U.S. wages have not kept pace with inflation, resulting in stagnation of purchasing power over the past four decades, according to a Pew Research Center report released in early August.
Unemployment is under 4 percent, the stock market is reaching all-time highs, and there is sustained job growth, yet “today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago.”
Average hourly wages across the U.S. were $22.65 in June 2018, compared to $2.50 in 1963. Yet, $2.50 in 1963 had the purchasing power of $20.27 today.
“Today’s average hourly wage has just about the same purchasing power it did in 1978,” the report said. “In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.”
Some segments of the U.S. workforce have fared better than others.
The top 10 percent of earners have seen significant increase in weekly earnings, moving from around $1,800 per week in 2000 to more than $2,100 in 2018, while the bottom 10 percent have remained largely stagnant over this period and had weekly earnings of $426 in 2018.
Several factors were suggested in the report as causes behind the stagnation of purchasing power, including increased employer costs for employee benefits, fewer labor unions, non-compete clauses in employment contracts and declines in manufacturing.
The full report is available here.
Editor’s note: This news article is part of a series for Labor Day 2018. Previous articles in the series are:
The End of Work: On Celebrating Labor Day Well by Myles Werntz
Teacher Uprisings Show Path Forward for Labor Movement by Chris Sanders