It's well known that the typical American household has essentially been running in place or falling behind financially for some time. Sapped by greater outlays for everything from energy and health care to transportation and education, workers' wages have failed to keep up with the cost of living.

What is news, however, is that stagnant wages have been a problem for far longer than anyone heretofore supposed, according to a new report released last week by the Economic Policy Institute, a nonprofit think tank focused on the poor and middle class.

Titled The Sad But True Story of Wages in America, the study found that all workers, regardless of whether they work in the private or public sector, have endured decades of stagnating wages despite significant gains in productivity.

"The EPI study confirmed and elucidated a trend that economists have been tracking for some time," says Matthew Freedman, professor of labor economics at Cornell University's ILR School. "Wages have been relatively flat for the bulk of the U.S. population, not only for the last 20 years, but, in fact, even further back -- well into the '70s."

Demonizing the Public Worker

Freedman says that what gains American workers have seen in earnings "have accrued almost entirely to those at the very top of earnings distribution." That is to say: the rich have gotten richer, while the middle class has been treading water. As a result, the nation has experienced an increasing disparity between haves and have-nots during the last few decades.

The findings throw into sharp relief the current debate about whether public-sector employees -- particularly those who belong to unions -- are paid too much.

As the EPI study puts it:
The current public discussion illogically pits state and local government employees against private workers, when both groups have failed to sufficiently benefit from the economic fruits of their labors.
The tactic of demonizing state workers has been used in Wisconsin, Ohio, and other states where Republican governors and legislators have sought to take away public-sector workers' collective bargaining rights.
These elected officials, most notably Wisconsin Gov. Scott Walker, argue that state budgets can't afford the largess paid to public-sector employees, despite concessions willingly made by state workers.

The perception that public employees are getting a better deal has stirred up resentment among some in the private sector who, in these austere times, feel they shouldn't be the only ones making sacrifices such as paying more for health care or forgoing raises.

But even if public employees were indeed paid better, the problem with that argument is that it's akin to asking the lone healthy person in a roomful of sick people why he, too, hasn't fallen ill.

A Love-Hate Relationship with Teachers

In the furor that has erupted over state budget deficits, "we've lost sight of the more important aspects of things," Freedman says. It's a classic example of taxpayers' reaction to the conundrum of either paying more in taxes or asking government to cut public workers' salaries.

"When the option is raise my own taxes versus [cut] somebody else's salary," he says, "it's always, 'I'd rather reduce somebody else's salary.'"

It's interesting to think of teachers in this scenario, Freedman says. "On one hand, we spend a lot of time complaining how teachers aren't valued enough, and then on the flip side suddenly now everybody thinks that teachers are greedy and are perhaps overcompensated."

The Only Real Winners: the Wealthy and the Corporations

Of course, the one issue missing from the public debate is that employers have benefited mightily from the fruits of workers' labor in the last couple of decades. According to the EPI study, productivity among American workers grew by 62.5% in the 20 years ending in 2010. Increased productivity benefits companies by reducing their need to hire and train more workers, among other savings.

The rise in productivity is far greater than the increase in real hourly wages for both private-sector, and state and local government workers, which grew 12% in the same period. (EPI notes that overall compensation, which includes health care and other benefits, grew a bit more for both groups, but still lagged well behind productivity growth.)

What's worse is that for workers without college degrees, wage gains have been even more meager. During the same 20-year period, private-sector wages for high-school educated workers grew by just 4.8% -- and a mere 2.6% for state employees. By contrast, real wages for college graduates in the private sector grew 19.4%, compared with 9.5% for those in state government jobs.

Government Policies Put Workers Last

Why have workers, regardless of their education or place of employment, fared so badly in the last few decades? The cause lies in the nation's economic policies, which have not supported good jobs during the last 30 years or so. Rather, EPI's study finds:
The focus has been on policies that were thought to make consumers better off through lower prices: deregulation of industries, privatization of public services, the weakening of labor standards including the minimum wage, erosion of the social safety net, expanding globalization, and the move toward fewer and weaker unions.
Such policies, the group says, have eroded most workers' bargaining power, widened income inequality and reduced access to good jobs.

It's not at all clear how to solve the problem of stagnant wages. Still, Freedman says, "It doesn't seem to me that the solution is an extreme one like policymakers in Wisconsin would like to pursue."

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the people i see making big money are lawyers.

April 28 2011 at 10:25 AM Report abuse rate up rate down Reply

What have the dems done? Passed legislation in 2007 that took money away from big oil and steered it toward our auto industry for R&D with mandates for better mileage and now low and behold we have suv's that get 32 mpg as well as waiting lists for chevy volts (almost all US auto workers are back to work), electric batteries being built here (500 at just one plant that pays $14 to $18/hour), and charging stations being made in this country. They eliminated the tax incentives for corporations to go overseas, they eliminated the 5.25% tax rate for those overseas profits, they passed legislation for 100% write offs for improvements made in this country that has demand way up for machinery and equipment, they gave the IRS the resources to go after offshore accounts with over 14,000 coming forward, they passed banking legislation that addresses the problems of the 2002 banking legislation that allowed predatory lending and less govt oversite on wallstreet, they've created 1.3 million jobs in 13 months, manufacturing and export gains for 20 months, and more. What's the gop done? Cut jobs and wages while handing even more over to corporate tax cuts.

And more good news: Retail sales up again, and unemployment claims continue to decline. 1.3 million jobs in 13 months, 20 months of manufacturing and export gains, demand for machinery and equipment up. All those manufacturing paychecks are coming back into communities and creating demand for goods and services just like the economists said.

April 12 2011 at 12:42 AM Report abuse +1 rate up rate down Reply

Our government must do something about lowering it's overhead for sure. Social Security should start at 70yrs and should only pay out to people who earn less then $30,000 net per year from pensions. As far as Medicare there should be harsher penalties for fraud and a copayment of $25 for every visit to a healthcare provider.
Then cut our defense budget to a more realistic level and end paying pensions of over $30,000 to anybody, senators and House members included.
It's this or we will see the Fall of the American Empire

April 04 2011 at 12:13 PM Report abuse rate up rate down Reply

In February 2004, the Bush White House, working through the OCC officially preempted national banks from state laws regulating mortgage credit, including state anti-predatory lending laws. State attorney generals and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. Of the many errors of judgment, and questionable ideological decisions of the Bush administration, this probably has the most significant and damaging effects that led to our housing and economic crisis.

March 29 2011 at 1:53 AM Report abuse rate up rate down Reply
2 replies to inasctg56's comment
AZ Stang

Feel better now?

April 01 2011 at 8:35 AM Report abuse rate up rate down Reply
Malcolm Gary Jr

Thanks for that jew!!! I just know in My heart this is all the Repulicans fault!!! Oh and Ive been around too long now and Ive seen this all coming for some time!!!

April 06 2011 at 1:40 PM Report abuse -1 rate up rate down Reply

you can fix the sorry state of America by voting out every incumbent, every election, every time....and demanding a demanding the

March 28 2011 at 9:54 AM Report abuse -1 rate up rate down Reply

reply to gvisto19 regarding "Public employees don't generate any income." You don't think that teachers, firemen, policemen, nurses, etc paychecks aren't spent in their communities? That their paychecks don't contribute to our eonomy? You're wrong. Just as for every autoworker there's ten related jobs due to those paychecks.

March 27 2011 at 10:10 PM Report abuse rate up rate down Reply
1 reply to inasctg56's comment

they don't generate income and they don't "produce" anything....and if you think unions or the federal government care about are mistaken....

March 28 2011 at 9:55 AM Report abuse -1 rate up rate down Reply
hi cat

Since the semi-retarded, greedy Corporation heads and their wholly owned pols (both republican and demoncrat) skuttled the whole US financial system with their MISmanagement and THEFT. YET, they GOT BAILED OUT (with my savings), GOT TO KEEP THEIR ROTTEN COMPANIES AND PAPER STOCK EQUITIES). We dummies are without an honest watchdog in the Halls of Congress. THEY know there really is nothing left to steal except public worker pensions and health care premiums. So THAT's WHAT THEY ARE GOING FOR !! Are they loyal to the USA ??? U.S. Middle class ? Our WAY of LIFE? NO! They love communist ( or mexican) slave labor, child labor and anybody and anyplace who has no UNION to look out for the basic human rights. They and WE will eventually be their cannon fodder. All that crap about making the State more "job friendly" by making it more corporate friendly is bunko squad all the way. JOHNNY FRIENDLY.... remember him in "On the Waterfront " ? He loved his workers too!!

March 26 2011 at 3:14 PM Report abuse +1 rate up rate down Reply
1 reply to hi cat's comment

Well said hi cat. I couldn't agree more, except the dems eliminated the tax dollars given to corporations to go overseas, the dems eliminated the 5.25% tax for overseas profits, they passed new banking legislation that addresses the problems from the 2002 gop banking legislation, they have worked with our manufacturing sector and they now have seen 19 months of gains, they are negotiating better trade agreements on behalf of american workers and we've seen over 19 months of export gains, and the unemployment has gone from 10 to 8.9 with economists forecasting over 2 million job growth for this year. I think the Obama administration is doing something right. THe gop? They just continue their trickle down, cutting jobs and wages, and handing it over to corporate tax cuts.

March 27 2011 at 10:02 PM Report abuse +1 rate up rate down Reply

what about the sorry state of the taxpayer?

The FairTax makes the United States the most favorable tax environment for growth in the world. That means trillions of dollars of new investments and millions of new jobs.

The FairTax brings everyone - drug dealers, illegal immigrants, gamblers and those adroit tax-avoiders - into the tax system, allowing all of us—the victims of this corruption—to pay lower taxes and take home more.

The FairTax has no federal deductions or withholding out of your paycheck. That’s right, you read it right; you take home all the money you earned.

The FairTax is a national sales tax that replaces all the corruption, bad ideas and insider trading of tax breaks. It raises just as much money but out in the open. That makes it a lot easier to see what’s being spent out of your money—another reason Washington hates it.

Yes, the FairTax is a threat to the status quo. The FairTax could be the greatest devolution of power from government to the people since the Declaration of Independence.

please go to yourself about this....and demand it from your rep. in Washington!

March 26 2011 at 9:02 AM Report abuse +1 rate up rate down Reply
2 replies to scottee's comment

Try getting the gop to do this when they've created loopholes for them to pay zero or very little in taxes. For example the 5.25% tax rate the gop passed in 2004 for overseas profits and they're fighting to return saying it would create jobs when it clearly did not create jobs in 2004-2008.

March 27 2011 at 10:12 PM Report abuse rate up rate down Reply

WE, the people, have to demand it! or vote them out! we don't have to be victims here! unless you are enjoying it.

March 28 2011 at 9:57 AM Report abuse rate up rate down Reply

hmmmmm, average yearly income of the 1% - 2% who got the tax break is $8,000,000, Last year. The top earners now take home 24% of all the income generated in the US last year, vs 8% in 1981. Top tax rate today is 36.5% and Reagan's first term was 67%. When 1-2% take home 24% of all the income in the nation, the middle class is no longer there as we know it. Everyone says we want to give our kids the same opportunities we had, heck How? How can you give your kids the same lifestyle you had when the rich are taking your money and entitlements that you negotiated and worked for all your life and paid to away? These folks (GOP) hold America hostage to get tax breaks through for the rich promising jobs, if they had not promised jobs I wasn't on their tail but promising jobs got them the tax break, so now where are the JOBS? On top of that, when Bush mistakenly or knowingly calculated next 8 years of surplus as a collected fund in the government's pocket, saying the money belongs to the tax payer and not the government, and gave a 8 year tax break saying it will stimulate the economy which it didn't. He caused almost $3 trillion national debt increase and before even a year passed he got rid of the surplus and we ended up with the unfunded tax break, borrowed from China to give to our rich who are sitting on 2 Trillion dollars of cash today. China has about 12% growth, we have less than 2% so why would they invest here in the US when they can make more money overseas, money doesn't understand nationality, it only understand money and goes where it can grow best. I say stop fooling yourself, you see they ware breaking the back of the labor, who is next? Does our labor have to sink to income level of Chinese to become viable for hiring again? Are you kidding me?

March 24 2011 at 1:35 PM Report abuse +1 rate up rate down Reply
1 reply to mhomi's comment

Bush started with almost no national debt and ended with almost $11 trillion with not much to show for it. He also created more foreign debt than ALL past presidents combined.

March 27 2011 at 10:14 PM Report abuse rate up rate down Reply

reply to mike: Take your anger and frustration out on american workers - you're playing right into the gop's hands and allowing them to further cut jobs and wages while handing it over to corporate tax cuts.

March 24 2011 at 10:56 AM Report abuse +1 rate up rate down Reply