Wisconsin Becoming a Low-Wage Economy

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By Jeanne Larson

UW-Milwaukee Professor Marc Levine’s October 2014 study for the Center for Economic Development, “Is Wisconsin Becoming a Low-Wage Economy? Employment Growth in Low, Middle, and High Wage Occupations: 2000-2013,” uses Bureau of Labor Statistics data to illustrate a troubling long-term trend in Wisconsin: the number of low-wage jobs is growing much faster than middle- or high-wage occupations.

Levine divided Wisconsin’s 750 occupations into three tiers based on median wages, the midpoint where half the workers in the job are paid more, half are paid less:

Low-wage           $12.50/hour or less

Middle-wage     $12.51 to $24.99/hour

High-wage          $25/hour and above

Levine counted jobs in these wage brackets in May of 2000, 2007, 2010 and 2013 (the most recent year for which data is available), adjusting wages for inflation, expressed in 2013 dollars:

2000                                       2013

Low-wage                           24.5%                                    30.7%

Middle-wage                     52.4%                                    45.1%

High-wage                          23.2%                                    24.3%

 

Levine notes that since 2010, when Governor Walker took office, all of the net job growth in Wisconsin has been in the low-wage category, some from newly-created low-wage jobs, but mostly from middle-wage occupations dropping into the low-wage tier as their pay fell in inflation-adjusted terms.

For example: 42,000 laborers and freight, stock, and material movers had middle-wage jobs in 2010 with median pay of $13.03/hour. By 2013 that occupation added 13,000 jobs in Wisconsin but median pay fell to $12.16/hour, so all 55,000 jobs were classified as low-wage in 2013.

Levine points out:

*Over 60% of the 2010-2013 growth of low-wage Wisconsin occupations was in the very low-wage range, below $10/hour.

*Inflation-adjusted median hourly wages for Wisconsin production occupations fell by 5.2% between 2010-2013. Real wages for welders and CNC machine tool operators, supposedly in such high demand that employers claim there is a skills gap in Wisconsin, fell by 6.5% and 4.7% respectively from 2010-2013.

Levine, who has researched and published on this topic for 20 years, says the downward trend in real wages suggests a pervasive, continuing erosion of the middle tier of Wisconsin’s occupational wage structure, and that if projections for future job growth by the state Department of Workforce Development are correct, the downward trend towards a low-wage economy is likely to continue unless there are changes in labor market institutions or public policies, such as an increase in the minimum wage.

In the November 4, 2014, election, voters in five states endorsed minimum wage increases, including states where Republicans won statewide offices, and Wisconsin voters backed city- and county-level minimum wage hikes.

Governor Walker states he doesn’t think the minimum wage serves a purpose, and that he wants to create jobs that pay two or three times the minimum wages—a laudable goal. But remember that Walker set another laudable goal—to create 250,000 jobs in his first term—and fell far short on that promise.

Walker is parroting the rhetoric of his big campaign supporters, the Koch brothers, and their political organizations like Americans for Prosperity (AFP), who have a history of waging war against giving hardworking Americans a raise by increasing the minimum wage. AFP urges legislators to vote against increasing the minimum wage or risk facing campaign backlash from AFP in the next election. In 2012, AFP claimed that the minimum wage “has hindered Americans in their quest for prosperity,” and in 2013 AFP claimed that raising the minimum wage “does more harm than good.”

If you believe as a public policy matter that Wisconsin needs to set a new floor for low-wage workers by increasing the minimum wage now, contact Governor Walker:

Box 7863, Madison WI 53707

608-266-1212

govgeneral@wisconsin.gov