11.8.2: Stagnant Paychecks?

 11.8.2: Stagnant Paychecks?

 With extensive automation, the productivity of U.S. workers has increased year after year, making them some of the most productive in the world (Statistical Abstract 2019:Tables 663, 1377). One might think, then, that their pay would be increasing. This brings us to a disturbing trend, one that troubles the economy and underlies widespread resentment, fears, and insecurity among the working class. In the next Down-to-Earth Sociology, let’s use two lenses to look at workers’ paychecks. Down-to-Earth Sociology Where Is Reality? Workers’ Paychecks Through the Years Let’s start with facts, some annual numbers produced by the U.S. Bureau of Labor Statistics. I have assembled these annual totals in Figure 11.4. Here you can see the average earnings of U.S. workers through the years. These are straightforward totals gathered by an agency of the U.S. government whose bureaucrats have no interest in what they show. Figure 11.4 Average Hourly Earnings of U.S. Workers

NOTES: Constant dollars are dollars adjusted for inflation with 1982–1984 as the base. SOURCE: U.S. Bureau of Labor Statistics 2019:Table A-2. The vertical axis of the graph represents “Dollars per hour” ranging from 0 to 22 in increments of 1, while the horizontal axis represents “Years” ranging from 1970 to 2017. The data presented in the graph is as follows: 1970: Current Dollars, 3.23; Constant Dollars, 8.29. 1980: Current Dollars, 6.66; Constant Dollars, 7.98. 1990: Current Dollars, 10.20; Constant Dollars, 7.91. 2000: Current Dollars, 14.02; Constant Dollars, 8.30. 2010: Current Dollars, 19.07; Constant Dollars, 8.91. 2019: Current Dollars, 23.31; Constant Dollars, 9.31. Note: Constant dollars are dollars adjusted for inflation with 1982 to 1984 as the base. As I have stressed throughout this text, facts never interpret themselves. Facts, or any aspect of life, for that matter, take on meaning only as we interpret them. And how we interpret them depends on the frameworks we use to fit them into. That people disagree on their frameworks of interpretation is a primary reason we have so many problems in society: But this is a matter for another day. For now, let’s try to see what Figure 11.4 means. Here are two major ways of interpreting Figure 11.4. One side of the Coin Look at Figure 11.4. The gold bars show current dollars. These are the dollars the average worker earns. You can see that since 1970 the average pay of U.S. workers has soared from just over $3 an hour to slightly over $23 an hour. Some would say that workers today earn almost seven times as many dollars as workers did 50 years ago. But let’s strip away the illusion. Look at the purple bars, which show these dollars adjusted for inflation, the buying power of those paychecks. You can see how inflation has suppressed the value of the dollars that workers earn. Today’s workers, with their $23 an hour, can buy little more than workers in 1970 could with their “measly” $3 an hour. The question is not “How could workers live on just $3 an hour back then?” but, rather, “How can workers get by on a $1.08 an hour raise that took 49 years to get?” This is about two cents an hour per year! Incredibly, despite workers having more years of college and more technical training, despite the arrival of computers and much higher productivity, the workers’ purchasing power increased $1.08 an hour between 1970 and 2019. After taking out income taxes and Social Security, what can you buy with those few remaining dimes? The Other side of the Coin To understand Figure 11.4, we need to consider how living standards have changed since 1970. The workers’ paychecks now purchase a greater variety and higher quality of goods. Americans now live in much larger houses, where they enjoy what only the rich could afford in 1970: an extra bedroom and bathroom, air conditioning, dishwashers, and clothes dryers. And their televisions, what a change. Instead of those dinky black-and-white sets that received only three channels, the workers’ TVs have much larger screens, show detailed images in color, and are connected to satellites that offer hundreds of channels from around the world. Workers carry cell phones that contain fine cameras and are filled with apps of their choice that allow them instant communication and give them instant news. Workers drive safer, longer-lasting cars and pickups, and for vacations they often fly instead of taking the bus. They eat out-of-season fruit flown in from South America and get medical treatment that was unheard of back in 1970. Their children now have the opportunity for college, something that used to be reserved for a select few. The workers’ quality of life has surged to such an extent that even their life expectancy has increased. Yes, those few dimes certainly have gone far. For Your Consideration The same facts, but what remarkably different interpretations. So → Which interpretation do you favor? Why? → Can you explain how your background leads you to your preferred interpretation? Hearing from the Author: Average Hourly Earnings of U.S. Workers