Workers Haven’t Received Raises in Decades

The hourly wage rate attempts to measure how much workers earn for each hour of work. It is calculated by estimating the total wage payments, divided by the total number of hours worked, economy-wide. In 2014, the average American worker earned about $20.60 for each hour worked, compared to $2.53 in 1964.1

At first glance, this suggests that Americans are better-paid than they were fifty years ago. However, these are nominal figures, which do not account for changing consumer prices. An hourly wage of $2.53 went much further in 1964, when the median home sold for about $18 thousand2, a one-year, 52-issue subscription to Life magazine cost $5, and a gallon of gas cost 30 cents.3

TO get a sense of how well workers are paid today, we need to adjust wages for inflation, which renders an interesting view of wage growth over the past several decades. The figure below, which reproduces a graph from the Pew Research Center’s Drew Desilver4, shows how both nominal and real wages’ growth since 1964.

real wage growth

Although hourly wages have been rising continuously in nominal terms, they have barely moved in inflation-adjusted terms. Between the 1970s and mid-1990s, hourly wages actually fell. Household incomes were rising during this period, but mainly because people worked more hours. A key element of this trend involved more labor force participation: dual-income households became more common, and homemaking became less common. Since the mid-1990s, hourly wages have risen. However, incomes and wages have generally stagnated. Part of what may be happening is that, while workers were paid more per hour of work, they’ve had fewer work hours.

At the end of the day, a lot of this is splitting hairs. In inflation-adjusted terms, hourly wages have barely moved for 50 years.

  1. Bureau of Labor Statistics (2015) “Employment, Hours, and Earnings from the Current Employment Statistics survey (National)” Series ID: CES0500000008
  2. US Census Bureau (n.d.) “Median and Average Sales Prices of New Homes Sold in United States”
  3. Mary Braswell (2013) “Looking back at life in 1914, 1939, 1964 and 1989” Albany Herald December 26
  4. Drew Desilver (2014) “For most workers, real wages have barely budged for decades” Factank Pew Research Center. October 9

Download the raw data and Markup file here

One thought on “Workers Haven’t Received Raises in Decades

  1. Could we also adjust for the change in worker productivity over the same time frame? I’d guess that workers are actually making less per unit of production than they were in the past.

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