Wage gap an ‘alarming trend’

Wage gap an ‘alarming trend’

Postby DDEATH » Tue Aug 12, 2014 8:36 am

Wage gap an ‘alarming trend’
Report: Metro Chicago mirrors national pulse; U.S. fills 8.7M jobs lost in recession, but at a cost
By Kathy Bergen Tribune reporter

The U.S. has regained the 8.7 million jobs lost in the recession, but the average wage has dropped 23 percent, according to a U.S. Conference of Mayors study released Monday.

The report, “U.S. Metro Economies: Income and Wage Gaps Across the U.S.,” also found a widening income gap between the rich and poor, with the highest-earning 20 percent of households gaining the most. Metro Chicago mirrored the national trend.

“While the economy is picking up steam, income inequality and wage gaps are an alarming trend,” said Kevin Johnson, conference president and mayor of Sacramento, Calif. The group expects the trend to continue.

The average annual wage of jobs lost in 2008-09 was $61,637 nationally, while the average wage of jobs added through the second quarter of this year was $47,171, according to the report, prepared by research firm IHS Global Insight. Jobs were lost in high-wage manufacturing and construction and replaced with jobs in lower-wage sectors such as hospitality, health care and administrative support.

The 23 percent wage gap compares with a 12 percent drop after the 2000-03 recession, the report said. The report did not break down the wage gap by state or metro area. But it used other metrics to measure income distribution shifts.

The report looked at how average household income changed relative to median income. Average income is spread over all households, while median income is the midway point in the income range.

“If average income rises at a faster pace than median income, it usually indicates that more and more income is being concentrated among the richer households,” the study stated.

From 2005 to 2012, “the ratio between the average and the median household income increased by 2.6 percent,” the study found.

For the Chicago metro area, the ratio was 2.5 percent.

“Since 1975, the increasing share of income earned by the highest quintile … rose from 43.6 percent in 1975 to 51 percent in 2012,” the report stated, adding that most of the gain came in the highest 5 percent of incomes.

The top 5 percent earned 22.3 percent of income in 2012, up from 16.5 percent in 1975.

In overall affluence, metro Chicago and most of its major peers fared better than many other areas.

The study looked at the percentage of households making less than $35,000 relative to the percentage earning more than $75,000. A metro area with an equal share of households in the upper and lower ranges would have a ratio of 1. A value above 1 indicates a larger share of poorer households, which was the case for 261 of 357 metros.

Metro Chicago had a ratio of 0.77, showing a greater share of well-to-do households.

In 2012, 30.4 percent of households in the 14-county tri-state region earned less than $35,000; 30.1 percent earned $35,000 to $74,999; and 39.5 percent earned $75,000 or more, the study found.

The region’s median household income in 2013 was $60,200, making it No. 42 among the 300-plus metros nationwide.

The region’s household income should grow at an annual rate of 3.4 percent from 2013 to 2017, the conference projected. By this metric, the region is ranked just below the top third.
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