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American Sigh: Why U.S. Workers Are Sliding Backward

Diana Ranile Baluyos cleans hotels for a living in Copenhagen. She gets a decent wage, six weeks of paid vacation and a flexible enough work schedule to spend plenty of time with her family, reports Remapping Debate:

"It's a good job," she said. "I make more than enough to live on. We never struggle."
If you're like me, you may have experienced a moment of vertigo in mentally stacking up this "low-wage" Danish worker's socioeconomic circumstances against that of most American workers. Never struggle? C'mon. It's hard to imagine in a country where, as the U.S. Census Bureau's new report makes starkly clear, income is down, poverty is up and good jobs are increasingly hard to come by. The grisly details:
  • Median household income (adjusted for inflation) in 2010 was $49,445, down 2.3 percent from 2009
  • Median household income in 2010 is 7.1 percent lower than it was in 1999
  • Earnings for the average male worker are lower than they were in 1978
  • Family household income fell 1.2 percent last year, to $61,544, with single-person household income declining 3.9 percent, to $29,730
  • Since 2007, median income has declined for all racial groups -- Black households have seen 10.5 percent drop; Asians, 7.5 percent; Hispanics, 7.2 percent; and Whites, 5.4 percent
  • Also since 2007, household income has decreased for all age groups except those 65 and older
  • More than 15 percent of Americans live below the poverty line, up 2.6 percent since 2007 and the highest rate since 1993
  • 22 percent of American children live in poverty, up 1.3 percent since 2009 and more than 7 percent higher than in the late 1960s
Working harder for less
These trends, which predate the latest recession, intersect with other signs of America's backward march in recent decades. Income inequality has risen since 1999, the Census Bureau noted. Between 1976 and 2000, in fact, the share of total income earned by the top 1 percent of U.S. households rose from roughly 9 percent to more than 23 percent. In the corporate sphere, average CEO pay rose from roughly 40 times an average worker's pay in 1980 to 263 times in 2009.

On the employment front, since 2000 the U.S. workforce has expanded by only 0.6 percent after averaging 2.5 percent annual growth over the previous 60 years. Of late, most new jobs have been low-wage. A survey by the National Employment Law Project found that three-quarters of the jobs created in the U.S. last year were in industries paying an average of less than $15 per hour. And middle-class jobs? They have seen the greatest losses during the slump.

While household income is shrinking, people are working longer hours. Median-income families today work an average of 3,500 hours per year, compared to 2,800 hours in 1975. Single parents over that time have seen their annual work hours shoot up 53 percent.

By some measures, of course, the U.S. economy is chugging along. For instance, over the last decade nonfarm business productivity rose an average of 2.5 percent year. So why are American workers going backward? Because most of that growth is being captured in the form of higher corporate profits and rising income for top earners. Overall, U.S. productivity over the last 20 years or so has risen more than 62 percent. By contrast, hourly wages for both private- and public-sector employers grew only 12 percent.

Pass the Danish
It is a truism, although one worth repeating, to note that it doesn't have to be this way. Even in a globalized age, shrinking wages aren't immutable. They represent a choice.

Take Denmark (to return to our housemaid above). Since the '70s, when it saw a spike in unemployment, the Scandinavian country has organized its labor market to de-emphasize low-wage work. As Remapping Debate's Mike Alberti explains, it invested heavily in government-training programs aimed at improving worker skills.

After six months of unemployment, the jobless are also required to participate in a state-funded training program. One reason that works: Along with taking the worker's professional goals into account, the government also steers people into sectors of the economy where there are more jobs and better pay. As a result, while in the U.S. Taco Bell ranks among the country's three top hirers (along with the U.S. Air Force and Army National Guard), Denmark has built up thriving electronics, manufacturing and other higher-wage sectors.

Of course, such policies also reflect something deeper about a nation's priorities:

"Danes do not like to see other Danes struggling," said Lars Andersen of the Economic Council of the Labour Movement, a union-affiliated think tank in Copenhagen. "We are very sensitive about that."
That sounds like a good place to start.


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