This is the Report on PA wages. You Bush supporters are all out to lunch just like Bush!!!!!!!
Wages & Income Decline Benefits Decline Growth Slows Needed: A Plan
Overview
Following the brief 2001 recession, the United States and Pennsylvania economies have been growing now for nearly five years. U.S. productivity has grown more rapidly recently than at any point since the 1950s. Yet, over the same period, wages and income have stagnated across most income groups.
With one exception, the past five years represent a return to the economic trends of the 1980s and the first half of the 1990s-and a departure from the broadly shared prosperity of the latter part of the 1990s. The exception: The economic benefits of the past five years have accrued to an even narrower band at the top of the income scale. Wage stagnation, coupled with higher costs for health insurance and gasoline, and erosion of pension protection, help to explain polling data that indicate continuing economic insecurity, despite relatively robust economic growth.
Current policy debates center primarily around government's role in creating conditions conducive to economic growth--levels of taxation and government spending, investment in economic development projects, and other policies. Our analysis points to the need for more attention to the link between economic growth and improving incomes. Simply put, in addition to policies that sustain growth, Pennsylvania families need policies that translate economic and productivity growth into higher living standards. They need this because, as the statistics below amply demonstrate, a more prosperous Pennsylvania economy is not currently translating into greater individual and family prosperity.
Wages Decline While Profits Rise
Adjusted for inflation, wages in Pennsylvania rose steadily from 1997 to 2001 but have stagnated since then. The median hourly wage'right in the middle of the earnings curve'fell to $14.21 in 2005, down 2.3% from $14.55 (in 2005 dollars) in 2004. Wages have declined not only in the middle of the earnings curve but at the low end and even for relatively high-wage earners. At the low end, Pennsylvania earnings fell for the fourth year in a row, to $7.33 per hour. Near the top end of the wage distribution'the 90th percentile'wages have now fallen for three years in a row. High-wage Pennsylvania earners made $32.45 in 2002 but only $30.94 in 2005. Only at the very top of the earnings curve, at and above the 95th percentile, did wages in Pennsylvania grow last year. In the United States as a whole, pay grew especially rapidly in percentage terms for CEO's at they very pinnacle of the wage distribution (No Pennsylvania-specific data exist on CEO pay.)
While wages for most workers fell, inflation-adjusted profits in the United States rose by 13% in 2005, to $1.35 trillion, their highest level ever and the fourth year in a row of rapid increases.
Wages Drop at Every Education Level
Across Pennsylvania and the United States, economists and the public have grown used to seeing wages for college-educated workers rise while those for workers with a high school education or less fall. In the past several years, however, wages in Pennsylvania and nationally have stagnated or declined at every education level.
The median wages of college-educated Pennsylvania workers fell from $22.76 per hour in 2002 to $21.72 in 2005. The median wages of Pennsylvania workers with some college education fell from a peak of $13.75 in 2004 to $12.97 in 2005. Pennsylvania workers with a high school education actually fared slightly better in relative terms, seeing a decline of only 11 cents per hour (from $12.70 in 2002 to $12.59 in 2005) A Break From the Shared Prosperity of 1995-2000
The periods 1995-2000 and 2000-2004/05 were similar periods of robust growth measured by increases in productivity. Yet trends in Pennsylvania wages, income, benefits, poverty, and other key economic variables differ dramatically between these two periods.
For example, median family income in Pennsylvania rose 14.5% from 1995 to 2000 but then fell 7.2% from 2000 to 2004. College-educated Pennsylvania workers' wages rose 9% from 1995 to 2000 before dropping 5% by 2005. The number of Pennsylvanians in poverty fell 29% from 1995-2000 but rose nearly 33% from 2000 to 2004. The number of Pennsylvanians without health insurance fell 12.5% from 1995 to 2000 but climbed 22.6% from 2000 to 2004. Slow Job Recovery After 2001 Recession
One factor contributing to wage stagnation is the slow job recovery evident in Pennsylvania and nationally following the short 2001 recession. While job growth has been healthier in the last three years, relative to the size of the labor force and the size of the working-age population recent job growth has not yet made up for the slow growth from 2001 to 2003. As a result, for example, Pennsylvania labor force participation in 2005 remained 1.1 percentage points below the level of 2002.
An Economic Plan for the Rest of Us
Many economists believe that productivity and living standards are necessarily linked and that higher productivity will translate, over time, into higher wages. The lesson that emerges from this report is that while higher productivity growth is necessary to higher living standards for the majority, it does not guarantee them.
A corollary lesson is that government policy should seek to re-establish a link between the strength of the economy and overall living standards.
This summer, in an important step that will most benefit low-income families, the Pennsylvania legislature and governor passed an increase in the state's minimum wage. Pennsylvania policies have also moved forward in the areas of workforce development and renewable energy, as outlined at the end of this report.
Acknowledging some progress, however, should not obscure the message implicit in recent economic statistics that more change-comprehensive, deep, and sustained change-is needed if prosperity is to be more broadly shared in Pennsylvania. Given the skewed distribution of gains from growth in recent years, "old economy" economic measures that look at overall or average economic performance'such as output and productivity growth, even job growth'tell us little about the economic conditions of typical families. Pennsylvania must develop the analytical and policy tools to more accurately understand and react to the real state of working Pennsylvania.
To assist with this development over the next six months, the Keystone Research Center will seek to stimulate a broader and more informed discussion about a range of critical topics: workforce development, job creation, economic security (including health and retirement security), energy policy and environmentally sustainable development, and taxation.
Ultimately, of course, the direction that economic policy will take in Pennsylvania will depend on the actions of our elected representatives. In this election year it is appropriate that all Pennsylvanians ask candidates standing for office a simple question: What is your economic plan for the 90+ percent of Pennsylvanians not currently benefiting from economic growth?
As our analysis suggests, it may be the most important question voters can ask in 2006.
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