Inflation-Adjusted Wages Have Declined Since Great Recession, and Worse for Low-Wage Occupations

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While the overall economy and the job situation has improved markedly since those early months of 2009 when 700-800,000 Americans were being laid off every month, the percentage of people not working or who are working part-time and want full-time jobs or have given up looking for a job but would accept one if offered is still 10.3 percent, well above the pre-recession rate.

There's another problem, too, according to a new report issued by the National Employment Law Project:

Moreover, most workers have failed to see improvements in their paychecks (Gould 2015a). In fact, taking into account cost-of-living increases since the recession officially ended in 2009, wages have actually declined for most U.S. workers. Inflation-adjusted or “real” wages reflect workers’ true purchasing power; as real wages decline, so too does the amount of goods and services workers can buy with those wages. The failure of wages to merely keep pace with the cost of living is not a recent phenomenon. The declines in real wages since the Great Recession continue a decades-long trend of wage stagnation for workers in the United States (Gould 2015a). [...]

Declines in real wages represent purchasing power losses for workers and their families. For example, for a restaurant cook who works full time, year-round, a real wage in 2014 that is 8.9 percent less than in 2009 translates into approximately $2,185 less in income in 2014 than in 2009, or an annual average decline of $437.

To put this lost value in context, it is equivalent to what the average household with comparable annual earnings will spend on nearly two months’ worth of groceries (BLS 2015a). For food preparation workers, a 7.7 percent decline in 2014 compared to 2009 means $1,622 less in income for 2014, or an average of $324 annually. This is equivalent to what an average household with comparable earnings will spend to refill its car’s gas tank over a little more than two-and-a-half months out of the year.

For retail salespeople, the largest bottom-quintile occupation, a 5.0 percent wage decline means a total loss of about $1,125, or $225 annually. This is sligh[t]ly less than what a household with comparable annual earnings will spend on an average month’s utility bill. For a higher-income worker, these losses might represent one fewer dinner out with family or friends, but for the household headed by a fast-food employee or a retail cashier, the losses in purchasing power are of major significance.

Bottom line of the report: Real wage declines are mostly greater for the lowest-paid workers across the occupational distribution. And if the something isn't done to improve the situation, the future doesn't look good.

The NELP analysis noted that 5 of the 10 occupations the federal Bureau of Labor Statistics estimates will add the most jobs to between 2012 and 2022 came in at the bottom of the occupational distribution in 2014. Their real (inflation-adjusted) median wages? Between $8.84 and $10.97 an hour. And there were real wage declines of 5.0 percent in 6 of the 10 highest-growth occupations between 2009 and 2014, compared with a 4.0 percent average decline across all occupations. "These findings suggest that the wage foundations for millions of new jobs over the coming years could be especially shaky and inadequate, providing little economic security," the report said.

Below the fold are more charts and tables from NELP's report.

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