The Electrical Worker online
June 2012

For More Americans, Low Wages are the
New Normal
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As recession-weary working families squint for light at the end of the economic tunnel, many indicators show that, for some at the top, the country is back in business. Stock prices are up, Wall Street is on the rebound, and the private sector has been gaining jobs, albeit slowly.

But recent studies reveal a startling new reality in post-recession America. The hemorrhaging of jobs that began in 2007 has been stanched, but largely by new employment that pays poverty level wages.

The National Employment Law Project reports that from 2007 to 2011, low-wage jobs grew by more than 3 percent, while mid-wage jobs rose barely a percentage point. Higher-wage jobs fell by 1.2 percent during that time. In plain terms, that means that many of the laid off teachers, nurses and managers might be finding work in stores or in food service.

"However you look at it, wages for most Americans are just limping along, and it's become a real sap on the recovery," NELP Director Christine Owens said in a statement.

And the numbers of low-wage workers are growing. A study released in April by the Center for Economic Policy Research shows that the U.S. now tops the list of developed nations with the highest percentage of low-wage workers. A staggering one in four Americans earn low pay, defined as less than two-thirds of the median wage — or about $10 an hour.

Low Prices … And Wages

The majority of these low-wage workers draw their paychecks from the U.S.' — and the world's — largest employer, Walmart. But many of the retail giant's employees make so little money that they qualify for public assistance.

In economically hard-hit Ohio, for example, more than 16,000 Walmart workers and dependents received monthly Medicaid benefits, and nearly 13,000 were on food stamps, according to data from the state's Department of Job and Family Services in 2009. The average wage for a Walmart associate is $8.81 an hour, according to an independent study by market research group IBISWorld.

Two more of America's top five employers as ranked by Standard and Poors include Target and McDonald's.

The Changing Low-Wage Work Force

During the primary campaign season, GOP presidential candidates brushed off the need to increase wages, claiming that low-paying jobs exist largely for teenagers living at home or who are otherwise financially dependent on their parents.

But the largest concentration of folks working in low wage jobs are adults between the ages of 35-64. While teenagers made up the lion's share of low-wage work in the late 1970s, the ensuing decades — which experienced a strong rollback of workers' rights and outright attacks on unions — pushed young workers further out of the labor market. Today, teenagers constitute only 12 percent of the low-wage work force, a 54-percent drop over the last 30 years.

Even worse, low-wage workers are significantly better educated. Daily Kos labor blogger Laura Clawson reports that since 1979, "The percentage [of low-wage workers] who have not graduated from high school has been cut by nearly half … Those with some college education, but not a four-year degree, shot up from 19.5 percent to 33.3 percent. Nearly one in 10 people earning $10 or less has a college degree, or more."

And wages — adjusted for inflation — are actually lower than they were a generation ago, despite the fact that productivity has risen significantly. The rate of wage growth has steadily declined since the official end of the recession in 2009, as workers' pay has declined nearly 1 percent. For young men, entry-level pay dropped a whopping 8 percent since 2007, a Government Accountability Office survey reports.

Romney Retreats

Despite calls from many economists, presidential candidate Mitt Romney said in March on CNBC that "there's probably not a need to raise the minimum wage." Romney had previously expressed interest in possibly raising the federal minimum of $7.25 by tying it to inflation, but he backtracked after being chided by the right-leaning Club For Growth and the Wall Street Journal editorial page.

The National Employment Law Project's Owens says this is the wrong prescription for stability. "You can't rebuild an economy when so many have so little to spend," she said. "Infrequent and inadequate attention to the wage floor over the last three decades has seriously eroded the value of the minimum wage. It's time for Congress and the states to step in, raise the minimum wage and index it to inflation. Higher wages and a more robust wage floor will help spur demand and hiring."

"These figures should shock the conscience of every working man and woman in this country," said IBEW International President Edwin D. Hill. "We need real job creation with fair wages to stop more middle class families from slipping into the ranks of the impoverished — not more tax cuts and givebacks to the 1 percent."

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