What a difference 30 years makes

Added August 30th, 2013 by Peter Ruark | Email This Entry Email This Entry
Peter Ruark

What were you doing in 1982?

Perhaps some readers were finishing up high school and beginning college, like I was. That year, Michigan’s unemployment rate was at its worst (16.8% in December) as automobile and other manufacturing jobs disappeared and in turn affected other parts of the economy. My graduating class expected that getting a postsecondary credential would help inoculate us from the worst effects of the recession and increase our wages.

Despite high unemployment, wages in Michigan were still generally high that year—our state had the  fourth-highest median wage in the nation. Unfortunately, in the 30 years since then, Michigan dropped to 24th. It was one of only eight states to have a median wage drop—a loss of 7%, second only to Alaska (largely due to the disappearance of high-paying manufacturing jobs).

Graphic showing growth at top end of the wage scaleAs the Michigan League for Public Policy’s 2013 Labor Day Report explains, African Americans felt the impact much more acutely than white workers. Between 1982 and 2012, median wages dropped 1% for white workers but 24% for African American workers. Factors that contribute to this disparity likely include:

  • Racial differences in educational level (14% of African Americans without a high school diploma vs. 7% of whites, and 15% of African Americans with a bachelor’s degree vs. 26% of whites)
  • Residential segregation (many African Americans live in urban areas with limited job and skill-building opportunities)
  • Racial wage disparities even among those with similar academic credentials ($90,000 median wage for white workers with electrical engineering degrees vs. $68,000 for African Americans with the same degree)

Wages did increase for higher-paid workers, however. Those at the 90th percentile (meaning they had higher earnings than 90 percent of workers in Michigan) saw their wages increase by 22% during those 30 years when adjusted for inflation.

Of the 10 highest employment occupations in Michigan, six have a median wage that will not lift a family of four out of poverty. In 1982, a quarter of Michigan workers held such “poverty wage” jobs and in 2011 that share was 28.5%. Most other Midwest states decreased, rather than increased, their percentage of workers earning poverty wage.

There is no magic bullet to increasing prosperity and reducing need in Michigan, but there are two things Michigan policymakers can do to help low-wage workers both in the short and long term. One is to raise the minimum wage to $10 an hour with an automatic adjustment for inflation, so that low-end wages can help workers meet their needs without eroding over time. Such a change would help more than 1 million workers and their families.

The other is to continue exploring ways to make postsecondary education more affordable and accessible to low-wage workers, so that their long-term job prospects and earnings can bring them into the middle class.

Much has changed since the class of 1982 got their high school diplomas, but the expectation that attaining a postsecondary credential will lead to higher wages has not. Michigan needs to strengthen this option for low-income individuals, including those already in the workforce.

— Peter Ruark

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