The Lowest Paid Get A Break At Last

Wages for the lowest-paid workers in the U.S. rose 1.6% in 1997, nearly twice as fast as wages for the best-paid. That's the biggest increase in inflation-adjusted pay since the government started collecting data in 1979. Economic growth is benefiting workers on the bottom half more than those on the top half. Is this a fluke? What about all those immigrants willing to work for less? How about all those jobs going offshore, thanks to the huge trade deficit?

The new economy continues to surprise. The largest blemish of this expansion had been a growing inequality in pay. But with unemployment down to 4.6%, labor markets are tight enough to support higher weekly earnings for the bottom 10% of the pay scale. Whatever downward pressures the global economy is putting on wages, fast economic growth (3.8% last year) and labor scarcity are more than compensating for it. This is particularly good news for unskilled young people entering the job market. The jobless rate for high school dropouts is down from nearly 12% in 1992 to 7%.

Judicious use of government policy has helped. The Earned Income Tax Credit amplifies the gains in disposable income for the working poor. And the hike in the federal minimum wage, in a period of low unemployment, boosts earnings.

The weekly earnings figures probably measure only a portion of the real gains made recently at the bottom half. They do not measure mobility--and with fast growth, low inflation, and tight labor conditions, our guess is that Americans are taking the upward-mobility escalator more than ever. Growth is good. Strong, noninflationary growth is better.

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