Those keeping their jobs are seeing pay stagnate

09.08.09
By James Conroy

With the unemployment rate nearing 10 percent and expected to continue to remain high well into 2010, those who have been able to keep their jobs have considered themselves lucky. But a new report finds that they may not be as blessed as they think as paychecks have shrunk or remain stagnant, making it harder to pay off credit card debt or their mortgage.

A report released last week from the Economic Policy Institute (EPI) called The Recession's Hidden Costs, finds that many of those who have stayed working during the economic downturn have seen their wages cut or a reduction in their hours.

The report finds that wage growth over the last year has increased at only half the rate it rose over the two previous years. What may be more surprising is that the wages of those with college degrees increased at a rate that was 56 percent lower than the two years prior.

"The fall-off in college-graduate wages seems to be driven by the total collapse of wage growth among women college graduates, whose wages grew at a measly 0.3 percent over the last year," finds the report.

While this has a negative effect on the everyday life of Americans, the report indicates that this stagnation of wages may make it harder for the nation to recover from the recession.

"Unless wage growth can regain its historical forward momentum, consumers who are focused on paying debt and rebuilding savings simply won't have enough income to stimulate the economy with their spending," says EPI. "This means that the path to recovery for the U.S. economy is likely to be much longer and slower than in past recession-recovery cycles."

The EPI report was released on the same day the Bureau of Labor Statistics announced the nation's unemployment rate ticked up to 9.7 percent for August. The BLS report indicated that average hourly earnings have increased 2.6 percent over the last 12 months.

More Employment Trends Articles | More Personal Finance Articles | News Home | Discuss in our Forum

Americans may be dipping into their savings as wages are slow to increase