US Workers' Wages Continue to Erode

LAWRENCE MISHEL felt a little down after drafting his latest Labor Day report on the United States workforce.

``It was the gloomiest thing I have ever written,'' the Economic Policy Institute economist says.

Mr. Mishel found that wages and job quality are still deteriorating on average, despite an economic recovery that is more than two years old. It is no wonder that people aren't optimistic about the economy, he says.

His study, written with a colleague, Jared Bernstein, is titled, ``The Joyless Recovery.''

On Tuesday, the Commerce Department released revised numbers on the gross domestic product (GDP), the nation's output of goods and services. They indicated that the recovery was a bit stronger than previously reported and that the 1990-91 recession wasn't so bad. From the trough of the recession in the first quarter of 1991 through June this year, the economy grew in real terms at a 2.4-percent annual rate instead of 2 percent - still weak compared to previous recoveries. During the recession, the economy shrank a real 1.6 percent rather than 2.2 percent.

But that good news doesn't affect Mishel's analysis. His numbers are based on employment and current population surveys. The improved GDP numbers signal that productivity has been rising faster than earlier statistics showed. But the extra income hasn't yet been delivered to employees.

Mishel and Mr. Bernstein find that the adverse wage trends of the late 1980s have continued through June 1993. Wages of blue-collar and non-college-educated workforce continue to fall, as they have since the late 1970s. Wages of relatively high-wage male workers - white collar and college educated - are slipping, as they have since 1987. Women, however, have done better.

The median hourly wage for males, in constant 1992 dollars, fell from $11.49 in 1989 to $10.92 this year, or 4.9 percent. That includes a 2.7-percent drop in this recovery. In the 1979-1989 period these men's wages slipped 11.1 percent.

In contrast, the median hourly wage for women has grown from $8.38 in 1989 to $8.54 this year. It is up 2 percent in the current business cycle and 6 percent since 1979.

Wage inequality has increased among both men and women. Wages of the average college graduate fell 0.8 percent between the first half of 1992 and the first half of 1993, but the wages of non-college-educated workers fell even faster. Males with graduate degrees got better wages. So did college-educated women.

Some observers have argued that growth in fringe benefits have offset declining wages. Mishel and Bernstein say that fringe benefit growth has been much less than the fall in real wages.

The two economists are analyzing wage levels, not family incomes. In the past, families were able to counter declining male wage rates with longer hours or sending more women to work for pay. But the proportion of the population participating in the labor force has been stagnant for three years and income growth has been slow. Thus, although not even 1992 family income numbers are available, Mishel says: ``It is hard to believe there is good income growth for anybody.''

Payroll employment in the first 28 months of the current recovery has increased 1.9 million. But, the study notes, this is little more than one-third as fast as in prior economic recoveries. And this is the only postwar recovery in which unemployment (at 6.8 percent) is no lower after 28 months of recovery.

Mishel and Bernstein also lament the fact that 526,000 of the 1.9 million jobs so far created in the recovery were provided by temporary-help agencies - a remarkable proportion since these agencies provide only 2 percent of total employment. The temporary-help industry has expanded 36 percent in the recovery. Involuntary part-timers fill three-quarters of new part-time jobs.

Considering their number and quality, Mishel finds it puzzling that President Clinton boasts about the jobs added this year.

Nor do economists see a quick improvement in the job scene. The Clinton administration this week cut its estimate of economic growth this year to a modest inflation-adjusted 2 percent. The latest statistics for July show personal incomes falling a slight 0.2 percent and construction down 0.5 percent. Maybe renewed bank lending will stimulate the recovery. But so far it remains sluggish.

You've read  of  free articles. Subscribe to continue.