By Richard (RJ) Eskow
A new briefing paper from the Economic Policy Institute provides an overview of the income stagnation currently plaguing the vast majority of Americans. “A Decade of Flat Wages,” by Lawrence Mishel and Heidi Shierholz, offers valuable background on one of the under-reported stories of our time: the slow disappearance of the middle class and the loss of social mobility.
The critical question is why? Why has the economy failed so many people, and what can be done about it?
Stuck in the Middle
The authors state the problem clearly and concisely: “The wage and benefit growth of the vast majority … has stagnated, as the fruits of overall growth have accrued disproportionately to the richest households.”
As Mishel and Shierholz note, “The wage-setting mechanism has been broken for a generation but has particularly faltered in the last 10 years …” Corporate profits have reached historic levels and the top one percent of earners have captured virtually all income growth.
We don’t have a problem of inadequate wealth. The problem is inadequate wealth distribution. For 99 percent of Americans, wage growth has lagged significantly behind increases in productivity. As the authors note, this is true “regardless of occupation, gender, race/ethnicity, or education level.” Since the Great Recession productivity has grown by 7.7 percent, while wages have actually fallen for the bottom 70 percent of earners.