America Needs a Raise!

Protesters march through the streets demanding a raise on the minimum wage to $15 per hour on December 4, 2014 in New York, United States. The movement, driven largely by fast food workers, has risen in prominence in the past year; today's protests were also joined by demonstrators angry at the Grand jury verdict to not indict the police officer who killed Eric Garner in July, 2014.
Photo: Andrew Burton/Getty Images

This morning the Labor Department announced that employers added 321,000 new jobs in November, meaning that 2014 is on track to be the strongest year of job growth since 1999. The great news is that more Americans are working — 2.7 million more than a year ago. The not-so-great news is that they still desperately, desperately need a raise.

But you didn’t need this jobs report to tell you that. On Thursday, low-wage workers in nearly 200 cities across the country’s states went on strike, joining picket lines, blocking intersections, disrupting businesses, and holding up signs in protest. It was only the latest set of demonstrations from the union-backed “Fight for $15” campaign, which has snowballed over the past two years.

More broadly, polls show that wage stagnation has become a central economic concern for Americans, with about three in four respondents to one recent survey saying that it matters “a great deal” or “quite a bit” to their view of the economy.

And of course it does. Since the recession hit, wage growth has just barely kept up with the pace of inflation, and in many cases, not at all kept up with the rising cost of living, including out-of-pocket medical spending and steep rents. That has trampled Americans’ confidence in the economy — even as virtually all of the main indicators outside of income and wages have improved — and carried major political ramifications, hurting Democrats at the polls in November.

Although corporate profits are at their highest levels in 60 years, and the stock market is up, wages and income still haven’t gone up significantly and haven’t picked up the way they did in earlier generations,” President Obama told a group of business leaders this week. “That’s part of what’s causing disquiet in the general public, even though the aggregate numbers look good.”

The abysmal earnings problem is international in scope, too. A report from the International Labor Organization released on Friday showed that global wage growth clocked in at just 2 percent in 2013, below the pre-crisis rate of 3 percent. In developed economies, it is a mere 0.2 percent.

So what’s going on? Why isn’t anyone getting a raise anywhere? In the United States, at least, a big part of the answer is that the recovery has still not proven strong enough to force employers to shell out more for their workers. With so many Americans out of a job, or unwilling to quit and go on the open market, businesses have no incentive to pay more to existing employees or bid up new ones.

A related issue is that workers with jobs have probably been earning a little more than they should have over the past few years. Businesses shy away from slashing workers’ compensation during a downturn, even if the math suggests that they should. That leaves “pent-up wage deflation” to wrangle with later on, according to Janet Yellen, the chairwoman of the Federal Reserve.

But there is good news on the wage front.

For one, many state and local governments have raised their minimum wages under pressure from advocacy groups and swayed by sunny polling data. (Many conservatives support higher minimum wages.) “Low wages are not an inevitable necessity in our global economy. Low wages are a choice,” said Thomas Perez, the labor secretary, in an interview yesterday. “I meet employer after employer in sector after sector who set the example of the false choice that you either take care of your worker or you take care of your bottom line.”

Moreover, the economy finally seems to have heated up enough to generate some wage growth. A major employment-cost index has started heading upward, and in November, average hourly earnings climbed 0.4 percent, the most since last summer.

That’s not much of a raise. But it’s a start. 


America Needs a Raise!