The average American workers’ paycheck has a few more
dollars in it than it did a year ago, but it doesn’t stretch as far.
|This CBSNews.com chart shows real wages falling below the rate of inflation, which rose 2.9 percent between June 2017 and June 2018. “According to the PayScale Index, which tracks quarterly paychecks, inflation-adjusted wages between April and June shrank nearly 1.5 percent compared with the same period last year,” CBS reports.
|With a virtually straight line, this Boston Globe chart shows no increase in the real average wage for U.S. non-supervisory workers (excluding farmworkers).
Despite a tight job market and Republican promises about tax cuts trickling down, wages aren’t keeping up with inflation.
Drivers who filled their gas tanks for $40 last summer are spending $50 now. The cost of living overall – rent, food, clothing, transportation, medical care and more – is 2.9 percent higher than in June 2017. Yet wages are up just 2.7 percent.
That means, adjusted for what each dollar actually buys, real wages are down for non-management workers over the last year.
“Jobs may be plentiful and corporate profits strong, but the U.S. economy is still failing workers,” the Boston Globe reported July 15.
In what should be a seller’s market for workers, economists are bewildered. Their theories involve globalization, technology and, importantly, the ceaseless attacks on unions and the right of workers to bargain collectively for better pay and benefits.
But virtually every news report comes back to an economist saying, in effect, “We really don’t know.”
Corporations are violating the laws of supply and demand with impunity, giving them little or no incentive to make good on the sales pitch for the 2017 tax cuts.
“Remember when Trump said the corporate tax cuts would translate to $4,000 in wage increases per worker?” Heidi Shierholz, former chief economist at the Department of Labor tweeted July 12. “How about zero, does zero work for you?”
Less than zero, in fact. Her post about Bureau of Labor Statistics data for the second quarter of 2018 showed “usual weekly earnings” – earnings before taxes and other deductions and including overtime – rising 2 percent, or 0.7 percent below the rate of inflation.
Many workers “are far from making up lost ground” from the Great Recession, and more roadblocks are in the way, the New York Times reported July 13:
“Hourly earnings have moved forward at a crawl, with higher prices giving workers less buying power than they had last summer. Last-minute scheduling, no-poaching and noncompete clauses, and the use of independent contractors are popular tactics that put workers at a disadvantage. Threats to move operations overseas, where labor is cheaper, continue to loom. And in the background, the nation’s central bankers stand poised to raise interest rates and deliberately rein in growth if wages climb too rapidly.”
While workers toil away for less and less, companies are using their tax-cut windfalls to buy back hundreds of billions in stock and further enrich executives and shareholders – namely the top 10 percent of Americans who own 80 percent of all stock.
“There’s a bit of a myth that through indirect holdings, like holdings of stock in a pension fund, the stock market has become democratized, and everyone’s all in. Not so,” economist Jared Bernstein said in a column for The Washington Post.
The New York Times story cited a Brookings Institution analysis showing that in 2000, the last time the jobless rate fell below 4 percent, “corporations pulled in 8.3 percent of the nation’s total income in the form of profits (while) wages and salaries across the entire work force accounted for roughly 66 percent.”
Now, corporate profits account for 13.2 percent of national income, and workers’ share has dropped to 62 percent.
“Worker productivity has been soaring for 40 years, sending corporate profits into the stratosphere,” International President Lonnie R. Stephenson said. “How is it possible that workers aren’t breaking even, let alone getting ahead?
“Economists may be puzzled, but America’s unions aren’t: it’s corporate greed run amok, fed by laws and policies that make the rich richer while workers, and consumers, pay the price. Electing pro-worker candidates in November is the first step toward balancing the scales.”