Report: Wage growth stalled this year and affected most groups

Wage growth for most workers remains stagnant and will need to pick up pace for the economy to hit full recovery mode, a new report said on Wednesday.

During the first half of 2014 year inflation-adjusted hourly wages fell for the majority of workers, even for those with a bachelor’s or advanced degrees, compared with the same period in 2013, according to a new study from the Economic Policy Institute’s Raising America’s Pay initiative.


The wage stagnation is evidence that the economy is far from full employment and shows that the Federal Reserve should not consider raising interest rates, the report said. 

"Despite a recovering economy and growing productivity, employers are not putting anything more in their employees’ paychecks," said report author EPI economist Elise Gould.

The report painted a dim picture of the labor market’s long-term lack of wage growth, which reaches back nearly four decades. 

"Over the past 40 years, corporations and their CEOs and lobbyists, have used public policy to stack the deck in their favor,”  she said.

Gould suggests several policy changes that could lead to higher wages, including raising the minimum wage, strengthening workers ability to form unions, cracking down on wage theft and expanding overtime provisions.

Taking a broad view, comparing this year with the first six months of 2007, the last period of decent labor market health, hourly wages for the vast majority of workers have been flat or falling, the report said.

Even since 1979, most workers have seen their hourly wages stall or decline — even though decades of consistent gains in economy-wide productivity have provided ample room for wage growth.

In fact, between 1979 and 2007, more than 90 percent of American households saw their incomes grow more slowly than average income growth, which was bolstered by faster wage growth at the top.

By 2007, the growing wedge between average income growth and that of the middle class, reduced those incomes by nearly $18,000 a year.

The lowest wage earners were the only group to not experience declining wages over the past year, mostly due to minimum wage increases in the first half of 2014.