While the economy has been doing better in general, one very important indicator of economic health remains painfully elusive: wage growth. For the majority of Americans, wages have remained fairly stagnant during the bulk of the recovery, and a new report from the left-leaning Economic Policy Institute suggests that even recent upticks are likely less substantive than they seem.
While worker productivity has steadily been growing over the past few decades, most employees’ paychecks haven’t been growing accordingly. Just how big is the disconnect? According to EPI, if wages had kept pace with productivity growth over 30 or so years, a worker making $50,000 today would instead be earning about $75,000. Instead, the gains from productivity have been channeled elsewhere, often to executives and shareholders.
In 2015, things seemed like they might be getting back on track. Nominal wages (that is, wage growth not adjusted for inflation) increased by 1.8 percent on the year. But according to the report, 2015’s uptick was caused by a decrease in inflation rather than an improvement in actual wages, and when looking at real wages (adjusted for inflation) and factoring in core inflation, which specifically removes more volatile portions of the inflation measure—wage growth was zero.