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Women's Pay Fell in Early '90s, Study Finds

Labor: Trend reverses that of '80s, liberal think tank says. Men's wages were still in a downtrend.

September 02, 1996|From Reuters

WASHINGTON — Women's pay fell in the early 1990s after having risen for more than a decade, reversing a trend that had helped family incomes remain steady as men's wages dropped, a study released Sunday says.

According to the study by the Economic Policy Institute, a liberal think tank in Washington, for the period from 1989 through 1995, the typical male worker's hourly wages fell 6.3% after inflation, consistent with the pace of decline in the 1980s. But the typical working woman's wages fell 1.7% over the same period, reversing some of the 5.7% increase experienced in the 1980s.

The decline in wages was not offset by an increase in benefits, according to the study. Total compensation, including wages and benefits, has grown just 0.1% faster than hourly wages alone since 1979, the study says.

The study, "The State of Working America," was released to coincide with the Labor Day holiday.

The authors say that at the same time pay for most people was falling, business profitability was rising to the highest level in 30 years and compensation for corporate chief executives was soaring.

"The changes in the economy have been 'all pain, no gain' for most workers," the authors of the study wrote. "The economy is clearly in transition, but it is far from certain that it is headed to a better place."

According to institute research going back to the late 1970s, the pay decline for most women is a first. Compensation for the highest-paid women has not suffered a decline, however.

The study's release follows recent reports that point to a modest pickup in wages for American workers. But Jared Bernstein, a labor economist at the institute and one of the authors of the study, said the recent evidence of rising wages amounts to "a lot of smoke and very little fire" and that wages appear to be stagnating after falling earlier in the decade.

According to the study, corporate chief executives' pay soared to 173 times that of the average worker in 1995, from a multiple of 122 in 1989 and about 60 in 1978, the study says.

It says the rise in companies' return on invested capital came not from greater investment or improved productivity, but rather from stagnant or falling wages. Wages are one of a company's biggest expenses, so any reduction would help profits.

"Profit rates are at a 30-year high [for 1995]. That would not be so objectionable if the fruits of growth were being shared equally," Bernstein said in an interview.

The study also notes that although job security has lessened, unemployment has dipped to about 5.3%, inflation remains near a relatively low 3% and some recent tax changes have helped boost poor workers' earnings.

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