Bad news: Wages are down for pretty much everyone


(Photo from Flickr user slgckgc used under Creative Commons license)

Anyone earning a paycheck knows that raises are rare these days. But a paper released Wednesday shows that not only are wages flat from before the recession — they’re falling.

Real hourly wages are down for workers at all education levels in the first half of this year compared to the first half of 2013, according to the Economic Policy Institute paper. Pay fell by 1.1 percent for people with high school diplomas, by 1 percent for people with some college, 1.6 percent for people with college degrees and by 2.7 percent for people with advanced degrees. “The last year has been a poor one for American workers’ wages,” writes Elise Gould, an economist with the institute, in the report.

Gould notes the pay decreases seen over the last year are part of a longer trend: Wages have pretty much been flat or on the decline since the start of the recession. In fact, the only group that hasn’t seen a drop in real wages since 2007 is workers with advanced degrees, for which wages are basically flat.

Real hourly wages fell for almost all other workers — even for those with a college degree– between 2007 and 2014, according to the report. People with advanced degrees saw wages grow by 0.2 percent. Meanwhile, wages fell by 2.5 percent for people with college degrees and dropped by nearly 5 percent for people with high school diplomas.


(Economic Policy Institute)

As the chart shows, the pay gap between workers at different education levels is widening, but Gould says the reason that’s happening is problematic. It’s not that the most skilled and most in-demand workers are being paid more, which would happen if companies were competing to hire highly skilled workers. Instead, everyone else is being paid less.  (A paper released by the Federal Reserve Bank of St. Louis in July came to a similar conclusion.)

The same holds true when you look back over the past decade: People with college degrees and people with advanced degrees are making more than they did in 2000, while workers at all other levels of education are making less. Oddly enough, people with some college, meaning they started college but didn’t graduate, are actually worse off than people who only have high school diplomas.


(Economic Policy Institute)

Gould says the bigger issue is that wages are not keeping up with increases in productivity. While workers have often been asked to do more after companies downsized during the recession, they still aren’t getting paid much more for their labor.

The unemployment rate is down, but more people who want full-time work are settling for part-time jobs or giving up all together.  “When there’s a line of workers looking for a job, it’s hard for workers to successfully negotiate for higher wages,” Gould said. “Employers are really holding all the cards in terms of bargaining for wages.”

Of course, that doesn’t mean that individual workers have gone without a raise since 2007, only that on average, workers in those groups haven’t made much progress in terms of pay. And even if real wages are down over the past several years, people with college degrees and graduate degrees still earn more, on average, than people without them.

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Jonnelle Marte is a reporter covering personal finance. She was previously a writer for MarketWatch and the Wall Street Journal.
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Jonnelle Marte · August 27