Labor Day, established more than a century ago to recognize the accomplishments of the American workforce, holds special significance in 2023. The nation’s 167 million workers have cause for celebration, as their wages have outpaced inflation.
According to Elise Gould, a senior economist at the Economic Policy Institute, low-paid workers have experienced significant wage growth since the onset of the pandemic in March 2020. Government stimulus measures, such as expanded unemployment benefits, have provided a stronger safety net for these workers, enabling them to search for higher-paying jobs. Consequently, many employers have responded by increasing wages over the past three years.
Despite these positive developments, a substantial number of workers still struggle to meet their financial obligations. Nearly 40% of Americans surveyed by the U.S. Census reported difficulties in covering their household expenses. While wages have kept ahead of inflation this year, research by the Economic Policy Institute reveals that low- and middle-wage workers have generally not kept pace with the rising cost of living over the past four decades.
Elise Gould acknowledges that many low and middle-wage workers continue to face challenges in making ends meet. She highlights that these workers have seen minimal wage increases in the last five decades.
Government data indicates that the average hourly wage for workers in July was $28.96, representing a 4.8% increase compared to the previous year. When considering a 3.3% inflation rate during the same period, it becomes evident that workers’ earnings have surpassed price hikes. This real wage growth is crucial as it translates into an improved standard of living, providing opportunities for better housing, purchasing new cars, or investing in education.
A study conducted by the Economic Policy Institute revealed historically strong wage growth for lower paid workers between 2019 and 2022. People within the bottom 10% of income earners experienced a 9% increase in their real hourly wages, surpassing any other period of economic disruption in the last forty years. However, millions of low-paid workers are still subject to the federal minimum wage of $7.25 per hour, which has remained unchanged since 2009. Although some states have implemented higher local minimum wages, approximately 20 states adhere to the federal minimum wage. Even if workers in these states receive raises, they lack the legal protection of a baseline wage higher than $7.25 per hour.
Elise Gould emphasizes the importance of locking in wage gains to provide economic security during downturns. She also highlights the ongoing efforts of labor advocates who seek to establish a new federal minimum wage of $17 per hour. Their argument is that higher wages would enable workers to keep up with inflation and reduce the disparities experienced by Black and women workers, who tend to earn lower wages compared to their White male counterparts.
The proposed legislation known as the “Raise the Wage Act” aims to increase the pay floor to $17 per hour by 2028, benefiting approximately 28 million workers. Senator Bernie Sanders, an independent from Vermont, is supporting this bill.
Simultaneously, the United States is witnessing a resurgence in labor organizing, with workers participating in unionization efforts at companies such as Amazon, Starbucks, and Trader Joe’s. The National Labor Relations Board reported a 53% increase in union representation petitions in fiscal year 2022, reaching the highest level since 2016.
This year, unionized workers achieved notable victories, including a new contract for UPS drivers that prevented a strike. This agreement will provide drivers with an average annual pay and benefits package of $170,000 by the end of the five-year contract.
Elise Gould acknowledges the growing momentum of organizing activities across the country, viewing it as a positive sign within the stronger economy. While it may take time for these efforts to result in contracts, they represent a step towards greater stability for workers.
In conclusion, Labor Day serves as a reminder of the achievements of the American workforce. Despite recent wage gains outpacing inflation, numerous workers continue to face financial challenges. Efforts to establish a higher federal minimum wage and the resurgence of labor organizing provide hope for a more equitable future.
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