U.S wage rises lagging further behind inflation

Aug 29 2006 by Nic Paton Print This Article

For the first time since World War II, most American workers have not seen their wage gains keep pace with inflation during a period of economic expansion.

A report in The New York Times has said that the median hourly wage for American workers has declined 2 per cent since 2003, after taking into account inflation.

While average family income, adjusted for inflation, has continued to advance, this has mostly been the result of gains by the top wage earners.

Some nine out of 10 workers have seen inflation outpace their pay increases over the past three years, according to the U.S Labor Department.

That included workers earning up to $80,000 a year, a level that put them in the 90th percentile of wage earners.

The paper reported that, with employment gains softening in recent months and inflationary pressures staying high because of factors such as high energy prices, the gap between wages and prices could increase for many workers.

The gap between the top wage earners and other workers is also growing.

Research by economists Emmanuel Saez and Thomas Piketty had suggested that, in 2004, the top 1 per cent of earners Ė a group that included many chief executives Ė received 11.2 per cent of all wage income, up from 8.7 per cent a decade earlier and less than six per cent three decades ago.

In addition, corporate profits were growing more quickly than wages and salaries.

Employee pay now made up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, according to the paper, while corporate profits have climbed to their highest share since the 1960s.