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Low-Wage Workers See Biggest Drop in Real Wages

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Many of us and our families have felt the pinch of stagnant wages during the past several years, and a new study shows that while real wages (adjusted for inflation) fell by 2.8% across the board between 2009 and 2012, low- and middle-wage workers—especially women—took the brunt of the hit.  

The study by the National Employment Law Project (NELP) finds that real wages (according to figures from the Bureau of Labor Statistics) for five of the 10 largest low-wage job categories—restaurant cooks, food preparation workers, home health aides, personal care aides and housekeepers—experienced a drop of 5% or more.

Women make up nearly two-thirds of all minimum wage workers and dominate the categories hit the hardest. They make up between 83% and 87% of home health and personal care workers, 85% of maids and housekeepers, and 70% of food service workers.

The drop in wages came at the same time that productivity increased by 4.5%. Says NELP Executive Director Christine Owens:

Corporations are reaping the financial benefits of an increasingly productive workforce, but the recent decline in wages shows that these gains are not being shared with the people actually doing the work.

For the 30 years prior to the recession, says Owens, real wage gains and income growth accrued primarily to those at the very top, while low-wage earners experienced stagnant or declining wages.

While persistent high unemployment likely explains some of the recent decline in real wages, recent losses are part of an alarming trend toward greater inequality and a shrinking share of economic pie going to those at the bottom.

The study finds that an eroding minimum wage, U.S. tax and trade policies that reward companies for shipping profits and jobs abroad, and the decline in union membership play roles in the inequality.

The minimum wage has been stuck at $7.25 an hour since 2009. If the minimum wage had kept pace with inflation since its real-value high in the late 1960s, it would currently be $10.71 an hour.

President Obama has proposed raising the minimum wage to $9 per hour and pegging it to inflation. If Congress acts on the proposal of Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) to raise the minimum wage to $10.10 an hour, the Economic Policy Institute (EPI) estimates about 30 million workers would see a rise in pay.

Overall, in almost 70 different occupations, half of workers make less than $10.10 an hour, including food preparation workers, child care workers, maids, hotel desk clerks, personal care aides and cashiers—the same workers who have seen the biggest drop in wages. So, not surprisingly, almost 56% of the workers who would get raises are women.

Because the average affected worker earns about half of his or her family’s income, this means a boost to American family incomes. EPI estimates family incomes would go up by a combined $51.5 billion, which, says AFL-CIO Chief Economist William E. Spriggs:

Mean more revenue for the Social Security Trust Fund, fewer dollars for the Earned Income Tax Credit and fewer people getting food assistance. That is why this is so popular with the American public. The U.S. public believes work should pay, and workers should be able to sustain themselves. That is why 19 states plus the District of Columbia have local minimum wage laws above the federal minimum wage.

The AFL-CIO has also called for an end to tax breaks for companies that offshore American jobs and to strengthen the right of workers to form unions and bargain collectively.

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