Recent Recession to Depress Wage Growth for Years
According to The Conference Board’s new Executive Action Report, the extended buyer’s market in jobs brought about by the recession has led to the weakest wage and compensation growth since the 1960s. Between 2008 and 2010, wages continued to trend downward with pressure felt more strongly for men, recent college grads, new hires, and unskilled workers.
Gad Levanon, Director of Macroeconomic Research at The Conference Board said, “While there were signs of modest overall wage improvements in 2011, the severe depression of wage growth during the Great Recession — turning negative in the hardest hit regions — is likely to impact consumer spending, inflation, corporate profits, income inequality, and employee engagement for many years to come. Moreover, the uneven distribution of this pain among different groups may carry deep social and political implications for the future development of the economy.”
The uneven distribution of the downturn has left women nearly unaffected; women still make an average of 80 percent that of a comparably skilled and employed man. Male workers, however, have been hit hard. As recently as last year, the average compensation growth for men was only half of that which occurred in the first decade of the millennium. Women’s growth, on the contrary, has nearly fully recovered. What’s more, men suffered an unemployment rate 2.7 percent higher than women by October 2009, which helps to explain the wage growth gap.
Workers with little formal education also suffered disproportionately during the recession experiencing a wage growth rate 1.5 percent slower than workers with at least a bachelor’s degree. Some of the very hardest hit employees have been recent college graduates enduring a 5 percent wage decline between 2008 and 2010.