Low-wage workers experienced wage growth of 9% between 2019 and 2022. That’s a historically fast real wage growth over the three-year span, especially in a period of economic inflation, according to a report from the Economic Policy Institute.
The data show that in 2022, the average wage for workers in the 10th percentile — the boundary between the lowest paid 10% and the highest paid 90% of workers in an occupation — was $12.57 per hour, or $26,145 annually, for a full-time worker.
“This tremendous real wage growth at the lower end of the wage distribution was exceptional, significantly faster than in any other business cycle peak since 1979,” according to EPI.
The experts attribute this growth to economic policies such as expanded unemployment insurance, economic impact payments, aid to states and localities, child tax credits and temporary protection from eviction.
“These actions provided relief to workers and their families to help them weather the recession,” the authors wrote. “These measures also fed the surge in employment, which gave low-wage workers better job opportunities and leverage to see strong wage growth.”
Additionally, a tightened labor market benefited low-wage workers, according to EPI. As employers scrambled to fill positions, they offered higher wages to recruit and retain workers.
State minimum wage increases have contributed to the fast wage growth, according to the report. In California, for example, legislators are considering raising the minimum wage for long-term care and other healthcare workers to $25 per hour to help senior living, skilled nursing and home health providers, as well as hospitals, general acute care hospitals, acute psychiatric hospitals, medical offices and clinics, behavioral health centers retain a viable workforce.
To keep the momentum going, EPI suggests that policymakers:
- raise the federal minimum wage;
- make long-term investments in our unemployment insurance system;
- strengthen and enforce labor standards; and
- remove obstacles to workers forming unions.
