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The economy may be slowly returning to normal, but wages will likely take a bit longer to recover. That’s because, according to new research, overall wage growth between 2008 and 2010 was the weakest since the 1960s. This has had an additional ripple effect for many segments of the population, particularly in forcing them to accept lower-than-usual salaries.
The research found that this shift has occurred because employers refused to cut wages of existing workers during the last recession. This means that previously unemployed and underemployed workers are bearing the brunt of the current wage problem since they have to accept lower salaries for jobs as a result.
First-time and younger workers are among the most affected demographic. According to the research, young workers experienced a wage decline of 5 percent between 2008 and 2010. The research also found that men were hit harder than women during the recession. In 2011, wages for men stood at half the average rate for the previous decade while wages of women are nearly fully recovered.
Additionally, highly educated workers were also greatly affected by slow wage growth during the recession. According to the research, highly educated workers, looking for a new job, should expect to accept salaries up to 30 percent lower than existing employees.
"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," Gad Levanon, director of macroeconomic research at the independent business membership and research association, The Conference Board, and a co-author of the report, said. "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 information in the Feeling the Pain: Wage Growth in the United States during and after the Great Recession report was based on data from the U.S. Bureau of Labor statistics. The paper was authored by Levanon, Vivian Chen, and Ben Cheng for The Conference Board.
Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.