- U.S. workers received a 5.6% bump in earnings from March to April, driven by low-wage job losses.
- The increase in earnings is due to the economy shedding mostly low- income jobs, which shifted the average earnings higher and created the semblance of a pay rise.
- The COVID-19 pandemic has exacerbated U.S. income inequality.
U.S. workers received a hefty bump in average earnings last month, despite an economic slump and the COVID-19 pandemic, according to the U.S. Bureau of Labor Statistics. But an economist cautions that the numbers are skewed due to lower-wage job losses.
Americans saw their real average hourly earnings increase by 5.6% from March to April amid a virus outbreak that caused a record-setting 23 million people to join the unemployment rolls, according to seasonally adjusted official data.
The increase in earnings is due to the economy shedding mostly low-income jobs, which shifted the average earnings higher and created the semblance of a pay rise, says Elise Gould, a senior economist at the Economic Policy Institute.
“The strong wage growth data in April reflects the dropping off of low-wage jobs from the total which results in higher average wages,” Gould told Karma. “So it appears there is faster wage growth, but it’s not actually driven by people getting meaningful wage growth.“
The increase in workers’ pay was also supported by a small drop in the cost of living in urban areas. Overall, the cost of goods and services as measured by the Consumer Price Index has been rising throughout the year but last month the CPI for urban dwellers inched down by 0.8%.
The COVID-19 pandemic, which has claimed close to 80 000 American lives, according to the World Health Organization, has exacerbated income inequality in the U.S., as salary gains over the last 40 years have accrued to workers at the top of the economic ladder, according to economists.
“The inequality has been magnified by this pandemic,” says Gould, who focuses on matters such as economic mobility, adding that high-earning workers have seen the most gains. “There has been some growth in the middle, but it has been slow. So workers and their families are still living paycheck-to-paycheck and these devastating economic losses from COVID-19 have meant real economic pain for many people.”
The pandemic has also brought worker safety issues to the forefront. In early May, workers at companies, including the online retail giant Amazon, asked for higher wages and protested dangerous working conditions, Reuters reports.
Policymakers could support U.S. workers by strengthening labor laws, says Gould.
“We have let the value of the minimum wage erode,” she said. “Employers have been allowed to oppose the formation of unions and that has led to reduced bargaining power for workers to see meaningful wage increases and better working conditions.”