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US wage disparity took another turn for the worse last year

Friday, January 27, 2017 - 00:20

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The picture on income inequality in America just got a little bleaker, by yet another measure.

[WASHINGTON] The picture on income inequality in America just got a little bleaker, by yet another measure.

Top earners last year made 5.05 times what their lowest-income counterparts took home, the widest gap in data going back to 1979, according to the Labor Department. What's worse, it shows the most recent improvement - in 2014 - was just a blip, and the trend is again moving in the wrong direction seen over almost four decades.

Resilient economic growth and a solid stretch of hiring the past few years had raised expectations that the gap between rich and lower-income workers would shrink in a sustained manner. The reality was disappointing. The growing divide underscores the angst that helped land President Donald Trump in the White House, with his appeal to working-class voters feeling left behind in the economy.

Americans near the top of the income scale, whose weekly earnings exceed those of 90 per cent of all full-time wage and salary workers, made at least US$2,095 in a typical week last year, according to the report released Jan 24. Those in the bottom 10 per cent earned less than US$415.

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It's not all bad news: The latest figures show overall median weekly earnings for the 101 million workers 25 years or older last year climbed about three per cent to US$885, from US$860 in 2015. The 2016 figures were reported by the Labor Department this week along with its fourth-quarter data from a survey of US households.

Wage disparities tend to be counter-cyclical, rising during times of slower economic growth, and usually shrinking when the business cycle accelerates. Of course, inclusive policies and opportunities to move up the socioeconomic ladder also play a huge role.

While the economy has grown at a historically modest 2.1 per cent rate on average in the current expansion that began in mid-2009, the US is almost at full employment now and the tight labour market has sparked hope that workers across the board will eventually see a lasting pickup in wage growth. Whether paychecks also reflect less inequality in coming years is anyone's guess.

Meanwhile, a stubborn gender gap persists among workers 16 years or older, the age-group usually used for such comparisons. Women's weekly take-home pay relative to men's has hovered within a narrow range during most of this economic recovery, instead of building on the improvement seen in prior decades.

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