Wages Aren’t Keeping Up with the Cost of Living

September 10, 2015, Written By Bill Hardekopf
Drawing up a living costs list  - expenses

Labor Day is more than a day off work. It’s a tribute to U.S. workers and their social and economic contributions to the prosperity of the country. But how are American workers fairing in 2015?

The short answer is not good. All workers have seen a decrease in real wages since the 2009 recession, and those earning the lowest wages are suffering the most.

The U.S. Bureau of Labor Statistics reports that the unemployment rate currently hovers around 5.5%, which seems to indicate the situation is improving. However, the real unemployment rate is closer to 10%. The Bureau’s statistics do not take into account the number of part-time workers who want full-time work, if they could find it.

Similarly, at first glance, it looks as if wages are on the rise. However, these numbers don’t take into account “real” wages. Real wages factor in the increasing cost of living, which reflects the amount of goods and services that someone can buy. Real wages have dropped since last year, and this decline has been taking place for the past 10 years.

The National Employment Law Project (NELP) analyzed data from the Occupational Employment Statistics that examined wage declines in over 800 occupations. Overall, the median hourly wage has decline by 4% from 2009 to 2014.

The poorest in the nation have faced the greatest declines, though. Those in the lowest quintile (people making $8.84 to $10.97 per hour) have seen a 5.7% decrease while those in the highest quintile (those making $31.82 to $87.36 per hour) have only seen a drop of 2.6%.

Those working in the food industry (food preparation workers and restaurant cooks) have seen the biggest drop (7.7% and 8.9%, respectively). Janitors and cleaners, personal care aides, maids and housekeepers, and home health aides have all faced drops of over 6%.

Statistics show there may be some hope and that steps can be taken to close this gap. Federal and state increases in minimum wages have contributed to a smaller decline in real wages. Thus, some argue we should continue to raise the Federal minimum wage to $12/hour by 2020 and $15/hour in higher-cost cities. There is currently a movement, started mostly by fast food workers, that demands the minimum wage should immediately be raised to $15/hour.

On the flip side, some corporations argue that raising minimum wage would lead to job cuts or passing increased costs to customers. Wal-Mart, Target, TJ Maxx and Marshalls are all companies that disagree and have voluntarily raised wages for their employees.

Some workers in the United States are struggling to purchase necessities like food and shelter. Whatever the solution, the statistics show that something needs to be done to revitalize low-wage earners.

The information contained within this article was accurate as of September 10, 2015. For up-to-date
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