Lawrence Mishel and Heidi Shierholz have a new paper out, The sad but true story of wages in America. Here’s the story, in one simple graph:
The story written out:
• U.S. productivity grew by 62.5% from 1989 to 2010, far more than real hourly wages for both private-sector and state/local government workers, which grew 12% in the same period. Real hourly compensation grew a bit more (20.5% for state/local workers and 17.9% for private-sector workers) but still lagged far behind productivity growth.
• Wage stagnation has hit high school–educated workers harder than college graduates, although both groups have suffered—and a bit more so in the public sector. For example, from 1989 to 2010, real wages for high school-educated workers in the private sector grew by just 4.8%, compared with 2.6% in state government. During the same period, real wages for college graduates in the private sector grew 19.4%, compared with 9.5% in state government.
This is the graphical representation about the joke with the 12 cookies. Private sector workers aren’t sitting around watching public sector workers take off in the distance. They are watching their wages stagnant while the economy is pushing wealth further and further into the top-end of the distribution. It’s not just a story about education, mind you. Here’s the same pattern for college educated workers.
Kash at Angry Bear Blog take a similar chart going back to the 1950s:
Mishel and Shierholz conclude:
The rhetoric of some newly elected politicians has suggested that state and local public employees in the United States are some sort of privileged class, earning high wages and benefits at the expense of the taxpayers. In fact, state and local government employees are not a privileged class.
Rather, they are part of the same class as the taxpayers to whom they provide services, and find themselves in the same situation: Neither private-sector workers nor state and local government employees have seen their pay rise much over the last two decades, and what meager pay growth they have experienced has been far outpaced by growth in productivity—the increased goods and services that they themselves have generated. The substantial growth in productivity, income, and wealth in the last few decades could and should have generated some pay growth for American workers. Reconnecting the growth of workers’ pay to the growth of productivity is the major challenge policymakers should be addressing
Getting a handle on this is going to be a major challenge. We’ll be addressing it over the next few months here. Meanwhile, here are four abstracts by David Card or David Autor and Katz about rising inequality to get started.