During yesterday’s Republican Primary Debate, Donald Trump and other candidates stated that they would not raise the minimum wage. Trump took this level of thinking even lower, proclaiming “Our wages are too high.” He thinks the only way for America to be competitive is for “people to work really hard” to “enter that upper stratum.”
This kind of language is out of touch. Bill Clinton and Newt Gingrich teamed up to “end welfare as we know it.” Most poor Americans work, but they don’t make enough money to get ahead. It’s easy for a billionaire who was born into a wealthy family to tell others to work hard. It’s also dishonest. Our economy does not produce enough jobs that pay enough for people to enter the middle class, much less Trump’s “upper stratum.” Complex problems need thoughtful solutions, not cliches.
USA Today reports that wages may be going up. The problem is that increases tend to be in certain professions and areas. Following an analysis by payroll processor ADP, the article claims that key trades are seeing pay increases between 3.8 and 7.2%. Interestingly the biggest pay increases have come in companies with 1,000 or more employees (5.9%). Smaller companies have offered lower raises: 500-999 employees (2.9%), 50-499 employees (2.5%), and 49 workers of less (2.9%). By region, the Midwest (4.4%) and West (4.4%) are earning more than those in the Northeast (3.0%) and South (2.6%). If these numbers are accurate, it's good news for workers in the right trade in the right area. Hopefully the good news will continue to grow and spread.
Daily Kos’s Mark E. Anderson examines increased productivity and stagnant wages between 1948 and 2014. His article includes a very informative graph that shows how these two economic measures were almost aligned. Now productivity doubles wages. Where has the money gone? Anderson argues that work has gone overseas where labor is cheaper and profits have gone to executives and investors. I agree, but would add one other big factor: automation. I was working with a client this weekend who works for a large technology manufacturer. His company will be able to shed hundreds of tech jobs once they move to cloud-based systems. Jobs can come back from China. Once they are automated, they are gone forever. Anderson makes a great point in concluding his article: What are the super rich and executives going to do when no one can afford to buy their products?
Most people look to the Bureau of Labor Statistics and its monthly employment report to understand the job market. While that is probably the best measure, there are other important signs, including how employers are treating employees and job candidates. A few months ago, I noted that almost every job posting now includes a list of benefits offered to new employees. Some are even listing a salary.
Employee retention is equally important. Bloomberg reports that some employers are now encouraging employees to use PTO and vacation time. A few employers are even paying bonus that employees can use during a vacation. Others offer “unlimited vacation.” These are the same companies who laid off so many workers that those who were spared worked extra hours and skipped vacation days. Now, as the job market tightens and employers still do not want to raise wages, vacation is a perk used to keep employees without increasing labor budgets.
If you’re asking for a raise or trying to negotiate salary with a new employer, think about vacation as a bargaining chip. If an employer cannot give you a higher wage, ask for an extra week of vacation or PTO. This is a good time to talk about time off.
Bloomberg reports today on careers that offer significant pay increases. Most workers are looking at minimal salary increases even though the unemployment rate has fallen. Workers in technology and finance have seen wages grow between 4-10%. What can you do to earn more? For most working people, especially those with college degrees, the best way to earn more is to find a new job. In many cases, new employers tend to offer more than current employers. Another way is to try to take the next step up the career ladder. Two clients who are clients in the grocery industry have told me that they have hired department managers with little experience. Why did they do this? Turnover. As the job economy heats up, there is more opportunity to move up because the experience employees are less available. If you’re unhappy with your current income, find a way to make a move.
Writing in Huffington Post, Bill Quigley, a law professor, lists several sad facts facing American workers on this picnic day that is supposed to honor labor. I urge to you take a minute, review this list, and ponder its meaning. The one point I would like to underscore is this: While productivity increased 21% between 2000 and 2014, wages only increased 2%. To quote the Talking Heads, “Who took the money away?”
Max Rust of the Chicago Sun-Times has produced a concise overview of right-to-work laws and their impact on states and workers. In short, the picture is not pretty. In right-to-work states, wages are lower, infant mortality rates are higher, fewer people have health insurance, and the average level of education is lower. Several states, mostly in the South and Southwest, have had these laws in place since the 1940s. More recently, Indiana, Michigan, and Wisconsin have passed such laws.
Right-to-work laws hurt the ability of workers engage in collective bargaining. Yes, they do give a few people the freedom to avoid union dues. Many others, however, have seen hourly wages in these states go down over recent decades. Unions are far from perfect. In fact, today’s Chicago Sun-Times also features a great investigative article on the family of a local Teamsters’ official. Even so, unions enable workers to bargain for better wages and working conditions. If unions are so bad, why do corporations and billionaires participate in groups like the U.S. Chamber of Commerce, the Club for Growth, and ALEC? If the richest people in American can collaborate to protect their interests, shouldn’t working class and middle class Americans have the same right?
USA Today’s Susan Page recently interviewed Secretary of Labor Thomas Perez. She asked Perez about a paradox in the current economic recovery: unemployment is down with little increase in wages. Perez said that there is still “slack” in the market, which would mean that unemployment would have to go even lower to drive increased wages. He also discussed a White House Summit on Workers, which will take place on October 7, 2015. This sounds like good news, but what results will it bring? Perez captured the general mood of American workers this way: “They’re hard and falling behind.” Page cast this as a “disparity between the wealthy and the middle of the workforce.” I would respectfully disagree. From the Occupy protests to the ongoing Fight for 15, low wage working people are voicing their frustration and demanding justice in a way that the middle class is not. That said, most American (I’d guess 70-80%) are feeling anxiety and a lack of security. President Obama put it best when he said, “America needs a raise.”
Jeanna Smialek of Bloomberg reports on a topic that it describes as “depressing” – wages. Despite steady increases in hiring, Smialek notes that wages have increased at a 2% rate since the end of the “Great Recession” in 2009. She cites two other measures that have held back pay increases: low productivity and low inflation. Bloomberg focuses on how this news impacts the economy. I’m more concerned with working people and what they are paid. More people are employed every month, and consumer sentiment remains negative. That doesn’t make sense. It would seem that increased opportunities to get new jobs and change jobs should make workers happier. However, as this fine article notes, too many Americans feel that their income is not letting them get ahead. If that’s the new normal, we’re in big trouble.
USA Today had some good news: benefits are on the rise. Companies offering paid maternity leave have increased over the last year from 12% to 21%. Over the same period, paid sick leave has increased from 33% to 42%. Family leave is up from 19% to 24%. The article even cited some companies that are offering “unlimited vacation.”
This all sounds good. However, as I’ve noted in recent posts, income is not rising in a significant way for most Americans. Payscale offers an informative chart that demonstrates how little pay in the U.S. has changed from 2007 to the Present. Benefits are good only when they are needed. Wage increases give people more control over their lives, more of a feeling of security.
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