Politics Wage suppression — not stagnation — is costing workers $10 an hour

00:10  11 june  2021
00:10  11 june  2021 Source:   thehill.com

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"I work a minimum 60 hours , Monday to Friday, 12 hours a day," he tells me. An hour or so after he walks Nikita to school he'll be leaving for the city, where he cleans CBD offices from 11:00am until 11:00pm, arriving home near midnight. Cleaner Tirtha Raj Karki works at least 60 hours a week and struggles But it maintains that a "strong economy" will deliver bigger wage rises over time and argues Labor's changes would be counterproductive, cost jobs and give too much power to unions. Above the din of the production line at the manufacturing plant where he works , machine operator Ray Wynne is

Since 1964, when data first became available, average hourly earnings for production and nonsupervisory workers have increased more or less steadily, from .50 an hour then to about .00 today A final possibility is that wage stagnation might have simply been a combination of a whole bunch of things, with workers taking hits from different directions in different decades. Inflation in the 1970s; slow productivity growth in the 1970s, 1980s and early 1990s; rapidly rising health-care costs layered on top in the 1980s and 1990s; Chinese competition and pressure for automation in the

Radical and rising economic inequality is no secret - and now, neither is its cause. New research from the Economic Policy Institute shows that the massive upward redistribution of income our nation has suffered these past four decades can largely be attributed to policies intentionally designed to suppress the wages of American workers.

a close up of text on a white background: Wage suppression — not stagnation — is costing workers $10 an hour © The Hill Wage suppression — not stagnation — is costing workers $10 an hour

To be clear, wage suppression was not an unintended consequence - it was the intentional outcome of policies at the legislative, regulatory and corporate levels deliberately implemented to keep wages low. As a nation, we chose to suppress wages on behalf of the rich and corporations - and with spectacular success.

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June 10 , 2021 at 10 :00 a.m. UTC. The owners of Klavon’s Ice Cream Parlor had hit a wall. For months, the 98-year-old confectionary in Pittsburgh couldn’t find applicants for the open positions it needed to fill ahead of warmer weather and, hopefully, sunnier times for the business after a rough year. But she credited increasing wages at her stores to an hour with helping her fill 71 positions since March. “We’re having pretty good success,” she said. Puckett, of Punch Pizza, said that raising wages had increased labor costs by 10 percent.

For example the opportunity cost of deciding not to work for an extra ten hours a week is the lost wages foregone. Click again to see the term . It is a type of opportunity cost . For example, going out on Friday night could involve several economic trade-offs. Let's say you really want to go to the bar with your friends. You will likely spend that evening and get home at 1 AM. The first trade-off might be the four hours you are giving up that you could use to perhaps finish your term paper.

In the post-World War II boom, from 1948 to 1979, wages broadly rose across the wage scale largely in lockstep with economy-wide productivity, helping to build the largest and most prosperous middle class the world has ever seen. But after 1979, the interests of the wealthiest Americans sharply diverged from everyone else. Productivity, net of depreciation, rose by 56 percent between 1979 and 2017, a period during which the top one-tenth of 1 percent saw their earnings soar at least five times that rate, while median hourly compensation gained only 13 percent and the bottom one-third of workers actually saw their real wages fall.

We conservatively estimate that this 43-percentage point gap between productivity and median compensation - this shift of national income from labor to profits and from the bottom 90 percent of earners to the very top earners - is costing the median American worker nearly $10 an hour - almost $20,700 a year for a full-time worker.

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If wages are stagnated who is buying all these new cars or are we already being paid way too much for our labour if despite stagnation we can continue to break these records. Not only this I travelled a lot during the past 10 years and always found it difficult getting flights that were fully booked , oh yes I also read foreign - One can also speculate that tightly linking corporate executive pay to profits and stock prices led to a shift in corporate strategy to suppress labor costs of typical and even white-collar workers and boost corporate profits, leading to a rise in the share of overall income going to profits.

Terms in this set ( 10 ). Maria earns per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of per hour of work . the utility of the things that can be bought with the wage the disutility of effort the reservation wage the probability of getting fired when

Many have sought to blame rising inequality on structural changes in the underlying economy, but our research finds that in fact deliberate policy choices are largely at fault. How can we be so confident in assigning intent? The answer comes from the policies that have played the biggest role - excessive unemployment, eroded collective bargaining and corporate-driven globalization - three policies which are inherently focused on suppressing wages that account for more than half the productivity-wage divergence and a loss of more than $5 an hour for the typical worker.

The largest and most obvious is excessive unemployment. The Federal Reserve is charged with the dual mandate of pursuing the maximum level of employment consistent with stable inflation, but since 1979 the Fed has aggressively erred on the side of the latter. Operating under the theory that tighter labor markets inevitably lead to higher inflation as rising wages push up consumer prices, the Fed has consistently reined in job growth by hiking interest rates whenever unemployment approached the allegedly "natural rate" (regardless of whether there was any evidence that inflation was actually on the rise).

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e) the wage that an employer must pay workers to reduce turnover to a reasonable level. Suppose we wish to examine the determinants of the equilibrium real wage and equilibrium level of employment (N). In a graph with the real wage on the vertical d) an increase in the markup of prices over costs .

Start studying Eco 111 ch 10 . Learn vocabulary, terms and more with flashcards, games and other study tools. When he's not competing, he works as a coach at a local tennis club. Valerie is a 36-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet. Antonio is a 42-year-old accountant who has been out of work for almost a year.

The result was an unemployment rate that averaged 6.3 percent from 1979 through 2017, a full point higher than during the previous three decades, intentionally denying workers the opportunity to benefit from tighter labor markets. We find that had unemployment averaged 5.5 percent (a modest goal) rather than 6.3 percent, median wages would have been 10 percent higher in 2017. Had the unemployment rate averaged 5 percent, median wages would have been 18.3 percent higher - at the 10th percentile, 21.2 percent higher.

The Federal Reserve intentionally raises interest rates and slows job growth which results in the diminished power of workers to demand higher wages. This is a fact. Thus, regardless of how seriously you take the inflation threat, you cannot deny that excessive unemployment is a choice - and that wage suppression is its proximate goal. And the same holds true of the litany of other policy choices that play an empirically assessable role in suppressing wages.

For example, the primary purpose of collective bargaining is to bargain for higher compensation, thus any policy that erodes the right to unionize intentionally suppresses wages. The purpose of outsourcing, both offshore and domestically, is to reduce labor costs, and thus to suppress wages. Misclassification, non-competes, anti-poaching agreements, forced arbitration agreements and most other labor market "innovations" are all implemented in an effort to suppress wages. And then, of course, there's the minimum wage.

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Unchanged since 2009, the federal minimum wage now stands at $7.25 an hour. Had it continued to rise with productivity as it had during the post-war decades, it would be $20 an hour today. The whole purpose of the minimum wage is to lift the wages of low-paid workers. Thus, our decades-long policy of eroding the minimum wage, the overtime threshold, and other labor standards can only be understood as a deliberate choice to suppress wages.

In fact, wage suppression has become such a norm that employers appear totally flummoxed at the reluctance of some workers to come back on the job at pre-COVID wages in the midst of a deadly pandemic. It apparently never occurs to them to entice workers back by offering higher pay. Instead, they blame more generous unemployment benefits for creating a "labor shortage." But in truth, what we have now - what we've long had - is a wage shortage created by decades of policies - enabled by economists and implemented on behalf of corporations and the wealthy - deliberately designed to keep wages low.

As our research reveals, our crisis of radical inequality is not an accident. It is a choice. Policy decisions are responsible for rising inequality - and policy decisions can reverse it. It appears that the Biden administration is taking this lesson to heart. The already-passed American Rescue Plan is driving us quickly to low unemployment. Some predict it will reach 3.5 percent by the end of 2022. Policies already underway include:

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  • Rebuilding collective bargaining, raising the minimum wage (legislatively and for contractors)
  • Policing worker misclassification
  • Restoring access to overtime for salaried workers
  • Reinvigorating the Equal Employment Opportunities Commission

The American Jobs Plan targets good quality jobs for noncollege-educated workers. This agenda is a recipe for restoring sustained robust wage growth for the vast majority, finally.

Larry Mishel is a distinguished fellow at the Economic Policy Institute and an author with Josh Bivens of the new report, "Identifying the Policy Levers Generating Wage Suppression and Wage Inequality." This research is part of the Unequal Bargaining Power initiative at EPI funded by the Hewlett and Spitzer foundations.

Nick Hanauer is a venture capitalist, founder of the public policy incubator Civic Ventures helped fund the report and is also the host of the podcast Pitchfork Economics.

Republicans Are Furious Fast-Food Workers Are Getting a Raise .
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