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It's not surprising that worker incomes have been under pressure during the Great Recession. Employers typically clamp down on wages when the economy slows, and the latest downturn was the worst since the 1930s. Most workers are well aware that employers aren't exactly going to be handing out huge wage hikes with an official unemployment rate of 9.7% and the government's broadest measure of unemployment, which includes those marginally attached to the workforce and people working part time who would like full-time employment, at 16.5%, according to the Labor Dept.'s January employment report released Feb. 5.
What is disturbing is that the outlook for wages and incomes over the short and long term looks bleak even when the recovery is in full swing. The pay rewards for work have been severely lacking for a majority of workers over the past three decades. Whether the measure is wages, earnings, or total compensation, the inflation-adjusted pay narrative remains the same: Workers have seen their inflation-adjusted pay go up only a little during the past four business cycle expansions while most of the gains have been captured by the top 10% to 15% of workers. A major lesson of the Great Recession is how financially vulnerable workers are with jobs and incomes less secure than ever.
"It isn't a healthy economy," says Paul Osterman, professor of human resources and management at the MIT Sloan School of Management. "There is a broad sense that it's a precarious labor market."
U.S. Wage Growth: The Downward Spiral
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