The State of Working America

by Mishel, Lawrence; Bivens, Josh; Gould, Elise; Shierholz, Heidi

• ISBN13: 9780801478550
• ISBN10: 0801478553
• Edition: 12th
• Format: Paperback
• Copyright: 2012-12-18
• Publisher: Ilr Pr

Summary

Since 1988, The State of Working America has provided a comprehensive answer to a question many Americans are asking as they watch the rich get richer and the middle class shrink: "How well has the economy worked for American families?" In the 12th edition the authors analyze a trove of data on income, wages, jobs, mobility, poverty, and wealth to demonstrate that low- and middle-income workers and their families would have fared far better over the past three-and-a-half decades if economic policies had not directed the fruits of economic growth to the highest-income Americans.

Author Biography

Lawrence Mishel is the president of the Economic Policy Institute. Josh Bivens is the institute's research and policy director. Elise Gould is an economist and the institute's director of health policy research. Heidi Shierholz is an economist at the institute.

Table of Contents

Documentation and methodology	p. 1
Overview: Policy-driven inequality blocks living-standards growth for low- and middle-income Americans	p. 5
America's vast middle class has suffered a 'lost decade' and faces the threat of another	p. 5
Income and wage inequality have risen sharply over the last three-and-a-half decades	p. 6
Rising inequality is the major cause of wage stagnation for workers and of the failure of low-and middle-income families to appropriately benefit from growth	p. 6
Economic policies caused increased inequality of wages and incomes	p. 7
Claims that growing inequality has not hurt middle-income families are flawed	p. 8
Growing income inequality has not been offset by increased mobility	p. 9
Inequalities persist by race and gender	p. 9
Economic history and policy as seen from below the top rungs of the wage and income ladder	p. 10
The Great Recession: Causes and consequences	p. 11
A very condensed macroeconomic history of the Great Recession and its aftermath	p. 12
Economic 'lost decades': Weak growth for most American's wages and incomes before and likely after the Great Recession	p. 15
Weak labor demand at the heart of the lost decade	p. 16
Weak labor demand devastates key living standards	p. 18
Dim growth prospects forecast another lost decade	p. 20
Two key lessons from the lost decade	p. 22
Extraordinarily unequal growth before the lost decade: Rising inequality blocks income and wage growth from 1979 to 2007	p. 23
Income inequality and stagnating living standards	p. 23
Wage inequality and the break between wages and productivity	p. 28
Strong income and wage growth in the atypical last half of the 1990s	p. 31
Economic mobility has neither caused nor cured the damage done by rising inequality	p. 33
Today's private economy: Not performing for middle-income Americans	p. 35
Middle-income growth lags average income growth and historical income growth rates	p. 35
Social insurance programs, not private sources, account for the majority of middle-fifth income growth	p. 36
Growing shares of income are dedicated to holding families harmless against rising medical costs	p. 36
Households have to work more to achieve income gains	p. 37
Assessing what the private economy is really delivering to middle-income Americans	p. 38
Today's economy: Different outcomes by race and gender	p. 39
Many more than just two Americas	p. 39
Male and female America	p. 41
No one 'American economy'	p. 43
Conclusion: The struggling state of working America is policy-driven	p. 43
The policy good for everybody in the fractured U.S. economy: Ensuring rapid recovery to full employment	p. 46
Table and figure notes	p. 48
Income: Already a 'lost decade'	p. 53
The basic contours of American incomes	p. 57
Family and household money income	p. 58
Median family income as a metric of economic performance	p. 65
A look at income by income fifths	p. 67
Median family income by race, ethnicity, and nativity	p. 68
The Great Recession and American incomes	p. 71
Impact by income group	p. 71
Impact by race and ethnicity	p. 74
Income losses projected for years to come	p. 74
Rising inequality of American incomes	p. 76
Family income inequality	p. 76
Unequal growth of comprehensive household incomes suggests diverging well-being	p. 79
Sharp rise in income inequality apparent in every major data source	p. 80
The limited impact of taxes and transfers relative to market income	p. 84
Factors behind the large rise in inequality of market incomes	p. 94
How much did middle-income living standards actually rise between 1979 and 2007?	p. 106
Measuring living standards at the middle	p. 107
Sources of income for the middle fifth	p. 109
Income growth for the middle fifth has been driven largely by elderly households' pension and transfer income	p. 112
Adjusting income for the truer contribution of health care transfers	p. 112
Disproportionate growth of transfers directed toward elderly households	p. 114
The role of hours worked and educational upgrading in wage growth	p. 120
Little of the growth of middle incomes can be attributed to a well-functioning economy	p. 127
Conclusion	p. 128
Table and figure notes	p. 130
Mobility: not offsetting growing inequality	p. 139
Intragenerational mobility	p. 142
Lifetime mobility against the backdrop of generational stagnation	p. 142
Family and individual mobility trends	p. 143
Factors associated with intragenerational mobility	p. 147
Intergenerational mobility	p. 150
Cross-country comparisons	p. 151
The impact of race, wealth, and education on mobility	p. 154
Race	p. 155
Wealth	p. 156
Education	p. 157
Income inequality and mobility	p. 161
Has the American Dream become more or less attainable over time?	p. 163
Conclusion	p. 168
Figure notes	p. 169
Wages: The top, and very top, outpace the rest	p. 173
Describing wage trends	p. 177
The decade of lost wage growth	p. 177
Contrasting work hours and hourly wage growth	p. 179
Contrasting compensation and wage growth	p. 180
Wages of production and nonsupervisory workers	p. 183
Wage trends by wage level	p. 185
Shifts in low-wage jobs	p. 192
Trends among very high earners fuel growing wage inequality	p. 194
Trends in benefit growth and inequality	p. 198
Dimensions of wage inequality	p. 206
Gaps between higher- and lower-wage workers	p. 208
Gaps between workers with different education and experience levels	p. 211
The gap between workers with comparable education and experience	p. 213
Rising education/wage differentials	p. 214
Young workers' wages	p. 222
The growth of within-group wage inequality	p. 228
Wage inequality by race/ethnicity and gender	p. 232
Productivity and the compensation/productivity gap	p. 235
Factors driving wage inequality	p. 241
Unemployment	p. 242
The shift to low-paying industries	p. 247
Employer health care costs	p. 248
Trade and wages	p. 253
Immigration	p. 265
Unionization	p. 268
The decline in the real value of the minimum wage	p. 279
Executive and finance-sector pay	p. 286
Explaining wage inequality: Bringing the factors together	p. 292
Technology and skill mismatches	p. 294
What is the appeal of the technology story?	p. 295
Education gaps and wage inequality	p. 296
The slowdown in the growth of demand for college graduates	p. 299
Within-group wage inequality	p. 301
The labor market difficulties of college graduates	p. 302
Jobs of the future	p. 305
Conclusion	p. 309
Table and figure notes	p. 310
Jobs: A function of demand	p. 321
Job creation is a macroeconomic outcome	p. 323
Zero is not the baseline for job growth	p. 325
What are today's jobs like?	p. 327
Industries	p. 327
Firm size	p. 329
Occupations	p. 330
Job quality	p. 333
Unemployment	p. 334
Unemployment and age	p. 336
Unemployment and race/ethnicity, gender, and education	p. 339
Unemployment rates of foreign- and native-born workers	p. 342
Unemployment insurance benefits	p. 343
Labor force participation: Structural and cyclical changes	p. 345
Beyond the unemployment rate: Other measures of labor market slack	p. 348
Employment-to-population ratio	p. 349
Underemployment	p. 350
Long-term unemployment	p. 351
Over-the-year unemployment	p. 354
Job-seekers ratio	p. 355
Voluntary quits	p. 356
Recovering from the Great Recession	p. 357
Comparing the Great Recession and its aftermath with earlier recessions and recoveries	p. 358
Job loss and gender in the Great Recession	p. 360
Unemployment in the aftermath of the Great Recession: Structural or cyclical?	p. 363
The consequences of job loss and unemployment for workers and their families	p. 367
Conclusion	p. 370
Table and figure notes	p. 371
Wealth: Unrelenting disparities	p. 375
Net worth	p. 377
The racial divide in net worth	p. 385
Assets	p. 386
Stocks	p. 391
Housing	p. 393
Retirement insecurity	p. 398
Liabilities	p. 400
Student loan debt	p. 403
Debt relative to disposable personal income	p. 404
Debt service	p. 404
Hardship	p. 408
Bankruptcy	p. 409
Wealth of U.S. citizens compared with citizens' wealth in peer countries	p. 411
Conclusion	p. 413
Table and figure notes	p. 414
Poverty: The Great Recession adds injury to insult	p. 419
Poverty measurement	p. 421
Official poverty line	p. 421
Supplemental Poverty Measure	p. 428
Relative poverty	p. 431
The working poor	p. 432
Poverty-level wages	p. 432
Job quality	p. 434
Work hours	p. 435
Determinants of low incomes	p. 437
The macro economy and poverty	p. 437
The impact of economic, demographic, and education changes on poverty rates	p. 440
Resources for low-income Americans	p. 444
International comparisons	p. 447
Poverty and the earnings distribution	p. 448
Resource allocation	p. 452
Conclusion	p. 454
Table and figure notes	p. 455
CPS income measurement	p. 461
Wage measurement	p. 465
Bibliography	p. 475
Index	p. 489
About EPI	p. 504
About the authors	p. 505
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