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Economy's Gains Fail to Reach Most Workers' Paychecks

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Abstract:

As of Labor Day 2007, the economic recovery that began in 2001 is six years old, and the economy has consistently expanded over this period. Productivity growth, though slower of late, has been particularly strong, and after a long, slow start, employment has been consistently growing, albeit slower than past recoveries.

But most American workers have not shared in the growth and prosperity they have been helping to create. Surely, one measure of the success of an economic growth period is how much of that growth finds its way into workers' paychecks. In a period of sharply rising inequality, however, this is no "slam dunk." In fact, as much of the data in this brief reveal, many workers' wages have been stagnant for a number of years, after adjusting for inflation, particularly those at the middle and lower end of the pay scale.

For example, while productivity is up nearly 20% since 2000, the real median hourly wage is up 3% overall and 1% for men, with none of this growth occurring over the three-and-a-half years since 2003. At the top of the wage scale--at the 95th percentile--real wages are up 9%. In recognition of Labor Day, this report examines the wage and employment trends in the 2000s.