On Monday, the US Conference of Mayors released a report showing that the average pay for jobs created following the 2008 financial crisis pay much less than the average wage in those industries that suffered substantial job losses pre-2008. The USCM report found that while jobs in sectors such as construction and manufacturing paid an average of more than $61,000 before the recession, the new jobs pay only about $47,000, or 23% less. In addition, the report says average household income in the US is now about $51,000, which is 3% lower than it was in 2005.
Why This Matters For Small Business:The report was released as the USCM’s Cities of Opportunity Task Force – which was formed by USCM president Sacramento Mayor Kevin Johnson and is led by New York City Mayor Bill de Blasio – met in New York on Monday to discuss widening income inequality, an issue that Democratic candidates have been trying to spotlight ahead of November’s elections. The USCM task force, whose membership is overwhelmingly Democratic, is reportedly planning to recommend minimum wage increases as a means to address income inequality.
Niraj Chokshi of the Washington Post writes that while “minimum wage increases are [a] potential solution” to income inequality, “some argue higher wages discourage businesses from hiring.” According to Chokshi, “Policies that chip away at high unemployment also can help to reduce inequality by providing workers who wouldn’t otherwise get it with a source of income.”
Likewise, in an op-ed for the Wall Street Journal, Michael Saltsman, research director at the Employment Policies Institute, makes the case that expanding the Federal Earned Income Tax Credit would do more for low-income workers than raising the federal minimum wage to $10.10/hr as President Obama has proposed. In particular, Saltsman advocates giving more benefits of the EITC to childless workers, who he says get less out of the program than do workers with families.