Good news: inequality is shrinking
Income inequality — the stubborn curse of the current era and, many think, a key factor in the global uprising against establishment powers — appears to be on a solid, steady decline in the U.S., according to a new report.
Quick take: For more than a year, the wage gap has been closing between American workers with the least and the highest education—wages have been going up the most for workers who need it the most, according to Jed Kolko, chief economist for Indeed, the jobs website. And this year, the most chronically unemployed Americans began to return to work.
What we don't know: The trend is coming on slowly rather than hitting workers in one bang. It will take time before it's clear whether the added dollars begin to erode the deep public antipathy and distrust of the system that seem to be at least in part fueled by a loss of hope in the economy.
It's also not clear who may gain politically: President Trump is likely to claim that he is delivering on his promise to the forgotten working class during his 2016 campaign. Democrats, however, will probably note that there have been 85 months of consecutive job growth leading to today's 4.1% jobless rate, and argue that these dividends for the working class are the product mostly of President Obama's economic program.
The details: For the last year or two, economists and politicians have fretted over how to loosen up worker wages, which have been effectively stagnant since the 1970s. Flat wages have been set against the meteoric rise of a new class of billionaire plutocrats to create a picture of massive and chronic income inequality and unfairness, and that impression appeared to help elect Trump.
- But for three consecutive years, wages have been rising the fastest for jobs with the lowest pay, Kolko tells Axios. And now the economy is specifically lifting up workers with the least education, a key social and economic dividing line—there have been five straight quarters of a shrinkage of the wage inequality gap, Kolko said, with surging wage gains for those with only a high school diploma.
- The median wage for someone with a high school degree grew to $714 a week as of the end of September, from $700 at the same point in 2016; high-wage workers just budged up to $1,271 a week, though, from $1,266. So the gap between them narrowed to $557 from $566, almost 2%.
- "This past year has been good news for the least-educated workers," Kolko tells Axios.
Metrics for the hard-core unemployed and lowest-paid workers — part of the core of the Trump base — have all seen significant gains.
- Broad unemployment including those no longer searching for work and involuntarily working part time fell to 7.9% in October, from 9.2% at the beginning of the year, Kolko said.
- And the share of the main working population that is employed — those 25 to 54 —grew to 78.8%, from 78.2%.
Those are the best numbers since 2000. In December 2000—the last time unemployment was at 4.1% — broad unemployment was at 6.9%. And the working population 25 to 54 years old was 81.4%.
That means that well over 1 million Americans still need to be drawn back into the work force.
And there are signs that the most stubborn unemployed are trying to return to work. Kolko said that searches are up at Indeed for the terms "no background check" and "felony-friendly jobs." "This suggested that people who have struggled more in the past to find jobs are encouraged by the tightening labor market to look for work," he said.