This Chart Explaining Workers’ Wages Will Piss you Off

Wage and salary as a share of GDP. Gray bars indicate recessions.

Federal Reserve Bank of St. Louis

This chart reveals that there has been a general fall in working people’s wages as a share of GDP since 1970.  This means that over time, the link between people’s earning power (and therefore their living standards) and economic growth is eroding.  In fact. since the Wall Street generated Financial Crisis of 2008, the US economy has grown while wages have fallen sharply.  The US economy actually emerged from recession in June 2009 and has been growing for nearly five years. Yet this week, an NBC News/Wall Street Journal poll of American adults found that 57 percent still think the economy is in recession.  Why? Because: the wage gap.

This has ordinary Americans rightly asking the question: economic recovery for who?

Josh Barro explains this inexorable downward trend of working people’s wages for the New York Times:

For four decades, even in stronger economic times, wage gains have not kept pace with economic growth. Wages and salaries peaked at more than 51 percent of the economy in the late 1960s; they fell to 45 percent by the start of the last recession in 2007 and have since fallen to 42 percent.

When the economy does grow, that growth disproportionately accrues to the owners of capital instead of to wage earners; and in the last few years, weak growth and abundant labor have made that pattern even stronger than normal.

What’s worse, is that those in low to middle income jobs are the ones seeing their wages suppressed, while top earners see their wages soar.  As David Cay Johnston wrote for Al Jazeera America:

While most workers are having a tough time, the SSA data reveal a dramatically different story at the top of the job market. The number of workers making $5 million or more grew almost 27 percent, to 8,982 workers, up from 7,082 workers in 2011. Total wages earned by these highly paid workers grew 40 percent — 13 times the overall increase in compensation for workers.

Even higher up the ladder, the number of workers making more than $50 million soared even more, from 93 in 2011 to a new record of 166 people in 2012. Average pay at this stratospheric level grew almost 20 percent, from $81.4 million in 2011 to $97.5 million last year.

In the US, the earnings of so called ‘High School drop outs’  have dropped 66% since 1969, and people with some college – the median education level in the US – have seen their wages drop by a third.

This is not even an American phenomenon.

The trend in rising global wages has almost stopped.  Wages rose 3% in 2007; dropping each year since to just 1.2% in 2011 (0.2% is you remove China from calculations).

People are working harder than they ever have, and for less.  Research by the International Labour Organisation reports that rises in Labor Productivity have outstripped wage inflation at an ever increasing rate in the last decades.  Between 1999 and 2011 Labor Productivity (the output of workers time and efforts) increased at double the rate of wages.  In Germany, labour productivity surged by almost a quarter over the past two decades while real monthly wages remained flat.

The reality the world over is that people are working harder, for longer, for less and that work is less likely to elevate their socio-economic position than at any time in the last five hundred years.
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