Wages grew in 2020 because low-wage workers suffered brunt of job losses

Wages grew historically fast in 2020 primarily because over 80 percent of the 9.6 million net jobs lost in 2020 were held by the lowest 25 percent of wage earners, according to a report from the Economic Policy Institute (EPI). Meanwhile, the highest-wage workers gained nearly a million jobs, skewing average wages upward.

Overall, less than 75 percent of low-wage workers were still working in 2020 compared with over 90 percent of high-wage workers. The report authors — EPI senior economist Elise Gould and research assistant Jori Kandra — explain why wage growth looks the way it does and how this recession has disproportionately hit the more vulnerable workers and their families.

“Wage growth in 2020 is neither a cause for celebration nor a reason to inject fears of economic overheating into policy debates. Faster wage growth between 2019 and 2020 is largely a result of the changing composition of the workforce,” said Gould. “It is not an accurate indicator of the amount of economic devastation and pain experienced by millions of workers and their families in 2020, nor is it an indicator that workers found themselves in a better bargaining position. It is indicative, however, of increasing inequality where those at the top have largely been spared from the recession while those at the bottom have been absolutely devastated.”

WORKERS STILL SUFFERING
“Most workers are still suffering from a relatively weak bargaining position that prevents them from securing pay raises sufficient to make up for decades of slow wage growth,” said Kandra.