Study: Average worker’s pay less than reported


Katia Dmitrieva - Bloomberg News



American workers are making less than official estimates show, according to new analysis.

U.S. workers earn a median weekly wage of $797, or $41,456 a year, according to the Ludwig Institute for Shared Economic Prosperity, which analyzed data up until 2020. That’s 19% below official estimates from the Bureau of Labor Statistics, a widely-used measure of pay.

The data also show a wider earnings disparity by race than traditional data. White workers’ wages rose 16% in the past two decades while Black Americans experienced a more tepid 7.9% advance. Labor Department figures show wages for the two groups rising at 12% and 10%, respectively.

“The bottom line is that things aren’t actually getting better for the average worker,” said Gene Ludwig, founder of the organization and chairman of financial consulting firm Promontory Financial Group who served as President Clinton’s Comptroller of the Currency. “You can’t make good policy without knowing what the facts are.”

The research comes at a time when policy makers are re-evaluating a range of traditional economic data. The Federal Reserve is looking at broader measures of employment, for example, to judge the strength of the labor market. Some in President Joe Biden’s administration want to focus more on equity when measuring the economy’s performance.

Meantime, Americans continue to struggle with more than half a million jobless claims filed each week. Official figures tend to obscure the experience of the average worker, with data indicating that wages rose amid the job cuts as low-earnings workers were disproportionately laid-off.

The non-profit group’s analysis includes data on part-time workers and the unemployed. The Ludwig Institute says including a broader swath of employment shows a more accurate picture of the labor market.

Lawmakers are watching employment data closely as they debate raising the federal minimum wage. Biden proposed a $15-an-hour minimum wage as part of his initial $1.9 trillion stimulus package, though the measure was later removed. Some Democratic lawmakers continue to push for the increase.

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Katia Dmitrieva

Bloomberg News

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