Data from the Pew Research Center shows that despite a strong labor market (3.9% unemployment as of July, the lowest it has been in nearly two decades), wage growth has lagged such that today's real average wage "has about the same purchasing power it did 40 years ago."
Additional key findings include:
- Year-over-year growth has mostly ranged between 2% and 3% since the beginning of 2013. But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year. And during the high-inflation years of the 1970s and early 1980s, average wages commonly jumped 7%, 8% or even 9% year-over-year.
- After adjusting for inflation, however, today’s average hourly wage has just about the same purchasing power it did in 1978,
- wage gains have gone largely to the highest earners. Since 2000, usual weekly wages have risen 3% (in real terms) among workers in the lowest tenth of the earnings distribution and 4.3% among the lowest quarter. But among people in the top tenth of the distribution, real wages have risen a cumulative 15.7%, to $2,112 a week – nearly five times the usual weekly earnings of the bottom tenth ($426).
- Sluggish and uneven wage growth has been cited as a key factor behind widening income inequality in the United States.
Read the full report here.