Wage declines are the new reality for the American workforce. More than half the full-time employees who lost jobs between 2007 and 2009 and have since found new full-time positions reported a wage cut, according to the Labor Department. More than one third (36 percent) said wages in the new job were at least 20 percent lower than in the one they lost. Americans haven't seen such large pay cuts since the Great Depression, reports Sudeep Reddy in The Wall Street Journal. Can anything be done about them? (See how some New Yorkers are protesting)
The wage cuts will prolong the downturn: This isn't "surprising" news, says Daniel Indiviglio in The Atlantic. In this recession, unlike many others, "good, high-paying jobs were lost." Unfortunately, this steep decline in wages signals that "overeducated, overqualified workers are taking jobs below their experience levels." This will only prolong unemployment rates among those with "less education and relatively weaker experience levels."
"Why did the recession cause a big drop in wages?"
There is a silver lining, though: This news "may not be quite as bad as it sounds," says Ed Morrissey in Hot Air. As wages fall, so do prices, "especially in real estate." If declining wages erode the price of housing, food, and energy, that's good news for those struggling to get by. But until the Obama administration stimulates "job-creating growth," things are unlikely to change.
"Wage cuts steepest since the Depression?"
Wage insurance might help: The "real and permanent loss of income" suffered by many during this recession may spur more talk of "wage insurance," says James Pethokoukis at Reuters. That's when the government makes up the shortfall in wages for laid-off workers who find new, lower-paying jobs in the same field. Obama's new top economic adviser, Gene Sperling, is known to be a fan of the policy, and John McCain suggested it during the 2008 elections. But it would be "very expensive."
"The Great Wage Drop and wage insurance"