Workers Struggling Even as Unemployment Falls

Wisconsin’s unemployment rate has reached an historic low; 2.9% as last reported by the Bureau of Labor Statistics. [1] Governor Scott Walker has touted this rate as a victory for his agenda. [2] However, workers in Wisconsin have not seen this tightening of the labor market translate into meaningful wage growth. From the Executive Summary of the State of Work in Wisconsin report, “Taking inflation into account, the state’s 2017 median hourly wage, $18.34, exceeds the 1979 median by just one dollar per hour. That translates to an average annual raise of less than 3 cents per hour, despite the fact that today’s typical worker is more productive…”[3] Furthermore, 675,000 are earning less than $10.95 or in other words 1 in 5 Wisconsinites working full-time cannot afford to raise a family. [3]

  • Analysis conducted in 2017 compares those states which have enacted Right to Work (RTW) legislation, Wisconsin, Indiana and Michigan with those which retained collective bargaining Minnesota, Illinois and Ohio. The findings indicate “RTW laws have actually lowered worker wages by 2.6 percent on average in the three Midwest states that adopted them since 2012.” [4]
  • The study above supports earlier on work conducted by the Economic Policy Institute (EPI) which found, in 2011, that workers in RTW states earned 3.2% less than those in collective bargaining states. Additionally, that rates of employer provided health insurance was 2.6% less in RTW states. [5]
  • The real (adjusted for inflation) minimum wage has fallen since 1968, when it reached $9.90 in inflation adjusted dollars. [6] The United States is an outlier in this regard, based on our GDP per capita the minimum wage would be expected to fall near the $12.00 an hour mark. [7]
  • After facing a lawsuit in 2014 to raise the minimum wage to a “livable wage” in accordance with state law enacted in 1913, Gov. Scott Walker instead acted to repeal the law and the ability of a worker to file a complaint of unfair compensation. [8] [9]

This is not just a Wisconsin issue. Slow wage growth has been a topic of much study and debate among economists for some time. The Harvard business review recommends “raising the minimum wage; increasing worker bargaining power (including by reducing non-compete contracts or collusion among firms); ensuring adequate labor demand through looser fiscal or monetary policy; increasing dynamism through pro-mobility or entrepreneurship policies; and making broad improvements to education or productivity policies.” [11] These recommendations are similarly voiced by many others. [12] [13] [14] [15] We know what we need to do, now we need elected officials that are willing to put workers before their corporate donors.

[1] https://www.bls.gov/eag/eag.wi.htm

[2] https://www.usnews.com/news/best-states/wisconsin/articles/2018-03-22/ap-fact-check-walker-touts-unemployment-over-other-measures

[3] https://www.cows.org/_data/files/SOWW-2018_-_Exec_Summary.pdf

[4] https://ler.illinois.edu/wp-content/uploads/2017/03/RTW-in-the-Midwest-2010-2016.pdf

[5] https://www.epi.org/files/page/-/old/briefingpapers/BriefingPaper299.pdf

[6] https://www.businessinsider.com/how-much-higher-the-federal-minimum-wage-should-be-2017-12

[7] https://www.economist.com/graphic-detail/2015/05/20/pay-dirt

[8] http://archive.jsonline.com/news/statepolitics/judge-dismisses-lawsuit-against-scott-walker-over-minimum-wage-b99626372z1-359590001.html

[9] https://wcca.wicourts.gov/caseDetail.html?countyNo=13&caseNo=2014CV002998&cacheId=988D68764ABA034167332C25187CC1DD&recordCount=1&offset=0

[10] https://legis.wisconsin.gov/senate/31/vinehout/news/columns/2017/wisconsin-s-long-journey-toward-a-living-wage/

[11] https://hbr.org/2017/10/why-wages-arent-growing-in-america

[12] https://www.forbes.com/sites/eriksherman/2018/07/21/why-wage-growth-is-slow-employers-dont-need-to-or-want-to-pay-more/#561b1434fd15

[13] https://www.epi.org/publication/charting-wage-stagnation/

[14] https://money.cnn.com/2018/06/13/news/economy/wage-growth-workers/index.html

[15] https://www.economist.com/finance-and-economics/2018/05/31/if-wages-are-to-rise-workers-need-more-bargaining-power

 

 

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