Key Question About the Economy and Labor Market:

What are some of the major patterns andtrends of compensation for US Workers

during the past 40 to 50 years?

By

Julie Dudash

EVT 7066 Unit 3

Foundations of Career & Workforce Education

America’s Work is Changing

• In the early 1900s, work changed from agricultural based to industry.

• Since the 1970s, manufacturing has declined. By 1996 only 1 in 7 jobs was in a manufacturing business.

• Over 70% of all jobs in the U.S. now fall under the service sector.

(Prywes 2000)

Inflation

*Inflation has caused an 89% decline of the dollar’s value since 1950. According to the consumer price index, an item worth $10 in 1950 now costs $89. Inflation has a huge impact on the American worker and their family.

(Hodges 2008)

Prices Aren’t What They Used To Be!

Real Hourly Earnings

*After WWII the worker’s purchasing power increased at a slightly rapid rate.

*However, purchasing power declined sharply throughout the 1970’s to reach a level in 1981 similar to a level recorded two decades earlier.

(Weisskopf 1984)

Workers Wages Across TimePercentage change in wages of high-wage, median wage, and low-wage workers in Florida, 1979-2007

Period Low-wage workers Median wage workers High-wage workers

1979 - 2007 +14.2% +23.5% +30.1%

*The earnings of low-wage workers were the slowest growing.

*High-wage workers had earnings that doubled in rate as compared to that of the low-wage earners over this time span.

*The Florida wage gap mirrors that of national patterns.

(Nissen, Eisenhauer, Feldman 2008)

Patterns of Poverty in the U.S.• As wages can’t keep up with inflation, poverty tends to rise.• In 1964, poverty was measured in absolute terms. The U.S. Government defined the

poverty line as the point where “families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.” (Wikipedia 2008)

• Poverty is on the rise in the United States as illustrated below. (Wikipedia 2008)

Earnings Disparity

• In 2006, workers in the 90th percentile earned almost five times the money of the workers in the 10th percentile.

• In 2004, the average CEO made 431 times as much as the average production worker.

• The typical CEO makes more in one day than the average worker makes in a year.

(Forman 2007)

Distribution of Earnings 2004(Forman 2007)

Benefits for Today’s Employees

• In the past century benefits such as paid time off would have been unheard of.

• Benefits continue to evolve. New benefits are emerging such as telecommuting and job sharing.

• Benefit costs have outpaced the change in salaries, mainly due to healthcare costs.

• Workers in management, business and finance have access to more benefits than service workers.

• Workers in unions are more likely to be offered benefits.• Full-time workers have greater access to benefits than those who

work part-time. (Jones 2005)

Healthcare Benefits

• The percentage of Americans with government-sponsored healthcare has remained constant.

• The percentage of those with employer-provided healthcare coverage has been declining.

• This leads to an increase in those Americans without healthcare coverage.

• In 2007, 20.2% of the population in Florida was without healthcare coverage. This compares to 15.3% nationwide without coverage.

• Florida ranked 3rd highest in the percentage of residents without healthcare coverage compared to the rest of the 50 states.

(Nissen, Eisenhauer, Feldman 2008)

Percentage of Workers Participating in Health Care And Retirement Benefits in Private Industry

March 2005 (Forman 2007)

Education Does Count

• The average number of school years completed by men and women has increased over time.

• The school years completed have gone from 10 years in 1948 to more than 13 years at present.

• The amount of hours that employees work has declined over time for those without a high school diploma.

• This relates to the need for educational opportunities for today’s youth and those already in the workforce.

• Those without education, without a high school diploma, not only work less hours but will make less money. This leads to an increase in the poverty level for these individuals. (U.S. Dept. of Labor)

• Text table 1. Percent distribution of hours worked by educational attainment, men and women, 1948-1997 (U.S. Dept. of Labor)

• ...Years of schooling completed .. 0-8 9-11 12 13-15 16 17 or more Mean Years

• Men

• 1948 ............................................ 38.4 21.9 25.2 7.3 4.3 2.9 9.7

• 1958 ............................................ 31.0 21.0 27.9 9.4 6.2 4.5 10.4

• 1968 ............................................ 18.7 18.9 36.4 12.6 8.1 5.3 11.4

• 1978 ............................................ 9.6 13.4 39.0 18.5 11.4 8.2 12.5

• 1988 ............................................ 5.7 10.1 38.6 19.7 15.1 10.8 13.1

• 1997 ............................................ 4.4 7.8 34.8 26.0 18.2 8.9 13.3

• Women

• 1948 ............................................ 30.3 19.5 39.0 7.1 2.7 1.4 10.1

• 1958 ............................................ 23.5 20.6 41.6 9.0 3.5 1.7 10.6

• 1968 ............................................ 14.5 18.5 50.4 11.8 3.4 1.3 11.2

• 1978 ............................................ 6.7 13.2 50.5 18.6 7.7 3.4 12.2

• 1988 ............................................ 3.4 8.9 45.7 22.8 13.3 5.9 12.9

• 1997 ............................................ 2.6 6.3 35.8 31.5 17.6 6.2 13.4

References

Forman, J.B. (2007). Making America Work. Washington, D.C.: The Urban Institute Press. Retrieved October 19, 2008, from http://www.my.usf.edu.bbc...

Herman, A.M. (1999). Report on the American Workforce. [Online]. U.S. Department of Labor. Retrieved October 19, 2008, from http://www.bls.gov/opub/rtaw/pdf/rtaw1999.pdf

Hodges, M.W. (August 2008). Inflation – Who Says It’s Dead? [Online]. Grandfather Economic Report Series. Retrieved October 19, 2008, from http://mwhodges.home.att.net/inflation.htm

Jones, Elka. (Summer 2005). An Overview of Employee Benefits. Occupational Outlook Quarterly [Online]. Retrieved October 19, 2008, from http://www.bls.gov/opub/ooq/2005/summer/art02.pdf

Nissen, B., E. Eisenhauer, & M. Feldman. (September 1, 2008). The State of Working Florida. [Online]. Research Institute on Social and Economic Policy, http://www.risep-fiu.org

Prywes, R.W. (2000). The United States Labor Force: A Descriptive Analysis. Quorom Books. Retrieved October 19, 2008, from https://my.usf.edu/bbcswebdav/users/wblank/E...

Weisskopf, T.E. (November 1984). Communications Use of hourly earnings proposed to revive spendable earnings series. Monthly Labor Review [Online]. Retrieved October 19, 2008, from http://www.bls.gov/opub/mlr/1984/11/rpt1full.pdf

Wikipedia. (October 19, 2008). Poverty in the United States. [Online]. Retrieved October 19, 2008, from http://en.wikipedia.org/wiki/Poverty_in_the_United_States