How Much Now?

by Belle Waring on April 20, 2008

This NYT article, The Decline of the $20 Wage”, on the vanishing blue-collar worker with a middle-class income is both depressing and…confusing. Adjusting the numbers for inflation is at least alluded to initially:

Leaving aside for a moment those who have lost their jobs, what of those who still have them? Once upon a time, a large number earned at least $20 an hour, or its inflation-adjusted equivalent, and now so many of them don’t.

However, from this point on the article seems to talk about wages which were $20-an-hour or above in the past–even as far back as the 70s–and are now less than $20 in nominal terms.

The $20 hourly wage, introduced on a huge scale in the middle of the last century, allowed masses of Americans with no more than a high school education to rise to the middle class. It was a marker, of sorts. And it is on its way to extinction….

Hourly workers had come a long way from the days when employers and unions negotiated a way for them to earn the prizes of the middle class — houses, cars, college educations for their children, comfortable retirements. Even now a residual of that golden age remains, notably in the auto industry. But here, too, wages are falling below the $20-an-hour threshold — $41,600 annually — that many experts consider the minimum income necessary to put a family of four into the middle class….

Since [the 1970s] the percentage of people earning at least $20 an hour has eroded in every sector of the economy, falling last year to 18 percent of all hourly workers from 23 percent in 1979 — a gradual unwinding of the post-World War II gains.

The decline is greatest in manufacturing, where only 1.9 million hourly workers still earn that much. That’s down nearly 60 percent since 1979, the Bureau of Labor Statistics reports.

The shrinkage is sometimes quite open. The Big Three automakers are currently buying out more than 25,000 employees who earn above $20 an hour, replacing many with new hires tied to a “second tier” wage scale that never quite reaches $20. A similar buyout last year removed 80,000 auto workers. Many were not replaced, but many were, with the new hires paid today at the non-middle-class scale, and with fewer benefits.

Surely $20 an hour in the 70s would be $60 or so an hour now, adjusted for inflation? It makes a big difference to this article and the author has totally failed to explain the issue. ‘Fewer people of this class make even 1/3 as much per hour as they did 30 years ago’ is a very different message from ‘fewer people of this class make this inflation-adjusted wage.’ It seems clear the article implies the former but muddies the waters with the nominal wage, ironically further masking the dramatic decline of the blue-collar middle class.