Wages decline despite economic strength

Joel Rogers

Wisconsin’s strong economic growth has resulted in better news for working people, but long-term wage decline and significant economic disparities still dominate the state’s economy, according to a new UW–Madison study.

The State of Working Wisconsin – 1998, released Labor Day weekend by the Center on Wisconsin Strategy at UW–Madison, provides a comprehensive view on the economic status of Wisconsin workers.

The study relies on a variety of data on wages, industry, family income, wealth, and poverty, comparing Wisconsin’s performance to its own past as well that of the nation.

Joel Rogers, director of COWS and professor of law, political science and sociology at UW–Madison, called the trends found in the report “disturbing.”

“Most Wisconsin families are working harder, but for less, than a generation ago,” said Rogers, who authored the report with Laura Dresser and Scott Mangum. “We know that it doesn’t have to be this way. We should be talking about how to improve that.”

Since the last Stateof Working Wisconsin report in 1996, some things have improved for working families in the state, the study found. Per-capita income growth outpaces the nation; unemployment falls well below the national rate; and median wages and family income are up and growing faster here than nationally. However, bad news overshadows the good, Rogers said. Data from the report support this conclusion. Here are some key findings, with all money values adjusted for inflation and expressed in 1997 dollars:

Recent wage increases have been trivial, leaving workers making less than they did 20 years ago.

• Today, the Wisconsin median hourly wage ($10.63) is still 8.4 percent below its 1979 level ($11.61). Between 1989-97, the long economic expansion, Wisconsin median wages grew a mere 28 cents per hour – on average, less than a nickel a year.
• From 1979-97, Wisconsin’s median wage declined 50 percent faster than the 5.3 percent national decline over the same period.
• Over the 1979 – 97 period, the median female wage in the state rose just 4.7 percent, from $8.84 to $9.25 – 41 cents over two decades, or about two pennies a year.

  Increases in family income since the late 1970s are due entirely to increases in hours worked – a strategy that cannot be indefinitely sustained.

• Family incomes are up, but given falling men’s wages and stagnant women’s wages, this is simply the result of increasing hours devoted to work. Nationally, from 1979-96, the average married couple with children increased its annual hours worked by 19 percent – to about 3,850 hours a year. The typical Wisconsin married couple increased their working hours even more. The added work resulted in a 9 percent family income gain nationally, but just a 6 percent increase for a family of four in Wisconsin.

  The share of Wisconsin jobs paying exceptionally low wages and the share of working families in poverty has dramatically increased.

• From 1979-97, the share of Wisconsin’s full-time workers who earned extremely low wages jumped by more than a third, from 14.9 percent to 20.3 percent. This outpaced the national increase in poverty-wage jobs over the period.
• Working hard for a living is not enough to keep Wisconsin families out of poverty. Since the late 1970s, the share of working families who are poor has increased by more than 70 percent, from 4.6 percent to 7.9 percent, far outpacing increases nationally.
• At present, more than half a million Wisconsinites live in poverty, up from less than 400,000 two decades ago. And since the late 1970s, the poverty rate among Wisconsin children has increased 50 percent, from 10.4 percent to 15.1 percent – more than half as much as the national increase over the same period.

  Inequality is growing rapidly – especially during the recent boom.

• Income inequality in Wisconsin is growing.
• Wisconsin’s tax system compounds inequality, imposing twice the tax rate on the bottom 20 percent of families (13.6 percent) as it does on the top 1 percent (6.4 percent).

COWS is releasing The State of Working Wisconsin concurrently with a national report, The State of Working America, by the Economic Policy Institute in Washington, D.C.

The national report found that despite recent economic gains, the living standards of the typical American worker have not fully recovered from the early 1990s recession nor benefited from the overall growth in productivity.

The Center on Wisconsin Strategy, based at UW–Madison, is a research and policy center dedicated to improving economic performance and living standards in the state. To request a copy of The State of Working Wisconsin – 1998, contact Robyn Richards, 262-5387, rrichard@ssc.wisc.edu. The executive summary will be available at: http://www.cows.org.