Pay Inequity in U.S. Is Widening

Source: Dana Wilkie, HR Magazine, November/December 2018

In many cases, wages for many low- and middle-income employees have not even kept pace with inflation.
Four decades ago, in 1979, the typical low-income worker—perhaps a waitress or a cashier—earned about $9.42 an hour when adjusted to today’s dollars. In 2016, a person in that same job earned about $9.33 an hour—roughly 1 percent less than what his or her counterpart was making 40 years ago.

The economy in 2018 has been strong, unemployment is at an all-time low, many businesses are turning healthy profits and the financial markets have surged. Yet that has not translated into robust wage growth for many U.S. workers, even though basic economic theory holds that this should have happened. Instead, pay for many low- and middle-income employees has remained relatively flat, in some cases not even keeping pace with inflation.

Theories abound as to why:
– Automation and global outsourcing have reduced the demand for lower-skilled workers and the pressure to increase their pay.
– A four-year college degree no longer promises the financial bargaining power in the labor market that it once did.
– The decline in labor unions has made it more difficult for low-wage employees to negotiate higher pay.
– The minimum wage doesn’t have the buying power it had decades ago.
– Company leaders, boards and shareholders grew gun-shy following the Great Recession and prefer to keep labor costs low in case of another economic downturn…..