Research shows the US is a low wage country

John Schmitt

(MoneyWatch) Recent research from John Schmitt of the Center for Economic Policy Research shows that the US leads developed countries in the share of workers earning low wages. The research also shows that increased wage polarization over the last several decades is one of the reasons for the large share of low wage-work in the US.

The bars in this graph represent the share of workers in low wage work, where low wage work is defined as employees earning less than 2/3 of the median wage (approximately $10 per hour or $20,000 per year). In this category, the US leads among developed nations:

John Schmitt

The next graph shows that the share of employees earning low wages has increased from 22 percent in 1979 to 28 percent in 2009. Thus, we have more people at the extremes of the distribution, and fewer in the middle. This helps to explain why the US has such a large share of workers engaged in low wage work:

John Schmitt

The bottom line is that there are two big issues facing US labor markets. The first is getting people back to work as soon as possible. The unemployment rate is still far too high, and our most immediate problem is providing jobs for the millions of people who are still seeking work. But there is also the the problem of reversing the trend toward increased wage polarization. This will require the creation of middle class jobs that are at least as good or better than jobs that existed in the past, something that is much easier said than done.

  • Mark Thoma On Twitter»

    Mark Thoma is a macroeconomist and time-series econometrician at the University of Oregon. His research focuses on how monetary policy affects the economy, and he has also worked on political business cycle models. Mark is currently a fellow at The Century Foundation.

Comments