Workers Return To Lower Wages


WASHINGTON (UPI) — U.S. economists say the millions of people looking for work are collectively eroding the compensation offered by employers.

“If your employer knows you don’t have outside options, it reduces your bargaining power,” said economist Heidi Shierholz at the Economic Policy Institute in Washington.

MartketWatch reported Monday economist Henry Farber at Princeton University studied wages before and after the recent recession.

On average, workers laid off and rehired in recent years have accepted a 17.5 percent decrease in pay, Farber found.

A study by the National Employment Law Project showed most of the jobs cut during the recession have been in the middle of the pay scale, while most of the jobs added to the economy recently have been at the lower end of the spectrum.

Shierholz said “one of the big red flags” is the number of people quitting their jobs. “If we were really seeing job prospects picking up we would see voluntary quits rising also,” she said.

“Quitting and getting a new job is one of the key ways that people see substantial wage growth,” she said.

Consequently, the “quits rate,” a barometer of those who voluntarily leave their jobs, has risen from a 2010 low of 1.1 percent to 1.5 percent. But it still has yet to reach its pre-recession mark of 2 percent, Labor Department data indicate.

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