Raising Wages is the Next President’s Key Task
A new paper by the estimable economists at the Economic Policy Institute help all of us understand the sources of income inequality in America today. Too often inequality is used to describe the poor growth in the standard of living in the U.S. But in fact, stagnant wages pure and simple is the cause of inequality except for those at the top. To say we must end inequality really means we must raise the wages of 90 percent or even more of American workers. This is no easy task.
The paper is called Raising America’s Pay, Why It’s Our Central Economic Challenge. It can be found at this link: file:///Users/jeffmadrick/Documents/Raising%20America’s%20Pay:%20Why%20It’s%20Our%20Central%20Economic%20Policy%20Challenge%20%7C%20Economic%20Policy%20Institute.webarchive
To sum it up, wages for the vast majority of American workers have stagnated or declined since 1979. This holds true even for those with a college degree. Median hourly wages rose by 0.2 percent on average each year since 1979. It declined for the bottom 10 percent of workers. It rose by 1 percent a year for those at the 95th percentile. Inequality then is really stagnation for almost all and a runaway of incomes at the top.
Such an analysis helps us focus our attention. Even the little progress made in reducing poverty, write the economists, is a function of stagnating or declining wages far more than it is the result of cultural issues like single-parent families.
No sense my summarizing the paper. The authors propose ways to raise hourly wages, that include a higher minimum wage. But this is the task the next president faces. And higher wages should increase aggregate demand, a major source of economic growth. Go read the paper. This short blog hasn’t done it justice.