A Wageless Recovery

by Fred Bauer

Drawing from data from the federal government’s Occupational Employment Statistics, the National Employment Law Project has released a study of hourly wages for the U.S. economy during the period of 2009–2012. Though this period has been called a “recovery,” hourly wages have, when adjusted for inflation, fallen across the economic spectrum.

However, this decline has been particularly sharp for lower-paid jobs. Jobs in the first quintile (making between $8.78 and $10.60 an hour) saw their wages decline 3 percent. Jobs in the second quintile ($10.61 to $14.21 an hour) saw the biggest collapse, losing 4.1 percent. Jobs in the third quintile of wages ($14.23 to $18.83 an hour) saw a 3.1 percent decline. Jobs in the upper 40 percent of hourly wages saw a smaller decline (a little under 2 percent). Many of the low-wage jobs with the greatest number of workers saw large decreases. As NELP writes in its report, “Occupational wage declines were especially marked, at -5.0 percent or steeper, for cooks, personal care aides, home health aides, food prep workers, and maids and housekeeping cleaners.” Restaurant cooks experienced especially large declines — their median hourly income was slashed by more than 7 percent.

Though NELP focused on the downward trend in low-wage jobs, this decline is not simply concentrated among those without college degrees. High-tech fields also had wages decrease. When adjusted for inflation, the median hourly income of a computer programmer has fallen by 2.5 percent between 2010 and 2012.

This decline shows how anemic the so-called “recovery” has been. But it also highlights broader tendencies. As Felix Salmon’s extensive charts show, many lower-income jobs saw wage growth that fell behind inflation in the 2007–2012 period.

The biggest single detailed occupation listed by the OES is “retail salesperson.” Over 4.3 million Americans fit into this category, and their median hourly wages have fallen by 2.6 percent between 2009 and 2012, according to NELP. But this decline cannot be blamed solely on the failed recovery – between 2002 and 2012, median hourly wages fell 6.5 percent.

It’s true that OES wage data does not consider all forms of compensation (such as health-care coverage), but this study might explain why many Americans feel poorer; when adjusted for inflation, their paychecks are getting smaller.

It is also true that individuals are not locked in the same job for year after year. They can be promoted within a given field or switch jobs to gain higher compensation. But there are plenty of individuals who do remain in a single job over a longer period of time, and, with the shrinking job market of the past few years, it can be harder to find a new job.

These numbers also frame the current debate about immigration. Republican allies of the Senate’s “comprehensive” approach have rallied behind guest-worker programs and an escalation of “low skilled” immigration. Meanwhile, supporters of pro-worker immigration reform have drawn attention to the effects of the Senate’s and White House’s immigration agenda on low-wage workers. The findings of this study suggest that American workers have already seen their bargaining power in the marketplace weaken, and it is plausible that the Senate’s immigration bill (or any immigration bill that maintains the essential premises of the Senate bill) could weaken the worker’s position even more.

Thus declining economic opportunity raises important issues for conservatives. A small-government vision is strengthened by a dynamic economy where a rising economic tide lifts all boats, so continued — and perhaps increasing — downward pressure on wages poses significant troubles for the realization of this vision. Conservatives serious about reviving this small-government vision should also be serious about reviving broad-reaching economic opportunity. And a policy measure that hinders this revival of opportunity could also hamper the project of Republican renewal.