Higher Pay Undercut By Years Of Wage Stagnation And Rising Inflation

Above Photo: Lay Guzma works as a cashier at the Presidente Supermarket on April 13, 2020 in Miami, Florida. (Joe Raedle/Getty Images.)

Even as retail and hospitality workers see pay hikes, the wealthiest Americans got even bigger raises during the pandemic — widening income inequality even further.

Theresa, 25, a cashier at Key Food in Brooklyn, was excited when she received a raise a few months ago.

“But I’ve barely noticed it, because everything is getting more expensive,” says Theresa, who requested that we only use her first name. “Groceries, bills, you name it. My paycheck just disappears. It’s depressing because I don’t know when I’ll get another raise.”

The situation is the same in the hospitality industry, in which some hotel maids and housekeepers in Los Angeles will soon earn $25 an hour, but it hardly covers the cost of living increases they experience, says Lorena Lopez, an organizing director at UNITE HERE Local 11, the union that represents hotel and restaurant workers.


But in recent months, the headlines have focused on the plight of businesses struggling to hire workers and offering dramatic pay raises to their employees, especially in low wage sectors of the economy. In both city neighborhoods and small-town main streets, it’s hard to avoid “Help Wanted” signs promising generous wages and benefits (as well as sign-on bonuses and even free iPhones) that are posted by national chains and local businesses desperate to reopen after a yearlong pandemic.

Conservative economists have argued against a minimum wage increase, believing that such an increase in some states has hurt business. In an op-ed earlier this year, the Wall Street Journal blamed a $4-an-hour “hero pay” increase to workers at Kroger supermarkets who worked during the height of the pandemic last year for the chain’s decision to close two stores in Long Beach, California. The Journal’s William McGurn wrote that “a minimum wage is a price, and that when you make it more expensive to hire workers, you price some of them out of the job market.”

Employer groups have also blamed government stimulus benefits during the pandemic for forcing businesses to increase salaries to compete. The U.S. Chamber of Commerce and National Restaurant Association affiliates have called for an end to the enhanced unemployment program. In the wake of April’s weaker-than-expected jobs report, the chamber said: “The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market.” But the chamber’s own survey in June undercuts that analysis, with only 16% of unemployed Americans pointing to expanded benefits for “not worth pursuing a job.”

In 2020, The Earnings Of CEOs At The Largest Public Companies Were On Average 351 Times As Much As That Of The Typical Worker In Their Industry, The Biggest Disparity Since The First Tech Boom In 2000.

Typically, wages have increased in line with greater productivity, but recent history has defied that trend, with wages lagging and the average American’s purchasing power the same as it was 40 years ago. As the Rand Corporation found last year, a full-time worker currently earning the national median wage of $50,000 would be making close to $100,000 now if the country’s economic growth had continued to be shared across the socioeconomic spectrum over the last 45 years the way it was in the decades after World War II.

And the recent wage growth at the low end has not helped reduce income inequality, which actually increased during the pandemic since the highest paid Americans saw sky high raises. In 2020, the earnings of CEOs at the largest public companies were on average 351 times as much as that of the typical worker in their industry, the biggest disparity since the first tech boom in 2000, according to the Economic Policy Institute.

A thriving economy should benefit all workers, not just those at the top, says Joe Gagnon, an economist at the Peterson Institute for International Economics, who is hopeful that wages will grow faster than inflation in months to come. “If the economy is growing, then it should grow for everybody,” he says.