Stagnant Wages

In both Pennsylvania and the United States since 2001, workers throughout most of the earnings distribution saw little or no increase in wages (Figure 4).

Pennsylvania low-wage earners (defined as those at the 10th percentile in Figure 1) earned $7.87 per hour in 2007, adjusted for inflation, 2% lower than in 2001 (see also Table 1). This indicates that the increase in low-wage earnings following the recent increase in the state minimum wage (an increase analyzed in The State of Working Pennsylvania 2007) was not large enough to achieve a rise in low-wage earnings over the full economic expansion.

In the middle of the earnings distribution, today’s Pennsylvania median hourly wage of $15.11 per hour is 25 cents lower than its level six years ago (Table 1).

Even higher-wage earners in Pennsylvania have gained little or no ground in Pennsylvania since 2001. In the United States as a whole, the highest-paid fifth of wage earners (from the 80th percentile on up) have seen their wages increase by between 3% and 7% over this period. In Pennsylvania, however, only a tiny group of earners above the 95th percentile has enjoyed substantial wage increases since the 2001 recession.

Education No Protection from Wage Stagnation

A common prescription for countering the wage stagnation America and Pennsylvania workers have experienced in the last several decades is for workers to get more education. While boosting the educational attainment of the Pennsylvania labor force makes sense and could, when combined with other policies, enhance competitiveness and opportunity in the state, having more education has, since 2001, done little to protect workers from losing ground.

The median wages of college-educated Pennsylvania workers fell from $24.36 per hour in 2001 to $22.42 in 2007—at 8% this is a larger decline than experienced over this period by workers with lower levels of education (Figure 6 and Table 2).

The median wages of workers with some college education fell by 5%, from $14.55 in 2001 to $13.79 in 2007.

Workers with a high school education faired somewhat better, their wages remaining essentially unchanged (at $13.10 in 2001 and $13.08 in 2007).

Workers with less than a high school education were the only group to gain some ground between 2001 and 2007. Their wages rose by 1.6% from $9.88 to $10.04.

Explanations for rising inequality have often centered on the rapid rise in the wages for college-educated workers since 1979. Given that, one might expect a slowdown in college earnings to have at least the positive benefit of ameliorating overall wage and income gaps. As noted above and elaborated further below, this expectation has not been borne out. Overall wage and income gaps have growth further even as higher-educated workers have seen their earnings fall.

Next: Return of the Guilded Age?

This page is an on-line summary of a portion of the full State of Working Pennsylvania 2006 report available for download from www.stateofworkingpa.org. © 2006 Keystone Research Center - www.keystoneresearch.org.