Wages last year plummeted to an all-time low as a percentage of the economy, even as corporate profits rocketed to new highs. This means that corporations have been able to squeeze more and more productivity out of workers, without rewarding them for their efforts.
According to a new report from the Economic Policy Institute, this phenomenon has been a long time coming. In fact, workers have seen precious little gain from increased hours and productivity since 1979:
Workers have been offering more to the economy and the labor market, and what they have received in return — particularly in the form of real hourly wages — has been very disappointing. This trend is particularly evident when considering that the majority of workers — especially those in the bottom 60 percent of the wage distribution — increased their work hours substantially between 1979 and 2007, the last year before the current recession. However, during this period (excluding a brief interlude of strong economic growth between 1995 and 2000), real (i.e., inflation-adjusted) hourly wages of the bottom 60 percent grew modestly — ranging from an actual decline for the bottom fifth to annual growth of about 0.25 percent for the middle fifth. This growth is far less than the increase in economy-wide productivity over that time.
As EPI noted, “In contrast, those at the top fared much better: The stock market grew strongly, CEO compensation grew twice as fast as the stock market, [and] wealth grew for the top 1.0 percent.” In the still-fragile economic recovery, the bottom 90 percent of workers have seen their wages fall, while “the top 1.0 percent of wage earners are likely to quickly recoup all of the ground lost in the downturn.”