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Wages Rising? 

Photograph by Nathaniel St. Clair

Some observers write as though we are waiting for wage growth to return to normal. We just need money wages to grow a little more and inflation rates to fall a bit and we’d be back on the right track. But what’s normal?  For example, how often since 2000-2017 has the real wage of average employees increased at least 1% a year? In only four of eighteen years: 2001, 2002, 2014, 2015.

If you want to feel good for five seconds, the latest earnings report shows that real wages for average employees are up since September of 2017. But the increase is just 0.4%–less than a half a percent. That’s what we are getting in what is supposed to be a red-hot labor market and a strong economy–so strong that the Federal Reserve is raising interest rates to cool it down.

So for workers the economy is good but not great, and has been so for years. Basic power structures and institutions lean heavily against the working class. Unions cover few workers. Some states and localities are raising their minimum wages, but many are not doing so, and the federal minimum wage has been stuck at $7.25 for years.

And while labor markets are good, and causing wage upticks in some places, there is no generalized shortage of labor–nothing dire enough to push up money wages to increase 4 to 5% a year. Employers aren’t used to having to expend real effort to get medium to low-skilled workers. When they have to exert, they think it’s a labor shortage. But real unemployment is not low enough to give average workers enough individual bargaining power.

On the sidelines there are millions of people who are ready to work. The labor force participation rate of prime-age workers (25 to 54 years old) is rising but it’s still several points below where it was in the 1990s. Today, some distribution centers, trucking companies, and other businesses have to pay more, but there are plenty of applicants for many job slots across the country.

That’s one reason why wages haven’t risen much. That is why Blue Ridge Health Care in North Carolina can get entry-level certified nursing assistants for $9.50. It’s why, over the past year, ZipRecruiter registered 8.1 million applications for 68,500 postings for administrative assistant jobs, and 9.2 million applications for 136,000 warehouse job listings.

It’s true that some employers are having to pay more to get the employees they need. That’s one reason Jeff Bezos is raising pay to $15 an hour at Amazon. (Another reason is that it’s bad P.R. that Amazon workers are stuck at $12 or $13 whilst Jeff is worth almost two hundred billion dollars.) But that might not be as much of a raise as it seems. What Jeff gives with the left hand, he takes away with the right. The company is pulling back on its bonus and stock programs. Some employees think they will be worse off.

One final note on $15. Amazon’s move reflects what a good thing the $15 minimum goal is. It has been a tremendous rallying point, a unifying force around an ultra-reasonable goal. But it is just the first step. Fifteen dollars looks good because wage growth has been mostly terrible since the early 1970s. But $15 is just $31, 200 for a person who works absolutely full-time, year-round. If you think that amount is adequate, you’ve been drinking the Cato-Kool-Aid at Republican Congressional parties.

 

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Frank Stricker is in the National Jobs for All Coalition. He taught history and labor studies at CSUDH for thirty-five years. He has just written What Ails the American Worker? Unemployment and Rotten Jobs: History, Explanations, Remedies. For some sources behind this essay, e-mail frnkstricker@aol.com.

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