Despite soaring corporate profits and nearly 25 percent gains in overall workforce productivity, 60 percent of American workers saw their wages stagnate or decline from 2000 to 2012 according to the latest study from the Economic Policy Institute (EPI), a think tank based in Washington D.C. The period has been termed by some economists as the “lost decade” of wage growth for most Americans.
The EPI data validates the claims of the burgeoning fast-food workers movement, uniting low-wage workers behind demands for better pay. In a $200-billion-per-year fast-food industry, paltry wages have become a central grievance of the growing protest movement that could change an industry employing roughly 4 million across the United States.
From the outset of fast-food strikes last year, workers walked off the job in single-day protests demanding $15 an hour and the right to join a union without intimidation. For the growing number of Americans who rely on fast-food employment as their primary source of income, a pay bump is long overdue.
“I’m a single parent of three, and I’m living check to check,” said Latoya Jemes, a 24-year-old fast-food employee in Memphis, Tenn. “I only have enough to pay my rent, and I might be able to squeeze out the things that my kids need, but I’m not making enough.”
What started as a small protest, has now turned into a national movement as thousands of fast-food workers prepare for what could be the largest walkout yet this Thursday. “The fact that workers are going to strike is a sign of a significant turning point in the movement. It’s really gone national,” said Dorian Warren, Columbia University professor.
Falling wages across the U.S.
The recent EPI report shows that declining or flat wages actually affect the majority of workers across the U.S., not just fast-food workers.
In the study, which is titled “A Decade of Flat Wages,” researchers found that the U.S. workforce made major gains in productivity, about 25 percent from 2000 to 2012, but “wages were flat or declined for the bottom 60 percent.”
The report draws from a variety of sources, including government data. “One of the things we tried to do was study all the possible data including establishment surveys like the U.S. Bureau of Labor statistics. We also looked at household surveys that ask people how much they earn. The study looks at two different methodologies but one thing that’s clear is that they tell the same story: very flat wages for a decade. That was actually following a generation of really flat growth,” Heidi Shierholz, a labor market economist at EPI, told Mint Press News in a statement.
“Sales professionals, production and transportation employees, and service workers all saw their average wages slide even in average terms,” writes Alan Pyke at ThinkProgress.
Here’s a breakdown of some of the data revealed in the study:
The median hourly earnings for American workers have slid back to where they were in 2000, while the highest-earning Americans are now paid more than 10 percent better over the same time-frame.
Similarly, the annual wages of the poorest 90 percent of workers declined between 2009 and 2011, according to a January EPI analysis. The wages of the top one percent of income earner rose 8.2 percent during the same period.
The data is part of a much larger economic trend dating back to the post WWII economic boom. From 1947-1978, most Americans, regardless of economic background enjoyed proportional gains in their share of national income. The bottom 20 percent gained 118 percent while the top 5 percent gained a healthy 86 percent according to one report from United for a Fair Economy using historical data from the U.S. Census Bureau.
The next few decades leading up to the economic collapse in 2008 took a dramatic turn. From 1979-2008, the bottom 20 percent lost 7 percent in their share of national wealth, while the top 1 percent grabbed a whopping 224 percent.
“We went almost a century where the labor share was pretty stable and we shared prosperity,” says Lawrence Katz, a labor economist at Harvard University in an interview with the New York Times. “What we’re seeing now is very disquieting.”
One New York Times report claims that the picture may be worse than expected.
“Labor’s shrinking share is even worse than the statistics show, when one considers that a sizable — and growing — chunk of overall wages goes to the top 1 percent: senior corporate executives, Wall Street professionals, Hollywood stars, pop singers and professional athletes. The share of wages going to the top 1 percent climbed to 12.9 percent in 2010, from 7.3 percent in 1979,”
Just how far has the wealth gap grown in corporate America? A look at most corporations reveals that lion’s share of profits go to corporate executives. McDonald’s, a company in the center of the fast food strikes, decided to give CEO Don Thompson a 200 percent pay and compensation increase when he took over the reigns of the golden arches in 2011.
USA Today reported earlier this year that Thompson receives $13.8 million each year in compensation, up from the $4.1 million he received in 2011, according to a regulatory filing.
Many employees who have worked for the company for decades are on the brink of homelessness, living paycheck to paycheck.
Tyree Johnson, a long-time McDonald’s employee works at two McDonald’s restaurants in Chicago. He earns $8.25 and isn’t able to get 40 hours work despite working at the two separate restaurants over the past 20 years.
Raising the minimum wage
What can be done to change the status quo? Researchers at EPI conclude their analysis by arguing for an immediate minimum wage increase and increased collective bargaining rights.
“Increasing the minimum wage is really smart economic policy because you are putting money in the pockets of those who are likely to spend it,” Shierholz said.
Raising the minimum wage from $7.25 to $10.10 is now supported by 80 percent of Americans according to one national opinion poll released last month by the National Employment Law Project Action Fund. The poll also found that 75 percent of respondents believe Congress should raise make this issue a priority and raise the minimum wage with the next year.
Living wage advocates contend that this single act would immediately lift millions out of poverty and help workers across the U.S.
“Raising the federal minimum wage to just $10.10 an hour and increasing the tipped minimum wage from $2.13 to 70 percent of the regular minimum wage, as has already been proposed in Congress, would immediately lift almost 6 million workers, 60 percent of them people of color, out of poverty,” writes Saru Jayaraman of the New York Daily News.
Many states have raised their minimum wages, but the federal minimum wage was last raised four years ago. Some experts believe it could be a few years before Congress acts to increase the minimum wage.
“It’s historically been up to 10 years before the minimum wage increases. It will eventually be increased, but the question is, will it be increased to a level that actually provides a solid wage floor? That’s the open question. If the minimum wage kept up with productivity since 1968, it would be around $19 today,” Shierholz said.
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