New Report on State of Working America Finds Income Rises for Typical Family, but So Do Work Hours and Household Debt With high employment, time is ripe to push for job benefits and career ladders Consistent low unemployment, accelerating labor productivity, and a rising minimum wage have led to broad-based wage gains for U.S. workers at all wage levels since 1995, according to the Economic Policy Institute (EPI). However, the typical American family is working more hours, is taking on historically high levels of household debt that far outpace small stock market gains, and often fails to receive adequate health care and pension coverage from their employer. These findings were a part of the EPI’s Labor Day report on “The State of Working America 2000-2001” – a comprehensive study of the changing living standards of working Americans with state-by-state analysis of wages, jobs, unemployment and poverty. “Persistent low unemployment and increases in the minimum wage have helped workers at the bottom recover from 15 years of wage stagnation and decline,” says EPI economist Lawrence Mishel. “However, some alarming trends persist as wage and income inequality remain high. Families are working more hours than ever and are saddled with the highest levels of debt in history.” For most workers, the early part of the economic expansion that began in 1991 was disappointing: incomes declined while poverty and job insecurity increased during what came to be called the “jobless” recovery. However, since 1995 persistent low unemployment has shifted the economy into a much higher gear. Although the investments in information technology associated with the so-called “new economy” have led to higher productivity, this has not contributed significantly to overall job growth, nor has the high tech sector set the pace for any meaningful wage gains for workers in other sectors. “This report highlights an important trend for state policymakers,” explained Bernie Horn, Policy Director of CPA. “The booming economy has not solved economic problems for average Americans. But it does create a unique opportunity for states to improve working families’ quality of life.” “State of Working America’s” Key Findings Wages. Low-income workers in particular are benefiting from rapid wage growth after more than 15 years of wage stagnation and decline. Workers at all levels see wage gains since 1995, in large part due to increases in the minimum wage and sustained low unemployment. For a family of four the average middle-class family’s income rose by about 9.2%, after inflation, from 1989 to 1998. But they also spent 6.8% more time at work to reap it. However, the structure of income inequality remained relatively unchanged during the 1990s, even though the shape of wage inequality shifted. Strong wage gains at the bottom allowed low-wage earners and the poor to close the gap with the middle, while the top continued to pull away from the middle during this period. Hours of work. Family work hours have increased by about 4.5 extra full-time weeks a year since 1989 for a middle-class, married couple, in large part due to the increased share of married women working more hours. Middle class black families work an average of 9.4 hours more per week than their white counterparts and Hispanic families work an average of five hours a week more than white families. Jobs. A tight labor market helps workers in the middle and bottom catch-up. Improving educational levels and skill sets of workers to attract better-paying jobs would help Americans move up a career ladder and attain greater economic security. Wealth. For typical households, rising debt, not the rising stock market, was the big story of the 1990s. Less than half of American households held stock in any form, including mutual funds and 401(k)-style pension plans. Poverty. Poverty rates remain stubbornly high despite a brighter wage picture. Child poverty in particular remains an intractable problem for the U.S. In 1998, 18.9% of American children – almost one in five – lived in poverty. This remains well above the rate in 1979. Click here for links to the State Reports and information on how to order The State of Working America from EPI.