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Saturday, October 31, 2015

'The Mystery of the Vanishing Pay Raise'

Please, sir, may I have a little more of that growing pie I worked so hard to help you make?

...millions of Americans have one overriding question: When will my pay increase arrive? The nation’s unemployment rate has fallen ... to 5.1 percent from 10 percent in 2009, but wages haven’t accelerated upward, as many had expected.
In fact, the labor market is a lot softer than a 5.1 percent jobless rate would indicate. ... This ... continued labor market weakness ... goes far to explain why wage increases remain so elusive. ...
But work force experts assert ... many other factors ... help explain America’s stubborn wage stagnation. Outsourcing, offshoring and imports exert a steady downward tug on wages. Labor unions have lost considerable muscle. Many employers have embraced pay-for-performance policies that often mean nice bonuses for the few instead of across-the-board raises for the many.
Peter Cappelli, a professor at the Wharton School of Business, noted, for instance, that many retailers give managers bonuses based on whether they keep their labor budgets below a designated ceiling. “They’re punished to the extent they go over those budgets,” Professor Cappelli said. “If you’re a local manager and you’re thinking, ‘Should we bump up wages,’ it could really hit your bonus. ...
Jared Bernstein ... put it another way: “There’s this pervasive norm” among employers “that labor costs must be held down at all costs because maximizing profits is the be-all and end-all.”
He added that the “atomization” of the American workplace — with the use of more temps, subcontractors, part-timers and on-call workers — had reduced companies’ costs and workers’ bargaining power.
As a result of all these trends, the share of corporate income going to workers has sunk to its lowest level since 1951. ...

More here.

    Posted by on Saturday, October 31, 2015 at 04:13 PM in Economics, Income Distribution | Permalink  Comments (28)


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