BUSINESS
12/29/2011 09:13 am ET Updated Jan 23, 2012

Public And Private Sector Wages Barely Grew Over Twelve Months: Analysis

Whether you work for the government or the private sector, it's likely your salary didn't go up much in 2011, but federal workers saw their wages grow the least in years.

Federal salaries increased by just 1.3 percent in fiscal 2011, the year that ran from October 2010 through September 2011. That's the lowest rate of growth in more than a decade, according to USA Today. And federal employees weren't alone in seeing their paychecks barely budge: State and local government workers, and workers employed in the private sector, experienced wage growth of only 1.2 percent.

Meanwhile the cost of goods continues to increase at a quicker pace. U.S. prices jumped 3.9 percent in the twelve months leading up to September, while core inflation -- a measure that excludes food and energy prices -- rose 2.0 percent, indicating that weak income growth is straining already struggling American families.

It's hardly surprising that federal salaries didn't grow by leaps and bounds in a year where so much of the political conversation was focused on how to keep government spending in check. But the modest income growth across all employment categories is a reminder of how tight money remains for most Americans, more than two years after what economists consider the end of the Great Recession.

The USA Today analysis arrives at the same time as another report, from Bloomberg News, indicating that federal minimum wage in the U.S. actually fell 20 percent from 1967 to 2010 when adjusted for inflation. In fact, The Huffington Post reports, minimum wage will remain below inflation-adjusted levels from the 1970s even in the eight states that will be raising the threshold in January.

Higher up the earning ladder, the picture is still sobering: half of all employees in the U.S. currently make less than $26,364, and with incomes so modest, some 45 percent of all Americans are struggling to cover basic expenses like food, transportation and medical treatment.

At the same time that wages for most workers have hardly grown, corporate profits reached record levels this year, and companies have continued to engage in what is known as "peer benchmarking" -- a competitive practice of paying their executives more and more in order to keep pace with other companies doing the same thing.

These trends have helped contribute to America's historically large wealth gap, which is closer to that of China, Sri Lanka and Rwanda than that of any economy in the developed world, and which has been cited as a major grievance by protesters in the national Occupy movement.

Federal workers are slated for another year of stagnant wages, with a pay freeze in place through the end of 2012 as part of the government's efforts to rein in costs. Still, as USA Today notes, federal employees already earn an average salary of $75,296 -- well above the median income for all U.S. workers -- and starting salaries for national-government positions are climbing higher all the time.

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