People of the lowest income brackets are finally reaping the gains of our near-record expansion. According to labor department data reported by the Wall Street Journal, the bottom tenth percentile of the U.S. income bracket had a 5% gain in weekly wages from a year earlier, compared to the median 1.7% gain across the whole U.S.
Why It Takes So Many Years
Low income workers are always the last to make gains from an economic expansion. A large part comes form high-skilled worker who cannot find jobs in their fields. During high unemployment times, these high skilled individuals are the ones that get the low-skilled jobs in areas like retail and fast food. Individuals with less than a high school degree get pushed to the side line.
Now, with unemployment at 3.7%, industries like tech and finance are booming. High skilled individuals are back in high demand and are finally leaving those retail jobs. Walmart and McDonald’s still need workers though, so low skilled workers are finally coming into high demand. By economic principle, price increases with demand, or in other words, the low skilled workers see higher wages.
The Bottom Gets the Benefits
Not only is the bottom tenth of earners seeing the largest wage gains, but the lowest skilled are as well. According to the article, individuals with less than a high school degree have seen close to 6% higher weekly wages from a year earlier, well above the 2% gains seen by all individuals.
This is one of my personal favorite data reports that has come out recently. The economy has been doing well for a while now, but higher income brackets were getting the majority of the growth. Now people who need the gains the most are seeing their lives improve. Finally, the U.S. economy is improving, not just the wealthy’s economy.