Woeful wages for the average U.S. worker

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David N. Taylor, executive director of the Pennsylvania Manufacturers’ Association, made a statement in his June 25 letter “A Case Against a Minimum-Wage Hike” that I believe we should all subscribe to. He wrote: “Ultimately, compensation must be related to the amount of value a worker adds.”

Since 1974, the output of goods and services per hour worked has increased by over 80 percent. In 1974, the non-farm minimum wage was $1.90 an hour. When productivity increases and inflation are taken into account, the minimum wage should now be $16.50 per hour. Even if we ignore all productivity increases but take into account only inflation, the minimum wage should still be over $9.15 an hour. The current minimum wage in Pennsylvania is $7.25.

The question I would put to Mr. Taylor and U.S. Sen. Pat Toomey is how, with an increase of 80 percent in the value of the goods and services created by each hour worked, has it come about that the minimum wage has actually fallen over the same period in real-money terms? And how is it that while productivity soared since 2001, hourly average wages haven’t grown at all in inflation-adjusted terms?

Curiously enough, in 1974, the average CEO salary was 27 times that of the average worker. In 1980, on the eve of Ronald Reagan’s presidency, CEO earnings were 36 times those of the average worker. In 2013, the average CEO earned 331 times what the average worker earned. Does this explain the stagnating wages of the people who actually make the product?



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