The Economic Policy Institute’s annual report, “State of Working America Wages 2019,” examines hourly wage trends over the last 40 years. The report finds that, for most workers, wages have grown in only 10 of the last 40 years, and the highest earners continue to pull away from middle- and low-wage workers. The national median wage is insufficient to afford the average Fair Market Rent for a modest two-bedroom rental apartment. The report asserts that policy interventions can make a difference for the lowest-income households and produce more consistent, equitable growth.
Long-term trends in compensation (wages and benefits) show slow growth for most workers. Wage growth has not kept pace with productivity gains. Since 1979, worker productivity increased by 69.6%, but compensation for production and nonsupervisory workers grew by just 11.6%. Wage growth among workers has been uneven since 1979, with greater gains at the highest end: hourly wages for the lowest 10% of wage earners rose by just 3.3%, the median wage grew 15.1%, and the wages for the top 5% of wage earners grew by 63.2%. Wages were spurred by exceptionally low unemployment in the late 1990s and in the last five years, but throughout the rest of the 40-year period, wages were largely stagnant.
The report also looks at the current wage distribution and wage growth in the last year. In 2019, the median wage was $19.33 an hour. That is less than the “housing wage” ($22.96/hour) needed to afford a modest two-bedroom apartment at Fair Market Rent in 2019 (see NLIHC’s Out of Reach report). Wage inequality continued to increase between 2018 and 2019, as the top earners pulled further away from middle- and low-wage workers. In 2000, earners in the top 5% were paid 2.9 times as much as the median worker and 6.0 times as much as earners in the bottom 10%. By 2019, the highest earners were making 3.5 and 6.7 times more, respectively. Despite tighter labor-market conditions, the wages for earners at the 10th percentile fell by 0.7% between 2018 and 2019.
The report offers evidence that earners at the bottom of the wage distribution benefit from increases in the minimum wage. Wage growth at the bottom was faster in the 24 states and the District of Columbia that increased their minimum wage in 2019. Wages at the 10th percentile grew by 4.1% in such states, compared to growth of just 0.9% in states that did not increase the minimum wage. States that have increased the minimum wage at least once since 2013 have seen a 17.6% increase in wages at the 10th percentile since that time, compared to a 9.3% for states that have not.
This pattern of slow, uneven, unequal wage growth contributes to the persistent housing affordability crisis, particularly for households with the lowest incomes. Households with extremely low incomes are much more likely to be severely housing cost-burdened. NLIHC’s 2020 Policy Priorities include anti-poverty solutions like increasing the federal minimum wage.
The report can be read in full at: https://bit.ly/2VmWzYs