List members,

I'm forwarding a Job Watch Bulletin from the Economic Policy Institute, out 
today with a report on real hourly wages for 2005.  Their report says that 
although 2005 was a solid economic year, real hourly wages fell for most 
workers.  There are a lot of graphs, so I'm not sure how it will come 
through.  Much of the same information is on their updated website, which 
can be accessed at <http://jobwatch.org/>, so you may need to go there to 
get the full effect.

I heard on the radio just this morning that in Tennessee, the difference in 
wages between the "haves" and the "havenots" had increased rather strongly 
last year, with higher education degrees being one measure of who we 
"haves" are.

Donna Brian, Moderator
NIFL Poverty, Race, & Literacy and Workplace Literacy Discussion Lists
Center for Literacy Studies at the University of Tennessee, Knoxville
djgbrian at utk.edu




>Date: Fri, 27 Jan 2006 13:38:49 -0500

>From: jobwatch-list at www2.epinet.org

>Subject: [JobWatch-list] JobWatch Bulletin, January 27, 2006

>

>

>1366935.jpg

>

>The state of jobs and wages

>

>Lee Price and Jared Bernstein

>

>Economy up, wages down

>The year 2005 was a solid economic year by some indicators, as the economy 

>expanded for the fourth consecutive year. Real hourly wages, however, fell 

>for most workers.

>

>Each bar in Figure A and Figure B represents the percent change in the 

>buying power of the wage for different groups of workers. Figure A shows 

>the real wage changes of low-, middle-, and high-wage workers, 

>corresponding to wages at the tenth, fiftieth, and ninety-fifth percentile 

>of the wage scale. Figure B shows the change in average real wages by 

>education level for high-school and college graduates (four-year degrees).

>

>13669b2.jpg

>

>1366acc.jpg

>

>For low- and middle-wage workers, as well as those with a high school 

>degree, real wages fell last year by 1%-2%. Those at the top of the wage 

>scale experienced marginal gains, and real wages were essentially 

>unchanged for college graduates.

>

>The decline in real wages for these groups of workers was the result of a 

>variety of factors. As shown in an 

><http://www.epi.org/content.cfm/webfeatures_snapshots_20060111>earlier 

>analysis, nominal wage growth slowed over the past few years as the slack 

>in the job market ultimately slowed the momentum coming out of the 

>full-employment job market of the latter 1990s. Inflation was also a 

>factor last year, as energy costs drove prices higher (on average for the 

>year, inflation was up 2.7% in 2004 and 3.4% in 2005). Thus, nominal wages 

>needed to grow that much faster to beat price growth.

>

>Other factors contributing to the decline in real wages are those that 

>reduce the bargaining leverage of many in the workforce, including: the 

>erosion of union power, the fall in the real value of the minimum wage, 

>the growing imbalance in international trade, and the offshoring of 

>white-collar jobs. As long as these forces are in play, the headwinds 

>pushing against real wage gains for many in the workforce will remain strong.

>

>

>----------

>Sluggish private job growth indicates failure of tax cuts

>Changes in tax law since 2001 reduced federal government revenue by $870 

>billion through September 2005. Supporters of these tax cuts have touted 

>them as great contributors to growth in jobs and pay. But, in reality, 

>private-sector job growth since 2001 has been disappointing, and a closer 

>look at the new jobs created shows that federal spending not tax cuts are 

>responsible for the jobs created in the past five years.

>

>If tax cuts have created jobs at all since 2001, it will have happened in 

>the private sector. Assuming that job growth in 2006 matches the Bush 

>Administration's projections, the economy will have added about 2.0 

>million jobs to the private sector from FY2001 through FY2006. But how 

>many of these two million jobs actually can be attributed to tax cuts and 

>how many to increased government spending particularly increased defense 

>spending in this period?

>

>1366bf4.jpg

>

>Based on Defense Department estimates of the number of private-sector jobs 

>created by its own spending, we project that additional defense spending 

>will account for a 1.495 million gain in private sector jobs between 

>FY2001 and FY2006. Furthermore, increases in non-defense discretionary 

>spending since 2001 will have added yet another 1.325 million jobs in the 

>private sector, for a total of 2.82 million jobs created by increased 

>government spending. Increased mandatory government spending which is not 

>even included in these estimates or the accompanying chart would account 

>for even more job creation. The mere fact that the projected job growth 

>resulting from increased defense and other government spending exceeds the 

>actual number of jobs projected to be added to the economy through 2006 

>clearly indicates that the tax cuts hardly seem plausible as the engine of 

>the modest job growth in the economy since 2001.

>

>----------

>Recent job gains lag far behind historical norms

>

>President Bush has noted that 2 million jobs were created over the course 

>of 2005 and that we have added 4.6 million jobs since the decline in jobs 

>ended in May 2003. But does that mean the labor market is getting back to 

>normal?

>

>Unfortunately, no. Recent job gains lag far behind historical norms. Last 

>year's 2 million new jobs represented a gain of 1.5%, a sluggish growth 

>rate by historical standards (see chart below). In fact, it is less than 

>half of the average growth rate of 3.5% for the same stage of previous 

>business cycles that lasted as long. At that pace, we would have created 

>4.6 million jobs last year. If jobs had grown last year at the pace of 

>even the slowest of the prior cycles 2.1% in the 1980s we would have added 

>2.8 million jobs. Over the last half century, the only 12-month spans with 

>job growth as low as 1.5% were those that actually included recession 

>months, occurred just before a recession, or were during the "jobless 

>recovery" of 1992 and early 1993.

>

>1366cfe.jpg

>

>----------

>For further analysis, consult the following EPI publications:

>

><http://www.epi.org/content.cfm/ib219>Why people are so dissatisfied with 

>today's economy (Issue Brief #219)

>

><http://www.epi.org/content.cfm/ib218>The wage squeeze and higher health 

>care costs (Issue Brief #218)

>

>----------

><http://lists.www2.epinet.org/mailman/listinfo/jobwatch-list>Sign up to 

>receive JobWatch bulletins by e-mail<http://www.jobwatch.org/index.html>

><http://www.jobwatch.org/link_info.html>Add JobWatch to your 

>site<http://www.jobwatch.org/index.html>

><http://jobwatch.org/>JobWatch.org home 

>|<http://www.ourfuture.org/>Campaign for America's Future

>

><http://www.epinet.org/>1366df8.jpg

>

>

>

>Economic Policy Institute

>1333 H Street, NW

>Suite 300, East Tower

>Washington, D.C. 20005

>

>Copyright ©2006 Economic Policy Institute. All rights reserved.

>

>

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