During last night’s Democratic presidential debate in Milwaukee, former Secretary of State Hillary Clinton said, “I know a lot of Americans are angry about the economy. And for good cause. Americans haven’t had a raise in 15 years. There aren’t enough good-paying jobs, especially for young people. And yes, the economy is rigged in favor of those at the top.” Rigged economy aside, was she correct in saying that Americans haven’t seen an increase in pay since the turn of the last century?
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TLDR version: no.
“It’s a common talking point among both Democratic and Republican politicians: that there has been wage stagnation in the past 13 to 15 years. But such claims do not reflect a broad increase in real wages and earnings among Americans,” writes fact checker Michelle Ye Hee Lee at The Washington Post‘s interactive debate transcript. “Bureau of Labor Statistics data show real average weekly earnings of non-supervisory employees in December 2015 were 9.2 percent higher than they were in December 2000.”
Real Earnings and Comparing Apples to Apples
The measurement “real earnings” takes into account inflation, and thus shows the buying power of what workers are paid, not just the number on their paychecks. That’s what Clinton was discussing, and that’s what The PayScale Real Wage Index measures. Looking at The Real Wage Index, we can see why many Americans might be angry about the economy – just not as compared to 2000 or 2001.
For most workers today, the measure of economic prosperity is whether their earnings recovered from the recession – in other words, a comparison between 2016 and 2006, not 2016 and 2001. The Index shows that although wages have risen 9.5 percent since 2006, the real value of those wages has fallen 6.9 percent during that time.
The Long Recession
The Great Recession lasted less than two years, according to the National Bureau of Economic Research, which measures expansions and contractions of business cycles, and puts the recession’s end date at June, 2009. The after-effects of this particular contraction, however, seem almost endless for many American workers.
While the current unemployment rate is 4.9 percent, the lowest since 2008, that measurement doesn’t take into account anyone who no longer qualifies for unemployment. That means that the long-term unemployed, discouraged workers, or those employed part-time for economic reasons don’t figure into the count. Add in those workers, and the unemployment rate is 9.9 percent. The number of long-term unemployed, for example, has remained largely unchanged since June at 2.1 million.
It’s also difficult to quantify some of the effects of the recession on workers who are at the beginning or end of their career. Those who retire early because they couldn’t get a job, for example, may not show up in official numbers. And, to Clinton’s point about the younger worker who can’t find a decent job, a recent grad who cobbles together several part-time jobs might be fully employed, but earning less than their education prepared them for, and not on the career track they’d planned.
Bottom line, there are plenty of American workers who didn’t get to take part in the economic recovery, but the time to look at is before the recession and after, not 15 years ago and today.
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