We’ve heard a lot over the past year about how tight this job market is, how many people are changing jobs and getting big pay raises, how restaurants, stores and other types of companies raise wages to try to be competitive for workers.
But it turns out that in 2021, if you adjust for inflation, household income remained about the same as in 2020, according to new data from the Census Bureau.
And that continues a four-decade trend of wages not rising much.
You know that saying “a rising tide lifts all boats”?
“In the three decades since World War II, all boats have been driven by economic growth,” said Molly Kinder of the Brookings Institution. “When the productivity of workers increased, their wages also increased. When companies do well, so do workers. Really across the board, low-wage workers, high-wage workers, middle-income workers, everyone was seeing their wages go up, and pretty evenly and in proportion to the economy and their own productivity.
Then, in the late 1970s and early 1980s, that changed. At least for bottom and middle workers, said Elise Gould of the Economic Policy Institute.
“Instead, we’ve seen wages at the top go up, we’ve seen a drop in the value of the minimum wage, we’ve seen measures implemented that make it harder for workers to form a union,” said Gould.
At the same time, globalization and automation of the labor market have also contributed to decades of weak wage growth.
And that was before the pandemic.
“But really the biggest problem in 2021, and even more so in 2022, is that the pretty good wage increases have been offset by high inflation,” said Harry Holzer, professor of public policy at Georgetown University. .
People in certain sectors, such as retail and hospitality, have received raises over the past year, he said.
“On the order of 5% to 6% per year is great,” Holzer said. “Until you consider the fact that inflation has been 8% to 9%.”
Yet, given what has happened over the past two and a half years – a global pandemic recession, 22 million people losing their jobs – “you would have thought that these two years of data should have shown an unprecedented calamity “, said William Spriggs, professor of economics at Howard University. .
So, Spriggs said, the fact that household income has remained stable through all of this is actually quite an achievement.
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