Five Decades of Stagnant Wages

The U.S. Jobs Report for November 2024

By Frank Stricker | December 21 | Online-only

The Bureau of Labor Statistics’ Employment Situation for November suggests that the labor market got over the big bump of strikes and storms that resulted in few job additions in October. Just 12,000 jobs were added then. In November, 227,000 jobs were added—not enough, but pretty good by conventional standards and better than six of the last eight months. Sectors that led the way in job creation included health care, leisure and hospitality, and the public sector.

To get a longer view of what is going on in the labor force, we can look at where job totals stand against pre-pandemic levels. Are today’s levels still below pre-pandemic levels as two Washington Post authors, Lauren Kaori Gurley and Andrew Ackerman seemed to claim (December 6, 2024)? Not that I can see. As the pandemic hit, total non-farm jobs fell by 20.8 million to 129.4 million between January and March of 2020. Since then the total has risen to 135.7 million such jobs, which means we have recovered lost jobs and then some. But, yes, the bigger point is that we are far below where we would be if we had had, for several decades, the kind of extra-strong job growth that we need to employ everyone who wants to work.

On the plus side for people with mainstream views, there is the fact that the official unemployment rate has been running at 3.9% to 4.2% for the past ten months. That’s full employment for many observers. But, as seen in our Full Count, if we add people who want jobs but are not searching in specified ways, and part-time workers who want full-time work and cannot find it, we get an unemployment rate of 9.8%. For dozens of millions of people out there it is not so easy to find a position. Some get discouraged and stop actively searching.

If we really were at or nearly at full employment, we’d expect that real wages would be rising strongly. What’s that story? Not so bad, not so great. In terms of purchasing power, the hourly wage—the real wage—of the average rank-and-file non-farm private-sector employee, increased in some months of the last year. But not by much. Over the year, real hourly pay increased by a total of 1.3% and so did real weekly pay. Inflation, although rather low, was still high enough to wipe out most of the apparent increase in wages (3.9%).

In terms of absolute numbers, the average weekly pay for these employees is a bit over $1000. Some do much better and some do much worse. And does $50,000 a year sound like a lot? To lower-wage workers, perhaps so. But if you are earning that amount and supporting one or two dependents, it’s not much. If your rent is $1500 a month or even just $1200, that is $18,000 or $14,400 off the top every year. Often, there is not enough left after rent, taxes, and other deductions for the rest of your normal bills, not to mention emergencies, such as when your car breaks down.

The grim fact is that for five decades most leaders in the major parties and in other mainstream movements and institutions have not been able to or have not wanted to get serious about lifting wages. In The New York Times on November 10, 2024, Nicholas Kristoff pointed out that blue-collar workers today earn less every week in real terms than they did in 1972. After huge declines in the 70s and 80s, it’s been a long slow crawl just to get back to where blue-collar wages were a half century ago.

But wait. On a site called CAP20, Bobby Kegon and Brendan Duke ran this headline on October 17, 2024: “American Wages Higher Than They Have Ever Been.” Whoopee? Don’t think so. Not counting the labor market effects of COVID, the hourly pay of production and non-supervisory employees is barely higher than it was in the early 70s. So this fact is pretty much in line with Kristoff’s argument. The buying power of the wages of dozens of millions of average American workers is about where it was in the 1970s. A half century of no progress whilst the total wealth of the country has ballooned.

I don’t want to go out on a limb here, but it seems elementary that any serious policy to lift the bottom half must include as a minimal starting point a federal minimum wage reaching $20 an hour in two or three years. And scheduled future increases after that. (Some of this is happening around the country in states and towns and for specific sectors.) Wider prosperity also requires a serious redistribution of money from the very rich tenth or fifth to the bottom half. The top 10% of earner-households have, on average, a net worth of $6.6 million. Most of the increase in workers’ pay should not come from higher prices whose benefits are gobbled up by owners and other high-income earners, while average folk face high inflation for things they need to buy.

Frank Stricker is a board member of the National Jobs for All Network and a contributor to Dollars & Sense.

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