Real Wages for US Workers

Over the past 54 years, the average hourly wage has risen from $2.50 to $22.65. However, when adjusting for inflation, the Pew Research Center found that in terms of real wages (purchasing power), there has not been nearly as much of an increase. Average wage growth each year is around 2-3%, although this does not account for the different levels of income.

"Usual weekly earnings" is another measure of salary. While we see from the graph above that average purchasing power is fairly unchanging over time, this only shows an average of all levels of income. Other data shows that since 2000, weekly wages have risen by 3% for those in the bottom tenth sector of the earnings distribution, but have risen "a cumulative 15.7%." The graph below shows the difference in wage increases for different levels of income.

Real wage, however, is not the only way that a worker is paid, and there are things like health insurance, retirement plans, and tuition reimbursement that need to be taken into account. Health insurance costs are thought to be one of the biggest reasons why employers are more limited in their ability to raise real wages. This is shown in the fact that while wage and salary costs have risen 5.3% total since 2001, total benefit costs have risen an "inflation-adjusted 22.5%" since 2001. Currently, there are also many different employment situations, plus employment has declined in some industries and inclined in others such as low-wage industries.

The issue with this slow and unequal wage growth is that it is a large reason behind the increasing income inequality, as those in the top tenth of earnings earn 8.7 times those in the bottom tenth. Overall, inflation-adjusted real wages account for a key factor into widening income gaps, and should it continue to worsen, the issue of the disappearing middle class will continue to be-- and become more of-- a huge issue.


Source: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/