Where Have All the Raises Gone? [View all]

[Scuba]

http://www.nytimes.com/2014/03/03/opinion/where-have-all-the-raises-gone.html

Most people who work for a living know that for a long time now, raises have been few and far between. Wages typically fall or stagnate in recessions, and the Great Recession was particularly severe, exerting a drag on pay that persists to this day.

But that is only a partial explanation, because declining and stagnant wages predate the latest downturn. Understanding the causes is essential for determining the policies needed to create good jobs. Research by three economists — Paul Beaudry, David Green and Benjamin Sand — goes beyond familiar explanations for wage stagnation like global competition and labor-saving technology. Examining the demand for college-educated workers, they found that businesses increased hiring of college graduates in the 1980s and 1990s in adapting to technological changes. But as the information technology revolution matured, employer demand waned for the “cognitive skills” associated with a college education.

As a result, since 2000, many college graduates have taken jobs that do not require college degrees and, in the process, have displaced less-educated lower-skilled workers. “In this maturity stage,” the report says, “having a B.A. is less about obtaining access to high paying managerial and technology jobs and more about beating out less-educated workers for the barista or clerical job.”

The findings help to explain the trajectory in wages for workers with bachelor’s degrees. From 1979 to 1995, their average pay rose modestly, by 0.46 percent on average annually, while wages declined for the non-college-educated who make up the vast majority of workers. From 1995 to 2000, wages grew for all educational groups, but since 2002 pay for the less educated has declined while pay for the college educated has largely stagnated.