Prosperity Watch Issue 61, No. 2: Wage gains mostly going to folks already doing well

May 10, 2016
Real wages for most North Carolinians are still lower than when the economy hit its most recent nadir in 2009. Workers at the very top of the wage scale have seen their paychecks grow, but not so for most working North Carolinians.
As shown here, wages are still below 2009 levels for most of the workforce, with only workers at the very top seeing any appreciable gains. Wages for the bottom 10 percent of earners have slipped by 30 cents an hour, and the median wage in North Carolina fell by over 60 cents. Over the same period, workers in the top 10 percent have seen their hourly income increase by over $2.50. 
Economists have become increasingly worried that the current cycle of economic growth is not producing significant wage gains. Historically, declining unemployment forces employers to boost wages to attract workers, but that has been extremely slow to happen this time around. There are signs that wage growth nationally may finally be accelerating, but it has not yet produced a meaningful raise for much of the workforce.
Even over the last few years, wage gains have gone disproportionately to workers who were already doing well. With inflation near zero over the last few years, most workers have posted at least modest real earning gains, but the gains at the top have been much larger. From 2013 to 2015, the top third of workers got 6.4 times the raise that the bottom third did.
Examining earning changes up and down the wage scale is a much better way of tracking our economic performance than looking only at state averages. Wage gains at the top of the distribution disproportionally affect the state’s average hourly wage, which can lead to the impression that everyone is better off. This analysis clearly shows that to be untrue. 
Even workers who have personally seen their income rise should be concerned about the pattern reported here. When most workers are trying to get by on wages that are worth less than what they earned over 6 years ago, it stifles consumer demand and holds the entire economy back. 

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