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It’s Official: The U.S. Is A Low Wage Country

April 24, 2012

The Great Recession has been officially over for some time; the unemployment rate continues to decline; things are looking up – right? Then why do so many Americans just not feel the recovery? A study from the Center For Economic And Policy Research may hold the answer. Mark Thoma summarizes for CNN 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:

(Just in case you missed that: nearly a quarter of American workers earn less than $20,000 per year.  )

This trend shows no sign of improvement, the study found steady growth in the percentage of US workers in the low wage category. “The United States has the highest share of low-wage work in the OECD countries analyzed here. Moreover, the incidence of low-wage work in the United States has been rising for at least three decades, from just over 20 percent in 1979 to just under 30 percent in 2010. This performance makes the United States a poor model for those seeking to reduce low-wage work.”

This is what we mean when we talk about US economic growth over the last few decades not benefiting workers. This is how income inequality grows.

If only low wages were a US worker’s biggest problem:

The intense policy focus on low pay can obscure the reality that low pay is often among the least of the labor-market problems facing low-wage workers, especially in the United States. U.S. labor law offers workers remarkably few protections. U.S. workers, for example, have the lowest level of employment security in the OECD and no legal right to paid vacations, paid sick days, or paid parental leave. The low level of union coverage in the United States means that contractual obligations generally don’t make up for the lack of legal guarantees.


In countries with welfare-state institutions and labor laws that provide significant rights and protections to all workers regardless of their wage level, a focus on the wage problems facing lowwage workers makes sense. In a country such as the United States, however, where welfare-state institutions and labor laws offer only weak protections, low-wage workers face a host of problems beyond low wages. In the U.S. context, raising wages at the bottom would certainly help. But, raising wages alone will do little to address these same workers’ lack of access to health insurance or to alleviate the “time bind” caused by a lack of paid vacation, paid sick days, and paid family leave. (CEPR – emphasis mine)

This can’t be what they mean by “leading from behind.”

4 Comments leave one →
  1. April 24, 2012 1:25 pm

    The facts and figures kind of give the impression we are trying to compete with Chinese wages and labor laws. Pretty sad how far and how fast we have fallen and continue to fall.

    • April 25, 2012 1:53 pm

      I have recently seen an article about some Chinese companies that began outsourcing INTO US. So I think we are winning already.


  1. A Blast From The Past: The History Of Outsourcing
  2. It’s Official: The U.S. Is A Low Wage Country « JoeWo Joe Wosik Blog

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