Economics
Some Key Trends

Economics Policy Institute ... The top charts of 2015

Burgess COMMENTARY

Peter Burgess

The top charts of 2015

On some fronts, the economy is steadily recovering from the Great Recession. The unemployment rate is down, and the pace of monthly job growth is healing some of the damage inflicted by the downturn. But as EPI’s top charts of 2015 illustrate, the economy remains far from fully recovered—and is still failing ordinary Americans, who have endured decades of stagnant wages despite working more productively than ever.

But the charts also make clear that it doesn’t have to be this way. They show that policies that enhance low- and middle-income Americans’ economic leverage—such as keeping interest rates low, raising the minimum wage, making it easier for workers to bargain collectively, expanding access to overtime pay, and eliminating discriminatory practices that contribute to gender inequality—can go far toward creating an economy where prosperity is broadly shared.

1 Share of prime-age workers with a job hasn’t recovered from the recession Employment-to-population ratio of workers age 25–54, 1989–2015 Employment-to-population ratio Jan-1989 80.0% Feb-1989 79.9 Mar-1989 79.9 Apr-1989 79.8 May-1989 79.8 Jun-1989 79.8 Jul-1989 79.8 Aug-1989 79.9 Sep-1989 80.0 Oct-1989 79.9 Nov-1989 80.2 Dec-1989 80.1 Jan-1990 80.2 Feb-1990 80.2 Mar-1990 80.1 Apr-1990 79.9 May-1990 79.9 Jun-1990 79.8 Jul-1990 79.6 Aug-1990 79.5 Sep-1990 79.4 Oct-1990 79.4 Nov-1990 79.2 Dec-1990 79.0 Jan-1991 78.9 Feb-1991 78.9 Mar-1991 78.7 Apr-1991 79.0 May-1991 78.6 Jun-1991 78.7 Jul-1991 78.6 Aug-1991 78.5 Sep-1991 78.6 Oct-1991 78.5 Nov-1991 78.4 Dec-1991 78.3 Jan-1992 78.4 Feb-1992 78.2 Mar-1992 78.2 Apr-1992 78.4 May-1992 78.4 Jun-1992 78.5 Jul-1992 78.4 Aug-1992 78.4 Sep-1992 78.3 Oct-1992 78.2 Nov-1992 78.2 Dec-1992 78.2 Jan-1993 78.2 Feb-1993 78.1 Mar-1993 78.2 Apr-1993 78.2 May-1993 78.5 Jun-1993 78.6 Jul-1993 78.6 Aug-1993 78.8 Sep-1993 78.6 Oct-1993 78.7 Nov-1993 79.0 Dec-1993 79.0 Jan-1994 78.9 Feb-1994 78.9 Mar-1994 78.9 Apr-1994 79.0 May-1994 79.2 Jun-1994 78.8 Jul-1994 79.1 Aug-1994 79.2 Sep-1994 79.6 Oct-1994 79.6 Nov-1994 79.8 Dec-1994 79.8 Jan-1995 79.7 Feb-1995 80.0 Mar-1995 79.9 Apr-1995 79.8 May-1995 79.7 Jun-1995 79.5 Jul-1995 79.7 Aug-1995 79.6 Sep-1995 79.8 Oct-1995 79.8 Nov-1995 79.7 Dec-1995 79.7 Jan-1996 79.8 Feb-1996 79.9 Mar-1996 79.9 Apr-1996 79.9 May-1996 80.0 Jun-1996 80.1 Jul-1996 80.4 Aug-1996 80.5 Sep-1996 80.4 Oct-1996 80.6 Nov-1996 80.5 Dec-1996 80.5 Jan-1997 80.5 Feb-1997 80.4 Mar-1997 80.6 Apr-1997 80.7 May-1997 80.6 Jun-1997 80.9 Jul-1997 81.1 Aug-1997 81.3 Sep-1997 81.1 Oct-1997 81.1 Nov-1997 81.0 Dec-1997 81.0 Jan-1998 81.0 Feb-1998 81.0 Mar-1998 81.0 Apr-1998 81.1 May-1998 81.0 Jun-1998 81.0 Jul-1998 81.1 Aug-1998 81.2 Sep-1998 81.3 Oct-1998 81.1 Nov-1998 81.2 Dec-1998 81.3 Jan-1999 81.8 Feb-1999 81.5 Mar-1999 81.3 Apr-1999 81.3 May-1999 81.4 Jun-1999 81.4 Jul-1999 81.2 Aug-1999 81.3 Sep-1999 81.3 Oct-1999 81.5 Nov-1999 81.6 Dec-1999 81.5 Jan-2000 81.8 Feb-2000 81.8 Mar-2000 81.7 Apr-2000 81.9 May-2000 81.5 Jun-2000 81.5 Jul-2000 81.3 Aug-2000 81.1 Sep-2000 81.1 Oct-2000 81.1 Nov-2000 81.3 Dec-2000 81.4 Jan-2001 81.4 Feb-2001 81.3 Mar-2001 81.3 Apr-2001 80.9 May-2001 80.8 Jun-2001 80.6 Jul-2001 80.5 Aug-2001 80.2 Sep-2001 80.2 Oct-2001 79.9 Nov-2001 79.7 Dec-2001 79.8 Jan-2002 79.6 Feb-2002 79.8 Mar-2002 79.6 Apr-2002 79.5 May-2002 79.4 Jun-2002 79.2 Jul-2002 79.1 Aug-2002 79.3 Sep-2002 79.4 Oct-2002 79.2 Nov-2002 78.8 Dec-2002 79.0 Jan-2003 78.9 Feb-2003 78.9 Mar-2003 79.0 Apr-2003 79.1 May-2003 78.9 Jun-2003 78.9 Jul-2003 78.8 Aug-2003 78.7 Sep-2003 78.6 Oct-2003 78.6 Nov-2003 78.7 Dec-2003 78.8 Jan-2004 78.9 Feb-2004 78.8 Mar-2004 78.7 Apr-2004 78.9 May-2004 79 Jun-2004 79.1 Jul-2004 79.2 Aug-2004 79 Sep-2004 79 Oct-2004 79 Nov-2004 79.1 Dec-2004 78.9 Jan-2005 79.2 Feb-2005 79.2 Mar-2005 79.2 Apr-2005 79.4 May-2005 79.5 Jun-2005 79.2 Jul-2005 79.4 Aug-2005 79.6 Sep-2005 79.4 Oct-2005 79.3 Nov-2005 79.2 Dec-2005 79.3 Jan-2006 79.6 Feb-2006 79.7 Mar-2006 79.8 Apr-2006 79.6 May-2006 79.7 Jun-2006 79.8 Jul-2006 79.8 Aug-2006 79.8 Sep-2006 79.9 Oct-2006 80.1 Nov-2006 80 Dec-2006 80.1 Jan-2007 80.3 Feb-2007 80.1 Mar-2007 80.2 Apr-2007 80 May-2007 80 Jun-2007 79.9 Jul-2007 79.8 Aug-2007 79.8 Sep-2007 79.7 Oct-2007 79.6 Nov-2007 79.7 Dec-2007 79.7 Jan-2008 80 Feb-2008 79.9 Mar-2008 79.8 Apr-2008 79.6 May-2008 79.5 Jun-2008 79.4 Jul-2008 79.2 Aug-2008 78.8 Sep-2008 78.8 Oct-2008 78.4 Nov-2008 78.1 Dec-2008 77.6 Jan-2009 77 Feb-2009 76.7 Mar-2009 76.2 Apr-2009 76.2 May-2009 75.9 Jun-2009 75.9 Jul-2009 75.8 Aug-2009 75.6 Sep-2009 75.1 Oct-2009 75 Nov-2009 75.2 Dec-2009 74.8 Jan-2010 75.1 Feb-2010 75.1 Mar-2010 75.1 Apr-2010 75.4 May-2010 75.1 Jun-2010 75.2 Jul-2010 75.1 Aug-2010 75 Sep-2010 75.1 Oct-2010 75 Nov-2010 74.8 Dec-2010 75 Jan-2011 75.2 Feb-2011 75.1 Mar-2011 75.3 Apr-2011 75.1 May-2011 75.2 Jun-2011 75 Jul-2011 75 Aug-2011 75.1 Sep-2011 74.9 Oct-2011 74.9 Nov-2011 75.3 Dec-2011 75.4 Jan-2012 75.6 Feb-2012 75.6 Mar-2012 75.7 Apr-2012 75.7 May-2012 75.7 Jun-2012 75.7 Jul-2012 75.6 Aug-2012 75.7 Sep-2012 75.9 Oct-2012 76 Nov-2012 75.8 Dec-2012 75.9 Jan-2013 75.7 Feb-2013 75.9 Mar-2013 75.9 Apr-2013 75.9 May-2013 76 Jun-2013 75.9 Jul-2013 76 Aug-2013 75.9 Sep-2013 75.9 Oct-2013 75.5 Nov-2013 76 Dec-2013 76.1 Jan-2014 76.5 Feb-2014 76.5 Mar-2014 76.6 Apr-2014 76.5 May-2014 76.4 Jun-2014 76.8 Jul-2014 76.6 Aug-2014 76.8 Sep-2014 76.8 Oct-2014 76.9 Nov-2014 76.9 Dec-2014 77 Jan-2015 77.2 Feb-2015 77.3 Mar-2015 77.2 Apr-2015 77.2 May-2015 77.2 Jun-2015 77.2 Jul-2015 77.1 Aug-2015 77.2 Sep-2015 77.2 Oct-2015 77.2 Nov-2015 77.4% 77.4% 1990 1995 2000 2005 2010 2015 74 76 78 80 82 84% ChartData Note: Shaded areas denote recessions. Source: Adapted from Elise Gould, 'What to Watch on Jobs Day: Job Growth Has Only Been Fast Enough to Keep Up with Population Growth,' Working Economics (Economic Policy Institute blog), November 5, 2015 Share Tweet Embed Download image While the headline unemployment rate has fallen nearly to pre–Great Recession levels, other measures show much less progress. In particular, the share of 25- to 54-year-olds with a job is a crucial measure of how far from full recovery the economy truly is. From its peak before the Great Recession to its trough following the downturn, the share of 25- to 54-year-olds with a job fell 5.6 percentage points. Since then, it has clawed back less than half of this decline. It currently sits at 77.4 percent, 2.9 percentage points below its pre–Great Recession peak. Even more striking, this measure is a whopping 4.5 percentage points below the peak reached in 2000. This provides strong evidence that the U.S. economy hasn’t yet achieved a full recovery from the Great Recession. It also illustrates that we’re far from the genuine full employment that prevailed in the late 1990s, which was the last time that nearly all American workers saw healthy wage increases. Until the labor market is tighter—in other words, until the share of Americans age 25–54 with a job has fully recovered—employers won’t need to pay higher wages to get and keep the workers they need. 2 The gap between what wages are, and what they would be in a healthy economy, is growing Cumulative nominal average hourly earnings, actual and hypothetical had they grown 3.5% annually since the recession began, 2007–2015 Average hourly earnings of all private employees Hypothetical, assuming 3.5% growth*

Jan-2007 $20.6000 Feb-2007 $20.6800 Mar-2007 $20.7700 Apr-2007 $20.8200 May-2007 $20.8800 Jun-2007 $21.0000 Jul-2007 $21.0000 Aug-2007 $21.0300 Sep-2007 $21.0800 Oct-2007 $21.1100 Nov-2007 $21.1500 Dec-2007 $21.2200 $21.2200 Jan-2008 $21.2400 $21.2809 Feb-2008 $21.3200 $21.3420 Mar-2008 $21.4100 $21.4033 Apr-2008 $21.4200 $21.4647 May-2008 $21.5100 $21.5264 Jun-2008 $21.5600 $21.5882 Jul-2008 $21.6300 $21.6501 Aug-2008 $21.7300 $21.7123 Sep-2008 $21.7600 $21.7746 Oct-2008 $21.8100 $21.8371 Nov-2008 $21.9200 $21.8998 Dec-2008 $21.9800 $21.9627 Jan-2009 $22.0000 $22.0258 Feb-2009 $22.0100 $22.0890 Mar-2009 $22.0800 $22.1524 Apr-2009 $22.1100 $22.2160 May-2009 $22.1200 $22.2798 Jun-2009 $22.1600 $22.3437 Jul-2009 $22.1900 $22.4079 Aug-2009 $22.2500 $22.4722 Sep-2009 $22.2700 $22.5367 Oct-2009 $22.3200 $22.6014 Nov-2009 $22.3700 $22.6663 Dec-2009 $22.3800 $22.7314 Jan-2010 $22.4300 $22.7967 Feb-2010 $22.4500 $22.8621 Mar-2010 $22.4700 $22.9277 Apr-2010 $22.5100 $22.9936 May-2010 $22.5500 $23.0596 Jun-2010 $22.5400 $23.1258 Jul-2010 $22.6000 $23.1922 Aug-2010 $22.6400 $23.2587 Sep-2010 $22.6800 $23.3255 Oct-2010 $22.7400 $23.3925 Nov-2010 $22.7400 $23.4596 Dec-2010 $22.7700 $23.5270 Jan-2011 $22.8600 $23.5945 Feb-2011 $22.8700 $23.6623 Mar-2011 $22.8900 $23.7302 Apr-2011 $22.9400 $23.7983 May-2011 $23.0000 $23.8667 Jun-2011 $23.0200 $23.9352 Jul-2011 $23.1100 $24.0039 Aug-2011 $23.0700 $24.0728 Sep-2011 $23.1200 $24.1419 Oct-2011 $23.2200 $24.2112 Nov-2011 $23.2000 $24.2807 Dec-2011 $23.2200 $24.3504 Jan-2012 $23.2600 $24.4203 Feb-2012 $23.3000 $24.4905 Mar-2012 $23.3700 $24.5608 Apr-2012 $23.4000 $24.6313 May-2012 $23.4200 $24.7020 Jun-2012 $23.4700 $24.7729 Jul-2012 $23.5200 $24.8440 Aug-2012 $23.4900 $24.9154 Sep-2012 $23.5800 $24.9869 Oct-2012 $23.5700 $25.0586 Nov-2012 $23.6400 $25.1306 Dec-2012 $23.7300 $25.2027 Jan-2013 $23.7600 $25.2751 Feb-2013 $23.7900 $25.3476 Mar-2013 $23.8200 $25.4204 Apr-2013 $23.8700 $25.4934 May-2013 $23.8900 $25.5666 Jun-2013 $23.9700 $25.6400 Jul-2013 $23.9700 $25.7136 Aug-2013 $24.0200 $25.7874 Sep-2013 $24.0600 $25.8614 Oct-2013 $24.1000 $25.9357 Nov-2013 $24.1700 $26.0101 Dec-2013 $24.1800 $26.0848 Jan-2014 $24.2200 $26.1597 Feb-2014 $24.3000 $26.2348 Mar-2014 $24.3400 $26.3101 Apr-2014 $24.3400 $26.3856 May-2014 $24.4000 $26.4614 Jun-2014 $24.4600 $26.5374 Jul-2014 $24.4700 $26.6135 Aug-2014 $24.5500 $26.6899 Sep-2014 $24.5500 $26.7666 Oct-2014 $24.5900 $26.8434 Nov-2014 $24.6800 $26.9205 Dec-2014 $24.6200 $26.9978 Jan-2015 $24.7600 $27.0753 Feb-2015 $24.7800 $27.1530 Mar-2015 $24.8500 $27.2310 Apr-2015 $24.8900 $27.3091 May-2015 $24.9500 $27.3875 Jun-2015 $24.9500 $27.4662 Jul-2015 $25.0100 $27.5450 Aug-2015 $25.1000 $27.6241 Sep-2015 $25.1200 $27.7034 Oct-2015 $25.2100 $27.7829 Nov-2015 $25.2500 $27.8627 Hypothetical, assuming 3.5% growth* Average hourly earnings of all private employees 2008 2010 2012 2014 2016 20 22.5 25 27.5 $30 ChartData * Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income Source: Adapted from EPI's 'Nominal Wage Tracker' Share Tweet Embed Download image Another measure that highlights the still-precarious state of the U.S. economy is the slow growth of nominal wages (wages unadjusted for inflation). Nominal wages of private-sector employees have only risen between 2 and 2.5 percent this year—and every other year since the recovery began. In a healthy economy, nominal wages should grow roughly 3.5 percent annually. Each year that wage growth misses this target just widens the gap that needs to be filled to restore wages to pre–Great Recession levels. The deceleration of nominal wage growth—and the failure so far to reverse this trend—is the clearest sign that the American economy remains weak because it is still starved of aggregate demand (spending by households, businesses, and governments). It is thus the clearest signal that policymakers—particularly the Federal Reserve—should hold off on intentionally slowing economic growth in 2016.

3a Workers’ pay is no longer rising along with productivity Growth in economy-wide productivity and a typical worker’s hourly compensation, 1948–2014 Year Hourly compensation Net productivity 1948 0.0% 0.0% 1949 6.3% 1.5% 1950 10.5% 9.3% 1951 11.8% 12.3% 1952 15.0% 15.6% 1953 20.8% 19.5% 1954 23.5% 21.6% 1955 28.7% 26.5% 1956 33.9% 26.7% 1957 37.1% 30.1% 1958 38.2% 32.8% 1959 42.5% 37.6% 1960 45.5% 40.0% 1961 48.0% 44.3% 1962 52.5% 49.8% 1963 55.0% 55.0% 1964 58.5% 60.0% 1965 62.5% 64.9% 1966 64.9% 70.0% 1967 66.9% 72.0% 1968 70.7% 77.2% 1969 74.7% 77.9% 1970 76.6% 80.4% 1971 82.0% 87.1% 1972 91.2% 92.0% 1973 91.3% 96.7% 1974 87.0% 93.7% 1975 86.8% 97.9% 1976 89.7% 103.4% 1977 93.1% 105.8% 1978 96.0% 107.8% 1979 93.4% 108.1% 1980 88.6% 106.6% 1981 87.6% 111.0% 1982 87.8% 107.9% 1983 88.3% 114.1% 1984 86.9% 119.7% 1985 86.3% 123.4% 1986 87.3% 128.0% 1987 84.6% 129.1% 1988 83.9% 131.8% 1989 83.7% 133.6% 1990 82.2% 137.0% 1991 81.9% 138.9% 1992 83.0% 147.5% 1993 83.4% 148.4% 1994 83.8% 150.7% 1995 82.7% 150.8% 1996 82.8% 156.9% 1997 84.8% 160.5% 1998 89.2% 165.7% 1999 91.9% 172.1% 2000 92.9% 178.5% 2001 95.6% 182.9% 2002 99.5% 190.7% 2003 101.6% 200.2% 2004 101.0% 208.3% 2005 100.0% 213.6% 2006 100.2% 215.6% 2007 101.7% 217.8% 2008 101.8% 218.3% 2009 109.7% 224.9% 2010 111.5% 234.4% 2011 109.1% 234.8% 2012 107.3% 236.6% 2013 108.3% 236.9% 2014 109.0% 238.7% Cumulative percent change since 1948 Productivity 238.7% Hourly compensation 109.0% 1960 1980 2000 0 50 100 150 200 250% 1948–1973:Productivity: 96.7%Hourly compensation:91.3% 1973–2014:Productivity: 72.2%Hourly compensation: 9.2% ChartData Note: Data are for average hourly compensation of production/nonsupervisory workers in the private sector and net productivity of the total economy. 'Net productivity' is the growth of output of goods and services minus depreciation per hour worked. Source: Adapted from Figure A in Josh Bivens and Lawrence Mishel, Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real, EPI Briefing Paper #406, September 2, 2015 Share Tweet Embed Download image Anemic wage growth is nothing new—American workers have had to contend with stagnant wages for decades. From 1973 to 2014, the hourly pay (wages and benefits) of typical workers increased only 9.2 percent over 41 years (after adjusting for inflation). Over this same period, net productivity (how much workers produce per hour) rose 72.2 percent. This means that although Americans are working more productively than ever, the fruits of their labors have primarily accrued to managers and executives at the top of the pay scale and to corporate profits. In contrast, for two-and-a-half decades beginning in the late 1940s, the pay of typical workers rose in tandem with productivity.

3b Inequality explains 70% of the pay–productivity gap Growth of productivity, real average compensation (consumer and producer), and real median compensation, 1973–2014 Year Median hourly compensation Consumer avg. hourly compensation Net productivity Producer avg. hourly compensation 1973 0.0% 0.0% 0.0% 0.0% 1974 -2.0% -0.9% -1.6% 0.1% 1975 -0.5% 1.0% 0.6% 1.2% 1976 0.4% 2.8% 3.4% 3.1% 1977 1.3% 3.9% 4.6% 4.5% 1978 2.5% 5.0% 5.6% 5.4% 1979 1.9% 4.9% 5.8% 6.6% 1980 1.1% 4.1% 5.0% 7.9% 1981 -1.2% 4.5% 7.2% 8.6% 1982 0.5% 5.6% 5.7% 9.7% 1983 0.4% 5.8% 8.8% 10.0% 1984 0.7% 6.0% 11.7% 10.8% 1985 1.7% 7.7% 13.6% 12.6% 1986 3.8% 11.2% 15.9% 16.3% 1987 3.4% 11.9% 16.5% 18.1% 1988 2.7% 13.3% 17.8% 19.9% 1989 2.6% 12.1% 18.8% 19.1% 1990 2.6% 13.4% 20.4% 21.8% 1991 3.6% 14.6% 21.4% 23.4% 1992 5.2% 18.0% 25.8% 27.3% 1993 4.5% 17.1% 26.2% 26.5% 1994 2.4% 16.3% 27.4% 25.7% 1995 0.7% 15.7% 27.5% 25.6% 1996 -0.4% 17.1% 30.6% 28.0% 1997 1.4% 18.4% 32.4% 29.8% 1998 4.0% 22.7% 35.0% 34.7% 1999 7.1% 25.3% 38.3% 38.2% 2000 6.8% 29.1% 41.6% 43.8% 2001 9.6% 31.2% 43.8% 46.6% 2002 11.3% 32.5% 47.8% 47.9% 2003 13.3% 35.1% 52.6% 51.1% 2004 13.6% 37.7% 56.7% 53.9% 2005 12.5% 37.9% 59.4% 54.6% 2006 12.3% 38.7% 60.4% 56.1% 2007 11.0% 40.6% 61.5% 58.4% 2008 11.6% 39.3% 61.8% 59.8% 2009 14.0% 42.1% 65.1% 60.9% 2010 12.7% 42.6% 70.0% 61.9% 2011 9.6% 41.1% 70.2% 61.6% 2012 8.5% 41.6% 71.1% 62.4% 2013 9.6% 41.2% 71.2% 61.8% 2014 8.7% 42.5% 72.2% 63.3% Cumulative percent change since 1973 72.2% 8.7% Net productivity Producer avg. hourly compensation Consumer avg. hourly compensation Median hourly compensation 0 20 40 60 80% 1980 1990 2000 2010 Loss in labor’s share of income (11.5% of gap) Divergence between consumer and output prices (29.6% of gap) Inequality of compensation (58.9% of gap) ChartData Note: Over 1973–2014, over half (58.9 percent) of the growth of the productivity–median compensation gap was due to increased compensation inequality, and about a tenth (11.5 percent) was due to a loss in labor’s income share—meaning that about 70 percent of the gap is attributable to inequality. All compensation data are in real terms. Data are for all workers. Net productivity is the growth of output of goods and services minus depreciation, per hour worked. Source: Adapted from Figure C in Josh Bivens and Lawrence Mishel, Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real, EPI Briefing Paper #406, September 2, 2015 Share Tweet Embed Download image The prosperity generated over the last four decades has failed to “trickle down” to the vast majority largely because policy choices have exacerbated inequality by allowing those with the most income, wealth, and power to capture these gains. Indeed, more than 70 percent of the pay–productivity divergence over 1973–2014 can be explained by rising inequality. This inequality takes two forms: inequality within the pay structure, and the loss in workers’ share of income (in other words, income is increasingly going toward capital owners—for example, in the form of profits—instead of toward employee compensation). And since 2000, rising inequality explains more than 85 percent of the pay–productivity divergence. For future productivity gains to lead to robust wage growth and widely shared prosperity, we need to institute policies that reconnect pay and productivity—such as those in EPI’s Agenda to Raise America’s Pay.

4 Had the minimum wage risen in line with productivity since 1968, it would be over $18 Real and nominal value of the federal minimum wage, and total economy productivity, 1938–2014 Real federal minimum wage (2014$) Projected under RTWA* Productivity Projected Net Productivity Nominal minimum wage Projected nominal minimum wage 1938 $3.67 $ 0.25 1939 $4.46 $ 0.30 1940 $4.43 $ 0.30 1941 $4.22 $ 0.30 1942 $3.81 $ 0.30 1943 $3.59 $ 0.30 1944 $3.53 $ 0.30 1945 $4.60 $ 0.40 1946 $4.24 $ 0.40 1947 $3.71 $ 0.40 1948 $3.43 $5.39 $ 0.40 1949 $3.48 $5.47 $ 0.40 1950 $6.44 $5.89 $ 0.75 1951 $5.97 $6.05 $ 0.75 1952 $5.85 $6.23 $ 0.75 1953 $5.81 $6.44 $ 0.75 1954 $5.77 $6.55 $ 0.75 1955 $5.79 $6.81 $ 0.75 1956 $7.60 $6.82 $ 1.00 1957 $7.36 $7.01 $ 1.00 1958 $7.16 $7.15 $ 1.00 1959 $7.11 $7.41 $ 1.00 1960 $6.99 $7.54 $ 1.00 1961 $7.96 $7.77 $ 1.15 1962 $7.88 $8.07 $ 1.15 1963 $8.45 $8.35 $ 1.25 1964 $8.34 $8.62 $ 1.25 1965 $8.21 $8.88 $ 1.25 1966 $7.98 $9.16 $ 1.25 1967 $8.67 $9.27 $ 1.40 1968 $9.54 $9.54 $ 1.60 1969 $9.13 $9.58 $ 1.60 1970 $8.71 $9.71 $ 1.60 1971 $8.35 $10.08 $ 1.60 1972 $8.10 $10.34 $ 1.60 1973 $7.62 $10.60 $ 1.60 1974 $8.66 $10.43 $ 2.00 1975 $8.40 $10.66 $ 2.10 1976 $8.70 $10.96 $ 2.30 1977 $8.18 $11.08 $ 2.30 1978 $8.83 $11.19 $ 2.65 1979 $8.81 $11.21 $ 2.90 1980 $8.48 $11.12 $ 3.10 1981 $8.37 $11.36 $ 3.35 1982 $7.89 $11.20 $ 3.35 1983 $7.57 $11.53 $ 3.35 1984 $7.27 $11.83 $ 3.35 1985 $7.03 $12.03 $ 3.35 1986 $6.90 $12.28 $ 3.35 1987 $6.68 $12.34 $ 3.35 1988 $6.44 $12.48 $ 3.35 1989 $6.18 $12.58 $ 3.35 1990 $6.67 $12.76 $ 3.80 1991 $7.20 $12.87 $ 4.25 1992 $7.03 $13.33 $ 4.25 1993 $6.86 $13.38 $ 4.25 1994 $6.71 $13.50 $ 4.25 1995 $6.56 $13.51 $ 4.25 1996 $7.14 $13.84 $ 4.75 1997 $7.57 $14.03 $ 5.15 1998 $7.47 $14.31 $ 5.15 1999 $7.32 $14.65 $ 5.15 2000 $7.08 $15.00 $ 5.15 2001 $6.89 $15.23 $ 5.15 2002 $6.78 $15.66 $ 5.15 2003 $6.63 $16.17 $ 5.15 2004 $6.46 $16.60 $ 5.15 2005 $6.25 $16.89 $ 5.15 2006 $6.05 $17.00 $ 5.15 2007 $6.68 $17.12 $ 5.85 2008 $7.20 $17.15 $ 6.55 2009 $8.00 $17.50 $ 7.25 2010 $7.87 $18.01 $ 7.25 2011 $7.63 $18.03 $ 7.25 2012 $7.48 $18.15 $ 7.25 2013 $7.37 $18.33 $ 7.25 2014 $7.25 $18.42 $18.42 $ 7.25 $ 7.25 1968:$9.54 2014:$18.42 2014:$7.25 Productivity Real federal minimum wage (2014$) Nominal minimum wage 1940 1960 1980 2000 0 5 10 15 $20 ChartData Note: The productivity series is total economy productivity net depreciation, indexed to the 1968 real value of the minimum wage. Minimum-wage values are in 2014 dollars deflated by the CPI-U-RS. Projections for productivity growth use CBO Budget and Economic Outlook, 2015 to 2025. Source: Adapted from Figure A in David Cooper, Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American Workers, EPI Briefing Paper #405, July 14, 2015 Share Tweet Embed Download image One way to raise Americans’ wages is to increase the minimum wage. Today, a range of policy proposals to raise minimum wages at the federal, state, and local levels have proliferated. Many of them seem extraordinarily ambitious, but this is primarily because the economy has grown so unbalanced in recent decades. Had wage growth been equitable and strong in recent decades, today’s minimum wage would be far higher. For example, had the minimum wage kept pace with productivity gains after 1968, as it did from its enactment in 1938 to 1968, it would stand at $18.42 instead of $7.25. And had the minimum wage maintained its peak inflation-adjusted value (reached in 1968), it would be $9.54. But unfortunately, wage growth hasn’t been distributed equitably in recent decades. This is because a multitude of policy decisions have sapped low- and moderate-wage workers’ power to bargain with their employers for higher pay. Restoring bargaining power to American workers will similarly require a range of policies. A good place to start is raising the federal minimum wage. In fact, increasing it to $12 by 2020 would boost wages for over 35 million workers—one-quarter of the American workforce.

5 States with the largest declines in collective bargaining have had slower pay growth Median hourly compensation growth and change in state collective bargaining coverage, 1979–2012 States with the largest declines in collective bargaining have had slower pay growth: Median hourly compensation growth and change in state collective bargaining coverage, 1979–2012 Note: Excludes Alaska and the District of Columbia. Source: Adapted from Figure B in David Cooper and Lawrence Mishel, The Erosion of Collective Bargaining Has Widened the Gap Between Productivity and Pay, EPI Report, January 6, 2015 Share Tweet Embed Download image Making it easier for workers to bargain collectively for higher pay is another way to raise Americans’ wages. Since 2010, Republican governors have attacked collective bargaining at the state level. These attacks are not just a narrow attack on unions—they are an ambitious attack on middle-class wages. And unfortunately, they have worked. States where collective bargaining has declined the fastest have seen the slowest growth (and in some cases, even declines) in median hourly compensation over 1979–2012. This illustrates why it’s crucial to restore and expand the right to collective bargaining—a key component of EPI’s Agenda to Raise America’s Pay.

6 Expanding access to overtime pay could benefit over 9 million children Number of fathers, mothers, and their children who would newly benefit from raising the overtime salary threshold to $933 per week from $455 per week, 2014 Newly covered under $933 Mothers 2,402,000 Fathers 2,219,000 Children (under age 18) 9,179,000 2,402,000 2,219,000 9,179,000 Mothers Fathers Children (under age18) 0 2,500,000 5,000,000 7,500,000 10,000,000 ChartData Note: The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers. Source: Adapted from Figure A in Ross Eisenbrey and Lawrence Mishel, Raising the Overtime Threshold Would Directly Benefit 13.5 Million Workers: Here Is a Breakdown of Who They Are, Economic Policy Institute Report, August 3, 2015 Share Tweet Embed Download image Making more Americans eligible for time-and-a-half overtime pay is yet another policy that will help working families get their fair share of economic growth. Earlier this year, new regulations from the Department of Labor proposed raising the overtime threshold—the salary level below which workers are automatically eligible for overtime pay—from less than $24,000 ($455 per week) to roughly $50,000 ($933 per week). This threshold had been changed only trivially since 1975, even as inflation eroded its effect. The rule change—which is expected to become law next year—will benefit approximately 13.5 million workers by making them newly eligible for overtime pay. Because America’s workers are also America’s parents, this rule change could potentially raise living standards for more than 9 million children. This illustrates that policy decisions matter when it comes to American families’ wages—and that using policy to boost wages needs to be a top priority.

7 CEOs make 300 times more than typical workers CEO-to-worker compensation ratio, 1965–2014 Year CEO-to-worker compensation ratio 1965/01/01 20.0 1966/01/01 21.2 1967/01/01 22.4 1968/01/01 23.7 1969/01/01 23.4 1970/01/01 23.2 1971/01/01 22.9 1972/01/01 22.6 1973/01/01 22.3 1974/01/01 23.7 1975/01/01 25.1 1976/01/01 26.6 1977/01/01 28.2 1978/01/01 29.9 1979/01/01 31.8 1980/01/01 33.8 1981/01/01 35.9 1982/01/01 38.2 1983/01/01 40.6 1984/01/01 43.2 1985/01/01 45.9 1986/01/01 48.9 1987/01/01 51.9 1988/01/01 55.2 1989/01/01 58.7 1990/01/01 71.2 1991/01/01 86.2 1992/01/01 104.4 1993/01/01 111.8 1994/01/01 87.3 1995/01/01 122.6 1996/01/01 153.8 1997/01/01 233.0 1998/01/01 321.8 1999/01/01 286.7 2000/01/01 376.1 2001/01/01 214.2 2002/01/01 188.5 2003/01/01 227.5 2004/01/01 256.6 2005/01/01 308.0 2006/01/01 341.4 2007/01/01 345.3 2008/01/01 239.3 2009/01/01 195.8 2010/01/01 229.7 2011/01/01 235.5 2012/01/01 285.3 2013/01/01 303.1 2014/01/01 303.4 20.0 29.9 58.7 87.3 376.1 188.5 345.3 195.8 303.4 1970 1980 1990 2000 2010 0 100 200 300 400 ChartData Note: CEO annual compensation is computed using the 'options realized' compensation series, which includes salary, bonus, restricted stock grants, options exercised, and long-term incentive payouts for CEOs at the top 350 U.S. firms ranked by sales. Source: Adapted from Figure C in Lawrence Mishel and Alyssa Davis, Top CEOs Make 300 Times More than Typical Workers: Pay Growth Surpasses Stock Gains and Wage Growth of Top 0.1 Percent, EPI Issue Brief #399, June 21, 2015 Share Tweet Embed Download image In contrast to the vast majority of workers, CEOs have enjoyed extraordinary pay growth in recent decades. The gap between CEOs and typical workers has expanded enormously over the past 50 years. In 1965 CEOs made 20.0 times as much as typical workers. This ratio rose to 29.9 in 1979 and 58.7 in 1989—and now sits at 303.4. While this is down a bit from previous peaks in 2000 and 2007, CEO pay is recovering rapidly from the Great Recession. There was perhaps a time when angst about CEO pay was largely symbolic. But CEOs now make so much—and set patterns of pay for other corporate managers and in other high-end labor markets (such as those in medicine and law, and in leadership positions in academia and large nonprofits)—that it is imperative that some competitive discipline be brought to CEO pay-setting. This would free up more income for the vast majority of workers whose pay has stagnated in recent decades.

8 Eliminating the gender and inequality wage gap would raise women’s wages by more than 70% Median hourly wages for men and women, compared with wages for all workers had they increased in tandem with productivity, 1979–2014 Wages for all workers Men’s wages Women’s wages Wages for all workers had they grown in tandem with productivity 1979 $16.00 $20.13 $12.61 $16.00 1980 $15.85 $19.83 $12.58 $15.88 1981 $15.43 $19.42 $12.47 $16.22 1982 $15.65 $19.27 $12.49 $15.98 1983 $15.57 $19.01 $12.65 $16.46 1984 $15.65 $18.92 $12.76 $16.89 1985 $15.79 $19.10 $12.82 $17.18 1986 $16.09 $19.64 $13.15 $17.53 1987 $16.10 $19.53 $13.49 $17.62 1988 $16.00 $19.16 $13.61 $17.82 1989 $15.91 $18.61 $13.60 $17.97 1990 $15.90 $18.32 $13.64 $18.22 1991 $16.00 $18.28 $13.70 $18.37 1992 $16.14 $18.13 $13.80 $19.03 1993 $16.02 $17.98 $13.96 $19.10 1994 $15.74 $17.66 $13.84 $19.28 1995 $15.62 $17.93 $13.75 $19.29 1996 $15.55 $17.81 $13.82 $19.75 1997 $15.92 $17.92 $14.16 $20.03 1998 $16.36 $18.56 $14.51 $20.43 1999 $16.87 $19.04 $14.64 $20.92 2000 $16.83 $19.16 $14.94 $21.41 2001 $17.18 $19.43 $15.26 $21.75 2002 $17.33 $19.52 $15.64 $22.36 2003 $17.54 $19.36 $15.68 $23.08 2004 $17.54 $19.13 $15.65 $23.70 2005 $17.33 $18.97 $15.54 $24.12 2006 $17.40 $18.93 $15.56 $24.26 2007 $17.26 $19.24 $15.69 $24.44 2008 $17.32 $19.13 $15.80 $24.48 2009 $17.61 $19.67 $16.07 $24.98 2010 $17.38 $19.16 $15.96 $25.71 2011 $16.91 $18.64 $15.67 $25.75 2012 $16.81 $18.60 $15.39 $25.88 2013 $16.97 $18.41 $15.35 $25.91 2014 $16.90 $18.35 $15.21 $26.04 $26.04 $18.35 $16.90 $15.21 Wages for all workers had they grown in tandem with productivity Men’s wages Wages for all workers Women’s wages 1980 1990 2000 2010 10 15 20 25 30 Women’s wages could be 71.2% higher ChartData Source: Reproduced from Figure G in Alyssa Davis and Elise Gould, Closing the Pay Gap and Beyond: A Comprehensive Strategy for Improving Economic Security for Women and Families, EPI Briefing Paper #412, November 18, 2015 Share Tweet Embed Download image In recent decades, not only have most American women’s wages grown much slower than productivity, they have also remained considerably below men’s wages. Gender wage disparities are present at all wage levels and within education categories, occupations, and sectors—sometimes to a grave degree. If we had closed the gender wage gap and had wages for all workers grown in line with productivity over 1979–2014, the hourly wages of the median woman could be over 70 percent higher today—$26.04 instead of $15.21. This highlights the importance of ensuring gender wage parity and raising wages for all workers—the twin goals of EPI’s Women’s Economic Agenda.

9 The share of prime-age women with a job has fared worse in the U.S. than in peer countries Employment-to-population ratio of women workers age 25–54, select countries, 1995–2014 Canada Germany Japan United States 1995 69.434551% 66.360158% 63.233624% 72.189196% 1996 69.577146% 67.220440% 63.701741% 72.770073% 1997 70.971110% 67.399584% 64.566038% 73.541046% 1998 72.183646% 68.944387% 64.036077% 73.642970% 1999 73.245982% 70.253128% 63.551051% 74.147991% 2000 73.944309% 71.210539% 63.582090% 74.213847% 2001 74.297867% 71.607431% 64.124398% 73.421299% 2002 75.348504% 71.845950% 63.863976% 72.259684% 2003 76.000458% 71.981067% 64.407421% 72.006189% 2004 76.720415% 72.129055% 65.028791% 71.848458% 2005 76.488663% 70.969949% 65.733178% 71.963537% 2006 76.984912% 72.647765% 66.614235% 72.504467% 2007 78.190906% 74.045933% 67.370518% 72.501768% 2008 78.008148% 74.744854% 67.495987% 72.301570% 2009 77.114622% 75.420875% 67.595960% 70.208609% 2010 77.075022% 76.320711% 68.157788% 69.343654% 2011 77.207691% 77.892216% 68.459240% 68.967922% 2012 77.710148% 78.235789% 69.161920% 69.196894% 2013 78.090883% 78.625264% 70.773639% 69.253713% 2014 77.444969% 78.839200% 71.835052% 69.997790% 78.8% 77.4% 71.8% 70.0% Germany Canada Japan United States 1995 2000 2005 2010 60 65 70 75 80% ChartData Source: EPI analysis of OECD Labour Force Statistics Share Tweet Embed Download image Another sign the economy is failing many American women is that in recent years, the share of 25- to 54-year-old women with a job has fared worse in the United States than in peer countries. In 1995, this share was higher in America than in almost any other wealthy country. Since then (and particularly since the tight labor markets of the late 1990s faded away), this advantage has been decisively lost. Since 2000 this share has declined substantially in the United States—while it has risen significantly in Japan, Germany, and Canada. Given that American families rely enormously on income earned by women from working, raising the share of women who are employed should be a policy priority. An obvious policy that would help working families—and disproportionately benefit women—would be a major national investment in early childhood care and education. This would make it easier for women to balance work and family.

10 Achievement gaps rooted in socioeconomic status exist when children enter kindergarten Reading and math achievement at the beginning of kindergarten, second through fifth socioeconomic quintiles as compared with lowest quintile Reading Unadjusted (M1S) Low-middle SES 0.269***(0.032) Middle SES 0.489***(0.034) High-middle SES 0.739***(0.037) High SES 0.996***(0.039) Standard deviation (sd) units Low-middleSES MiddleSES High-middleSES HighSES 0 0.25 0.5 0.75 1 1.25 ChartData Math Unadjusted (M1S) Low-middle SES 0.240***(0.032) Middle SES 0.504***(0.035) High-middle SES 0.710***(0.036) High SES 0.957***(0.039) Standard deviation (sd) units Low-middleSES MiddleSES High-middleSES HighSES 0 0.25 0.5 0.75 1 1.25 ChartData Note: SES refers to socioeconomic status. Bars show the unadjusted standard deviation score for each socioeconomic group, relative to low-SES children. Source: Adapted from Figure D1 in Emma Garcia, Inequalities at the Starting Gate: Cognitive and Noncognitive Skills Gaps Between 2010–2011 Kindergarten Classmates, Economic Policy Institute Report, June 17, 2015 Share Tweet Embed Download image Economic inequality leads to education inequalities. The large achievement gaps documented throughout children’s school trajectories don’t originate in school—rather, they are rooted in children’s socioeconomic status (SES). Indeed, performance gaps in reading and math are apparent when children enter kindergarten—and performance is closely associated with, and rises along with, SES. In fact, children in the highest socioeconomic fifth have reading and math scores that are significantly higher (by a full standard deviation) than those of their peers in the lowest SES fifth. This illustrates the need to weaken the link between inequality and education, and to ensure that all children are prepared for kindergarten. This will require not only expanding access to high-quality early education programs, but also pursuing policies to reduce economic disparities.