Politics In Real Life: What Wage Stagnation Looks Like For Many Americans
When Jennifer Kaiser's mother was her age, a lot of the women she knew were stay-at-home moms who could maintain a solid standard of living without taking outside work. These days, that's pretty much an unaffordable luxury.
"For me and a majority of the people I know it's a paycheck-to-paycheck society. That's the way it is and it stinks," said Kaiser, a 44-year-old legal assistant at a downtown Indianapolis law firm.
It's not that Kaiser doesn't enjoy her job, which pays a decent salary after 10 years and even provides small raises every year. But like many millions of Americans, she finds that the raises she gets are pretty much eaten up by rising expenses, leaving her with a standard of living that's essentially flat.
"I get a raise, but every year it's lower and lower. The past few years, it hasn't even been a raise that's comparable to the cost of living. So it makes it hard," she said.
In Kaiser's case, the recent illness and death of her mechanic husband left her with steep medical bills that she said she can't pay. The house where the couple lived with their two children is now being foreclosed upon.
Her troubles underscore a brutal reality in the age of wage stagnation: When people who live paycheck-to-paycheck hit a bump in the road, it can quickly send their finances into turmoil.
"I always prided myself on being that person that would do whatever to dig myself out, but I find myself in a position where I'll be digging forever," she said. "I feel like I'm in this hole, and every time I get up, a little bit more gets thrown in."
The issue of wage stagnation could end up playing a dominant role in this year's presidential election for the first time, according to Larry Mishel, an economist at the Economic Policy Institute, a pro-labor think tank.
Wages and benefits have essentially flatlined or declined for four out of five Americans between 2007 and 2014, and except for a few years in the 1990s, they weren't rising all that fast before that, Mishel noted.
For 25 years after World War II, U.S. productivity and the compensation paid to workers rose at essentially the same rate. After about 1973, the two diverged, and in recent years wages have risen much more slowly, especially compared to corporate profits.
"There's been a series of decisions that basically all work to undercut the ability of the typical worker to get a better deal from his or her boss," Mishel said.
Among the policy changes responsible for this divergence are the gradual erosion of unions, the failure of Congress to raise the minimum wage and a weakening of overtime protections for many workers, he added.
Globalization has also played a part, forcing U.S. employees to compete with workers in low-wage countries who are willing to work for far less. While joblessness has fallen, the economy is still far from full employment, which means workers have less power to bargain for higher pay, Mishel noted.
Meanwhile, higher health care costs mean employers have less money to put into wage increases, even if they want to.
"Firms are beseiged by pressure from global competition and from other employers. They don't want to step out and provide higher wages until they have to," Mishel said.
These changes have been taking place for years. What's different this year is the extent to which the major presidential candidates are talking about them.
Democratic contender Bernie Sanders has made stagnant wages a central plank in his campaign and has called for a $15-an-hour federal minimum wage. His opponent Hillary Clinton proposes raising it to $12, but she says states with a higher cost of living should raise it above that.
Sanders has also proposed changes, such as free public college tuition, that would increase people's standard of living, if not their wages.
The de facto Republican nominee, Donald Trump, says poorly executed trade deals with countries such as China and Mexico have placed U.S. workers at a disadvantage and promises to renegotiate them. He argues that would lead to more domestic jobs, which would mean a tighter labor market and higher wages.
"Basically, candidates across the political spectrum have invoked wage stagnation as a key economic challenge, but the debates we've seen have not dug into the details," Mishel said.
He predicts that with the approach of the general election, the two parties will be forced to differentiate themselves with more specific ideas.
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