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Wage Growth Slowing Despite Recovery

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Workmen repair on old stone bridge over the Rocky River in North Olmsted, Ohio, Thursday, June 9, 2011. (AP Photo/Mark Duncan)
Workmen repair on old stone bridge over the Rocky River in North Olmsted, Ohio, Thursday, June 9, 2011. (AP Photo/Mark Duncan)

WASHINGTON -- American workers are earning more money than they used to, but the rate of wage growth has been slowing down since the Great Recession technically ended in 2009.

According to a report released Thursday by worker advocacy group the National Employment Law Project, the rate of wage growth has declined steadily during our nearly three-year recovery. And in real terms, wages have actually declined slightly.

"However you look at it, wages for most Americans are just limping along, and it's become a real sap on the recovery," NELP director Christine Owens said in a statement. "You can't rebuild an economy when so many have so little to spend."

In March, the average hourly wage for all private sector workers rose five cents from the prior month to $23.39, resulting in a 2.1 percent annualized growth rate for the past year, according to the U.S. Labor Department. For nonsupervisory and production workers wages rose just three cents, putting the past year's growth at 1.8 percent. Prior to the start of the Great Recession in December 2007, wages grew at a 3.3 percent rate for all private sector workers and 3.7 percent for nonsupervisory workers.

Even worse, inflation-adjusted wages have declined, according to NELP. From March 2011 to March 2012, real wages for all workers declined 0.6 percent. For nonsupervisory and production workers -- people like non-managerial construction workers and restaurant workers -- wages fell 1 percent in that time.

Thursday's report builds on previous gloomy NELP research that found that decent-paying jobs lost during the Great Recession are being replaced mainly with low-paying jobs. In July 2011, NELP reported a 3.2 percent rate of job growth in low-wage jobs, while mid-wage jobs increased by 1.2 percent and higher-wage jobs fell by 1.2 percent. So people who lost their jobs as managers, accountants and nurses might be finding work in stores or restaurants.

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The massive pool of unemployed 12.7 million unemployed Americans and 7.7 million working part-time because they can't find full-time jobs is helping to push wages down. Entry-level pay for young men fell 8 percent from 2007 to 2011. Among long-term unemployed workers who found jobs soon after the recession ended, a Government Accountability Office survey found that 71 percent were earning less than they did before. Of those, half experienced an earnings reduction greater than 26 percent.

In its report, NELP says boosting the minimum wage would be the best way to raise wages for American workers, per a proposal from Sen. Tom Harkin (D-Iowa).

"Infrequent and inadequate attention to the wage floor over the last three decades has seriously eroded the value of the minimum wage," Owens said. "It's time for Congress and the states to step in, raise the minimum wage and index it to inflation. Higher wages and a more robust wage floor will help spur demand and hiring."

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