output personally – then they make real wage growth.
I do not share the profits of my investments and risk with anyone. Those belong to me.
Why do you not get a clue before you make assumptions about me. I have forgotten more about running a stable and profitable business than you will ever know.
Healthcare is a criminal scam. USA is rich but psychotically dysfunctional at the edges.
That pic reminds me of working at the pickle factory one summer . I was completely enamored with the pickle slicer. The thought of putting my willie in it haunted me for weeks.
One day I finally got the opportunity and I went for…in no time my willie was in the pickle slicer…my Lord it was great. Then someone opened the damn door to the room and caught us…the pickle slicer and I got fired…her name was Lisa .
JK
The circle jerk of Wall Street to K-Street to Capitol Street have engineered everything just the way they want it average people own nothing either renting leasing or government rent by property tax and if anything goes bust average people get handed the debt and the circle jerk cycles on wash rinse repeat .
Remember all those elected as our public servants are already owned or are members of the circle jerk and they do not give a fuck about you your kids our country “NOTHING” but more for them and less for everybody else . Hell they even pay a badge wearing minions and courts to assure you do not get out of line while they piss on you and swear it’s raining !