Graph: The U.S. Leads the Way in Low-Wage Work and Pay

As has sadly been the case all too often these days, one of the latest reports from the Economic Policy Institute, an American think-tank, is grim: low-wage workers (the 10th percentile of wage earners) have seen their real pay decline by five percent over the 1979-2013 period, despite concurrent productivity gains of 64.9 percent.

Consequently, American low-wage workers fare the worst in the developed world: according to the OECD, as of 2012, they earned just 46.7 percent of what a median worker worker does, far below the OECD average of 59.9 percent; to catch up to that average, U.S. low wage workers would need a 28 percent raise in their wages.

The graph below highlights this issue rather starkly:

Note that over a quarter of America’s labor force — 25.3 percent to be exact — is low wage, which is defined as earning less than two-thirds of the median wage. On this metric, too, the United States ranks the highest among the 26 countries surveyed, and far higher than the OECD average of 16.3 percent.

Thus, the U.S. has the largest number of low-paid workers in the developed world, and they in turn are the lowest paid in the developed world. And while several countries, such as the U.K., Ireland, and Canada, come close, most of them at the very least have more developed social safety nets to offset the shortfall among low-wage workers (universal healthcare alone is a major mitigating factor, given that medical bills account for many cases of bankruptcies among the American poor).

Setting aside the considerable amount of misery that comes with low paying and often menial labor, the broader impact on the long-term prosperity of the nation cannot be understated: with one out of four workers (and their dependents) having so little income, consumer demand — the lifeblood of the economy — stagnates. Fewer people are able to afford an education or vocational training, leading to a lot of untapped and desperately needed potential.

All this despite the nation’s economic elites — its executives, shareholders, and investors — broadly doing better than ever. Is it really so untenable for companies to spare some of their record, post-recession profits to improve the plight of their beleaguered workers — i.e. the consumers and patrons they all so badly need?

 

In any case, this is a point I have made too many times before, so instead of retreading it once more, I will leave you with this illuminating report by  Elise Gould (also from EPI) on Why America’s Workers Need Faster Wage Growth—And What We Can Do About It. As always, feel free to share your thoughts and feedback.

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One comment on “Graph: The U.S. Leads the Way in Low-Wage Work and Pay

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