The Economic Policy Institute released a study recently that found the economy in the United States has been steadily growing since 2000, but workers aren’t being paid any more than they were a few years ago. In fact, since 2003, the salaries and wages of 95% of workers have actually fallen a slight amount.
It doesn’t make sense. The economy is growing. There is less unemployment. Workers have increased productivity by over twenty percent in the last few years, and they aren’t being compensated? Inquiring minds want to know why.
One possibility is that the economy isn’t growing as much as we might think. Unemployment numbers are down, but does that reflect new job growth or simply more people dropping out of the rat race? The baby boomers are retiring, which leaves plenty of open positions for up and coming employees, so the low unemployment numbers might be an illusion rather than fact.
It should be mentioned that the Economic Policy Institute is well-known for its liberal bias. Economy growth is subject to many factors and making large assumptions based on samples can always be misleading – take a look at exit polls! It could easily be that paychecks are climbing a bit, but the growth was buried, either accidentally or deliberately by competing statistics.
The Big Cheese
Another popular opinion, that is probably right, is that the big cheese in companies, upper management and the board are taking the possible raises. Only 95% of paychecks are unaffected by the growing economy. The top five percent have been growing steadily over this time. In fact, the average CEO makes 364 times more than the generic worker. In 1989, he (or she) made only 71 times more. The wage gap is very large, and some say this gap reflects the money that should be made available to workers.
Of course, the supporters of big business disagree to a level. The CEOs and top executives keep the companies afloat and help pull the economy along. Perhaps they should be rewarded for their hard efforts. But, workers are producing twenty percent more these days than in the past without a pay raise in most cases. Can management say the same?
Don’t Ask, Don’t Get
Another highly likely scenario is that we simply aren’t asking for more money. The economy has been plodding along at a steady trot and we’ve been complacent with low interest rates and easy money. Now things are starting to tighten up, particularity in the credit and housing markets, which means we might be feeling the pinch soon.
There is nothing like a credit crunch or rising mortgage payments to spur us into action. The upper management who has been living so nicely off our increased labor will soon be getting a new message – we’re working hard. So pay us accordingly!