Wages stall in Obama economy

Neil Munro White House Correspondent
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Americans have become more productive even as wages decline, according to a new report by the left-of-center Economic Policy Institute

Productivity has grown by 7.7 percent since 2007, yet wages have grown by less than 1 percent during President Barack Obama’s tenure, and fell for the bottom 70 percent of the workforce.

The president of EPI, Larry Mishel, says the cure is greater federal regulation of the marketplace to raise the minimum-wage, to help union organizing and curb use of foreign guest workers.

He also suggested that the federal government could pay older Americans to leave the labor force, which would free up jobs for younger Americans.

“A temporary five year program where people aged 60 and above can retire at full benefits [would] get them out of the way and let young people get at the jobs,” said Mishel.

However, Mishel declined to comment when asked if the proposed doubling of immigration would increase the supply of workers and also reduce workers’ ability to demand higher wages.

A Senate bill passed in July would double immigration rates, and could allow 46 million new immigrants by 2033. Business-linked Republicans have also drafted bill that would increase the inflow of immigrant workers and guest workers.

Those measures are strongly opposed by some Democrats, many of the GOP’s base and some top-level members, notably Alabama Sen. Jeff Sessions. He’s arguing that the GOP’s support among all Americans would be boosted by ensuring that federal immigration policy pushes up Americans’ wages and job opportunities, rather than by helping companies hire workers at lower wages.

Mishel’s deputy, Heidi Shierholz, said new immigrants can reduce wages for immigrants and Americans when they have very little bargaining power to demand more wages from their employers. The same wage-reducing process can also be caused by temporary guest-workers, she said.

The position allows her to endorse immigration while also urging regulations to offset its impact on American workers.

Roughly 1.3 million fewer native-born Americans have jobs today than had jobs in 2000, even though their working-age population has grown by 16.4 million, according to July report by a think tank that favors reduced immigration.

In contrast, 5.3 million new immigrants have won jobs since 2000, while the nation’s working-age immigrant population has grown by 8.8 million, said the report by the Center for Immigration Studies.

The EPI report also notes that Americans wages have were falling prior to the economic crash in 2007 and 2008. For example, after-inflation wages have only risen 4.4 percent since 2000, despite a productivity increase of 24.9 percent.

Wages for high-school graduates have dropped by a percent, while wages for people with professional degrees have risen by only 5 percent since 2000, said the report.

The after-inflation median weekly wages of men have risen by 0.4 percent since 1979, said the report. The median wage is not the average wage, but is the wage earned by the person halfway between the lowest and highest earning person.

Overall, “the median worker saw an [wage] increase of just 5.0 percent between 1979 and 2012, despite productivity growth of 74.5 percent,” said the report.

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Neil Munro