Over the last few decades, employees have been receiving an increasingly larger portion of their overall compensation in the form of benefits such as health care, paid vacation time, hour flexibility, improved work environments and even daycare. Ignoring the growth of these benefits and looking at only wages provides a grossly incomplete picture of well-being, and the increase in compensation for work. While it is difficult to adjust for all of these benefits that workers are now receiving, one measure of wage and salary supplements show they have nearly tripled since 1964. Total compensation, which adds these benefits to wages and salaries, shows that earnings have actually increased more than 45 percent since 1964.
.. Furthermore, “purchasing power,” the amount of stuff people can buy with each dollar, has changed dramatically over the last half decade and, surely, must be considered when evaluating the state of the average worker based on his or her take-home pay. CPI is notorious for overstating inflation, and thus understating the growth of real wages received by workers. Adjusting the data with the more appropriate Personal Consumption Expenditure index brings the growth in average hourly wages from 5.58 percent to more than 35 percent and the growth in total compensation of employees from more than 45 percent to more than 87 percent.
.. According to the economist Mark Perry of the American Enterprise Institute (AEI), 100.5 hours of work was required to purchase a washing machine in 1959 compared to just 23.3 hours of work (for the average worker) in 2013. Purchasing a TV demanded an astounding 127.8 hours of work in 1959, whereas a worker in 2013 could purchase one with only 20.7 hours of work.
.. Daniel J. Smith is an assistant professor of economics at the Johnson Center at Troy University, a research and educational center dedicated to understanding the moral imperatives of free markets and individual liberty.
How to Bridge That Stubborn Pay Gap
In August, the federal Office of Personnel Management said government hiring managers could no longer rely on an employee’s previous salary when setting his or her new one. The acting director, Beth Cobert, explained that the practice particularly disadvantaged women who had taken time off to raise children. Women are also more likely to have worked in the lower-paying public or nonprofit sectors.
“Don’t ask about salary history for new hires, and it really reduces the impact of previous discrimination,” Ms. Babcock said. “I think that is the most effective thing organizations can do.”
..When employers publish people’s salaries, the pay gap shrinks.
.. Ms. Goldin of Harvard has found that the pay gap is largest in occupations with the least flexibility in terms of where and when people work, like finance and medicine.
Why the Gap Between Worker Pay and Productivity Is So Problematic
Though productivity (defined as the output of goods and services per hours worked) grew by about 74 percent between 1973 and 2013, compensation for workers grew at a much slower rate of only 9 percent during the same time period, according to data from the Economic Policy Institute.
.. Without a strong middle class we see weak consumption. With unhappy workers we have a less productive set of people for business to hire. If we’re only tapping the creativity and potential of a small fraction of our population that can’t be good for society. If working, middle-class Americans are not thriving, eventually they become anti-business voters.
.. I think that business leaders just need to recognize that companies can’t thrive for long if their communities are struggling.
.. The current path is one where federal policy makers squabble for partisan gains, delay tough choices, and make America a less attractive place to compete. Business leaders pursue their narrow short-term interest and free ride off each other’s investments—the business environment deteriorates, businesses leave America, the government enacts anti-business policies, companies reduce their U.S. activities further, and distrust deepens.
Median Earnings and Annual Hours Worked for Two-Parent Families
While median wages for two-parent families have increased 23 percent since 1976, evidence suggests that this increase is not the result of rising wages but of additional hours worked outside of the home. For example, in 2009, the average two-parent family worked 26 percent more hours than in 1975, with families now working about 3500 hours, on average, compared to 2800 hours. The 26 percent increase in hours worked mainly reflects increases in women working. In fact, among two-parent families with median earnings, the hours of men were relatively constant over time, while hours worked by women more than doubled from 1975 to 2009.