If you need additional evidence of the radical divergence between people who make most of their earnings through investments and “rents” — and the majority that depend on wages and salaries, here is the latest report from PayScale, the Seattle firm that tracks compensation data.
In other words, this is why a roaring bull stock market and rising overall household wealth exists side-by-side with many people barely getting by and most seeing stagnant income at best. With nearly three job-seekers chasing every job, companies have little incentive to raise wages. Some smaller outfits are struggling to get by.
The PayScale Real Wage Index shows wages adjusted for inflation are down nearly 8 percent since 2006. Inflation may be low on a macro level, but the compensation most workers receive is not enough to keep up.
According to Katie Bardaro, the company’s lead economist:
Our results show the economy is on a steady, but very tepid recovery with wage growth rising at a slow rate. We anticipate the trend of sluggish overall wage growth to continue in 2014 with a few industries such as science, biotech, and healthcare showing periodic gains that are more significant.
Seattle ranks second in real annual wage growth, at 1.6 percent, behind No. 1 Minneapolis-St. Paul. San Francisco, Boston and New York rounded out the top five. However, some large metros such as Phoenix did not even keep up with the national average.
Healthcare and engineering saw the most pay growth since 2006, at 10.3 percent and 10 percent respectively. Manufacturing wages fell at an annual rate of 0.5 percent, while construction paychecks declined by 0.3 percent.
The situation may be even more dismal than the data show. PayScale tracks full-time, private industry employees. Thus, the rising use of temps isn’t factored in. Nor is the heavily low-wage cohort that is kept from achieving full-time hours.
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Today’s Econ Haiku:
The Supremes’ new hit
Government by the people?
Buy the government