June 16th marks the longest period in history without an increase in the federal minimum wage. The last time Congress passed an increase was in May 2007, when it legislated that the minimum wage be raised to $7.25 per hour on July 24, 2009. Since the minimum wage was first established in 1938, Congress has never let it go unchanged for so long.
To get the data for this graph visit The FRED Blog The value(s) of the minimum wage. At the bottom of the page they provide direction on how to recreate the chart with FRED data. Knowing how to do this is valuable and should be incorporated into any statistics or QL course.
The EPI article, Raising the federal minimum wage to $15 by 2024 would life pay for nearly 40 million workers, by David Cooper (2/5/19) covers their analysis of raising the minimum wage. Their graph here shows the gap between the minimum wage and median wage over time. The report is lengthy and detailed. A few quick highlights:
Raising the minimum wage to $15 by 2024 would undo the erosion of the value of the real minimum wage that began primarily in the 1980s. In fact, by 2021, for the first time in over 50 years, the federal minimum wage would exceed its historical inflation-adjusted high point, set in 1968.
All told, raising the minimum wage to $15 by 2024 would directly or indirectly lift wages for 39.7 million workers, 26.6 percent of the wage-earning workforce.
Indexing the minimum wage to the median wage would ensure that low-wage workers share in broad improvements in U.S. living standards and would prevent future growth in inequality between low- and middle-wage workers.
The article has over 20 graphs/charts/tables and each one has the associated data. The report does include “a discussion of the research on the likely effects such a raise would have on businesses, employment, and low-wage workers’ welfare.”
From 2017 to 2018, men at the 95th percentile saw large wage gains, while those at the middle and very bottom of their wage distribution experienced downright wage losses.
The gender wage gap at the 10th percentile remains the smallest across the wage distribution and it has narrowed since 2000; it is currently at 5.9 percent. The regression-adjusted average gender wage gap narrowed slightly from 2000 to 2018 and is currently at 22.6 percent.
In both comparison periods, both men and women at the 10th percentile saw greater wage growth in states with minimum wage changes versus those without.
Over the last 18 years, wage growth for white and Hispanic workers has been about four times faster than that of black workers in the 20th through the 70th percentiles of their respective wage distributions. The 60th and 70th percentiles of the black wage distribution remain below their 2000 levels.
The wages of those with a high school diploma rose faster than the wages of those with a college degree over the last two years, narrowing the gap between college and high school wages. As a result, the college wage premium—the regression-adjusted log-wage difference between the wages of college-educated and high school–educated workers—fell from 50.6 percent to 48.4 percent between 2016 and 2018.
Wage growth has varied depending on numerous factors such as gender, race, income level, and education. The EPI article, America’s slow-motion wage crisis-Four decades of slow and unequal growth by John Schmitt, Elise Gould, and Josh Bivens (9/13/18) summarizes the findings with 30 graphs or tables (data included). For example, the cumulative percent change in inflation-adjusted hourly wages for workers in the 10th, 50th, and 90th percentile is given in the graph here (downloaded from the article).
The first key trend since 1979 is the historically slow growth in real wages. In 2017, middle-wage workers earned just 16.8 percent more than their counterparts almost four decades earlier. This corresponds to an annualized inflation-adjusted growth rate over the 38-year period of just 0.4 percent per year. The real wage increase for low-wage workers (those at the 10th percentile) was even slower: 8.9 percent over 38 years, or a 0.2 percent annualized growth rate.
This slow growth is particularly disappointing for two reasons. First, as we will see in the next section, U.S. workers today are generally older (and hence potentially more experienced) and substantially better educated than workers were at the end of the 1970s.10 Second, for workers at the bottom and the middle, most of the increase in real wages over the entire period took place in the short window between 1996 and the early 2000s. For the large majority of workers over the last four decades, wages were essentially flat or falling apart from a few short bursts of growth.
Quiz Questions: What was the cumulative change in hourly wages from 1979 to 2017 for
What was the cumulative change in hourly wages from 1979 to 2017 for workers with an advanced degree?
What was the cumulative change in hourly wages from 1979 to 2017 for workers with less than a high school diploma?
Which ethnic group had the greatest change?
What was the cumulative change in hourly wages from 1979 to 2017 for Women in the 50th percentile?
What was the cumulative change in hourly wages from 1979 to 2017 for Men in the 50th percentile?
The article and/or corresponding data is ready for use in a stats or QL course in the 90th percentile.
On average, in 2017, black women workers were paid only 66 cents on the dollar relative to non-Hispanic white men, even after controlling for education, years of experience, and geographic location. A previous blog post dispels many of the myths behind why this pay gap exists, including the idea that the gap would be closed by black women getting more education or choosing higher paying jobs. In fact, black women earn less than white men at every level of education and even when they work in the same occupation. But even if changing jobs were an effective way to close the pay gap black women face—and it isn’t—more than half would need to change jobs in order to achieve occupational equity.
Along with the graph copied here, there is a time series from 2000 to 2016 of the Duncan Segregation Index:
the “Duncan Segregation Index” (DSI) for black women and white men, overall and by education, based on individual occupation data from the American Community Survey (ACS). This is a common measure of occupational segregation, which, in this case identifies what percentage of working black women (or white men) would need to change jobs in order for black women and white men to be fully integrated across occupations.
The OECD (Organisation for Economic Co-operation and Development) defines poverty as an income below half the median household income. The chart here was created using the most recent year of data from the OECD poverty rate page . The U.S. leads the pack with a rate of 17.8%, with Israel right behind at 17.7%. At the bottom are Denmark and Finland with rates of 5.5% and 5.8% respectively. It is important to note, as the OECD does,
However, two countries with the same poverty rates may differ in terms of the relative income-level of the poor.
The data is available for more than OECD countries on their page and there is an interactive graph, but the graph can’t be dowloaded. The data and R script that created the graph here are available: csv file, R script.
Citation for data:OECD (2018), Poverty rate (indicator). doi: 10.1787/0fe1315d-en (Accessed on 11 July 2018)
The Great Gatsby curve represents the correlation between income inequality and intergenerational income elasticity. In short, the greater the income inequality in a country the greater the relationship between a child’s income and their parent’s income.
Rising immobility and rising inequality aren’t like two pieces of driftwood that happen to have shown up on the beach at the same time, he noted. They wash up together on every shore. Across countries, the higher the inequality, the higher the IGE (see Figure 2). It’s as if human societies have a natural tendency to separate, and then, once the classes are far enough apart, to crystallize.
U.S. Publicly held companies now have to report CEO and median worker salaries (this was part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) and Bloomberg has an article, Alphabet CEO Page Makes a Tiny Fraction Compared to Its Median Employee by Alicia Ritcey and Jenn Zhao (5/15/18), with an interactive graph (see image). Mattel “wins” with a CEO to median worker pay ratio of 4,987-1. Walmart “wins” in the consumer staple category with 1,188-1 ratio. In the interactive graph there is a button on the top right that hides outliers. This is useful, but be conscious of whether it is on or off.
An analysis of data from a youth survey found that 58 percent of black young adults reported that their parents contributed an average of $4,200 over the course of their college career. That compares to an average of $12,000 given by 72 percent of white families.
Finances by race is summarized in table 1, copied here. It is note that “All averages are statistically different at the 5 percent level by race, indicating that the differences are not a result of random chance.” (This can be used in a statistics course and if you contact the author you might even get the data.) The article goes on to note how this may impact the future of these students:
As early as age 25, racial wealth gaps begin to emerge. In the age 25 asset survey, college-educated white young adults reported having approximately $17,000 more wealth than black young adults who had attended college. We calculated that a $10,000 increase in young adult net wealth is associated with 7.6 percent less student loan debt. Young adults with high net wealth may have benefited from transfers of wealth from their parents and subsequently may be in a better position to pay down their student loans quicker.
An August 2016 report by EPI, The teacher pay gap is wider than ever (8/9/16 by Allegretto and Mishel), suggests not. For instance, the graph here shows that teachers are paid 23% less than other college graduates in 2015 and the gap has been increasing since 1980.
Average weekly wages (inflation adjusted) of public-sector teachers decreased $30 per week from 1996 to 2015, from $1,122 to $1,092 (in 2015 dollars). In contrast, weekly wages of all college graduates rose from $1,292 to $1,416 over this period.
For all public-sector teachers, the relative wage gap (regression adjusted for education, experience, and other factors) has grown substantially since the mid-1990s: It was ‑1.8 percent in 1994 and grew to a record ‑17.0 percent in 2015.
The report includes 8 graphs with data plus two tales. There are comparisons between females and males, as well as union and non-union.