On Labor Day, little to celebrate for American workers

Many Minnesotans will be free from work today because of the federal Labor Day holiday, but the average worker has had little to celebrate in recent decades. 

Between stagnating wages for working and middle-income Americans and persistent pay gaps that have left women and people of color behind, there hasn’t been much progress for workers in the past half-century. The pandemic has interrupted the recent economic growth that followed the Great Recession, causing unprecedented strain for workers and businesses as the virus continues to spread across the country.

Americans’ earnings have barely changed since the 1970s, despite huge increases in economic productivity since then. In 1982 dollars — the baseline used by the Federal Reserve — the median wage in 1979 was $335 in 1979, compared to $359 in 2019.

“Even as productivity has increased and the size of the pie has grown — each hour of labor has become more productive and created more output and revenue — the share that workers have gotten is falling,” said Aaron Sojourner, a University of Minnesota labor economist.

The extra profit has gone to shareholders instead. 

There’s no clear-cut reason for the lack of wage growth, but rather a “whole constellation”of factors at play, he said, including labor policy and macroeconomic policy decisions spanning decades. 

The long decline in workers’ collective bargaining power is a significant cause of the stagnation, Sojourner said, as workers have struggled to form a united front in negotiations with management and investors. 

Fewer Minnesotans are union members, but the state’s membership rate is still above the national average

Union membership has been declining steadily for decades, which experts attribute to the shrinking manufacturing industry, outsourcing of blue collar jobs and the rise of anti-union attitudes and policies among business owners and politicians beginning in the mid-20th century.

In Minnesota, the percentage of workers who are union members has shrunk by a third since 1989. Union membership in the North Star State was 22% in 1992 and hit a 30-year low in 2019, according to Bureau of Labor Statistics data.

The decline of unions is especially significant during the pandemic, Sojourner said. Unionized workers are more likely to speak up about safety and health concerns, and unionized workplaces are 30% more likely to be inspected for potential safety violations, he and fellow researcher Jooyoung Yang found in a recent study.

Pay gaps by race and gender persist

While the gender pay gap has narrowed slightly in recent decades, racial pay disparities have worsened.

Women made 85% of what men earned in 2018, up from 64% in 1980, according to Pew Research — but progress has slowed in the past 15 years.

And for some workers of color, the gap has widened, according to the nonpartisan think tank Economic Policy Institute. Black workers earned 81% of white workers’ pay in 2000, and 77% in 2019.

The racial disparities are attributed to work experience, education and job type — and workplace discrimination. After controlling for age, education, gender and region, Black workers still make nearly 15% less than their white workers, EPI found.

More workers have paid sick and vacation time

On the upside, more workers have paid sick leave and vacation time than in 2010, an especially important benefit during a pandemic.

In 2019, 76% of workers had paid sick time, up from 67% in 2010, according to Bureau of Labor Statistics data. Still, that means roughly 33.6 million people don’t have sick leave.

Access to sick time also varies widely by job type. Nine out 10 people in management or professional positions — high-paying jobs like lawyers, bankers and engineers — were granted paid sick time in 2019, compared to 60% of people in service jobs.

Pandemic has interrupted recent economic growth, stressed workers

Just as things were finally beginning to turn around for workers during the recovery following the Great Recession, especially on the bottom rungs of the economic ladder, the pandemic hit. 

“In the last couple of years, the labor market was tightening and tightening, unemployment was falling and falling and falling, and wage growth was sort of accelerating — that’s a good news story,” Sojourner said. “And the coronavirus is a different story.”

Although there are some signs of recovery, workers are still hurting. In August, the share of the U.S. population that was employed was among the lowest rates since 1975, and more than 13.2 million workers filed continued claims for unemployment benefits — meaning they filed an initial claim one week, then filed to receive benefits another week —  during the week of August 22. That’s double the number of claims filed during the worst week of the Great Recession, according to Federal Reserve Bank data.

There are approximately six people on unemployment for every job opening in the U.S., Sojourner said — meaning there’s no way for every unemployed person to get a job. Federal and state unemployment have helped families make ends meet, but many are still struggling, he said.

“There’s huge pain in the labor market right now for working families. People lost their earning opportunities through no fault of their own,” he said. “There’s a lot of jobs that shouldn’t be happening because of the risks of the pandemic. It’s complicated … but (people) still need (money) to have a roof over their head, and food, and take care of each other and not be stressed out.”