Thursday, April 26, 2012

Wage Growth in the U.S. Will Feel Effects of Great Recession for Years to Come

The Great Recession has confronted U.S. workers with an extended buyer's market in jobs, according to a new Executive Action Report from The Conference Board, leading to overall wage growth between 2008 and 2010 that was the weakest since the 1960s. Feeling the Pain: Wage Growth in the United States examines prevailing trends in recent U.S. Bureau of Labor Statistics data, and finds workers and wages still reeling from the downtown, with significant disparities across states and demographic groups in how strongly wage pressures have been felt.

Said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report: "While there were signs of modest overall wage improvements in 2011, the severe depression of wage growth during the Great Recession — turning negative in the hardest hit regions — is likely to impact consumer spending, inflation, corporate profits, income inequality, and employee engagement for many years to come. Moreover, the uneven distribution of this pain among different groups may carry deep social and political implications for the future development of the economy."

Pain Unevenly Distributed

Women's wages are still, on average, close to 20 percent lower than men's, but male workers have been hit especially hard by stagnating wages in recent years; even in 2011, men's wage growth had only rebounded to half the average rate of the previous decade, while women's wage growth was nearly fully recovered. In previous recessions, like that of the early 2000s, no significant such disparities were found. The Great Recession, however, concentrated its direst effects on industries like housing and construction, leading to an unemployment rate that was nearly 2.7 points higher for men than women by October 2009. With this wide a gender gap in unemployment, a corresponding gap in wage growth is expected, as employers in traditionally male industries face a large supply of excess workers. Read more.....

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