Posted on 09/28/2003 10:40:37 AM PDT by nwrep
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After 10-year surge, salaries level off at $89k
By EE Times Staff, EE Times
August 28, 2003 (10:49 a.m. EST)
URL: http://www.eetimes.com/story/OEG20030828S0040
For more than a decade now, design and development engineers and managers have ridden a pay surge that's taken them from $59,800 in 1994 to a high of $89,100, on average, in 2002. But the wave crested in 2003, dipping slightly to $88,900, $200 under last year's mean.
It's not the first time the U.S. EE Times "Salary & Opinion Survey" has recorded a decline; it also happened during another pullback in the technology field, in 1988-89, when wages fell $100 from one year to the next. That brief retreat was followed by a series of plateaus and booms. Between 1993 and 1994, for instance, salaries burped up only $800, but after that, engineers enjoyed record lows in unemployment (below 1 percent) and the emergence of the Six-Figure Engineer (staff-level EEs earning $100,000 or more).
Although the overall U.S. mean fell slightly in 2003, 58 percent of this year's American respondents actually got raises; only 8 percent lost ground. The remaining one-third said their salaries stayed put. The breakout for more than 400 European engineers responding to this year's survey was similar, with 52 percent reporting raises, 43 percent remaining the same and 5 percent losing ground. EEs in the United Kingdom reported a mean salary of $56,062 in U.S. dollars, Germans came in at $54,759 and French respondents trailed at $48,922.
Why did U.S. wages fall?
The reason for the overall dip in mean salary is twofold: First is the statistical reality that our survey is measuring a separate group of designers and managers, not the same ones queried last year, and this sample simply earned a bit less. Second, corporations have instituted policies to freeze salaries or reduce the increases. Altogether, 42 percent of the respondents' employers froze salaries in the past 12 months. Compare that with 1991, another down year, when 16 percent of that year's sample saw salary freezes.
Here's what some of this year's 842 surveyed U.S. EEs and managers said:
"Pay raises have been limited to 2 percent total over the past year for the engineering department. We allocated those raises to the more-junior engineers to increase retention. The senior members of the group did not take a pay raise."
"Raises were smaller than usual and late. Motorola, Tellabs, 3Com and Lucent are close by. As long as they are laying off rather than hiring, our management feels we should feel lucky to have jobs."
One European designer says that "a perceived shortage of engineers means many opportunities for companies to trim, downsize and lower salaries. Also, many engineers [are] prepared to work for lower salaries. The shortage is not of engineers, but cheap engineers."
An engineer in the U.K. cries: "This year I received a 1 percent annual salary rise, the lowest in my career to date!"
Corporations have stretched the raises over longer periods, as at this engineer's company.
"Merit raises have gone from a 12- to 18-month cycle. Amount of raise has been reduced. 401k company-matching contribution has been suspended. Medical benefits have been reduced, with an increase in the portion the employee has to pay for."
Many companies have pay-for-performance policies in place that help when times are good-and hurt when they're not. "I expect my salary to not increase this year, due to the low number of orders we have received this year so far," one respondent lamented.
Corporations have adopted other strategies to reduce costs. Benefits have been shaved, and not just in the electronics field. The Employee Benefit Research Institute's Small Employer Health Benefits Survey found that 65 percent of companies increased deductibles for employees and 35 percent boosted the employee share of health insurance premiums. Witness this engineer's experience: "I started with a new company that pays a higher base salary but has less in bonuses. I'm also paying 70 percent of my health insurance costs now. Before, it was 15 percent."
While the Bureau of Labor Statistics reported overall wages rising 0.6 percent last quarter, benefit costs shot up 1.4 percent, much of it attributable to to double-digit increases in health insurance.
Bonuses aren't as large as in previous years, readers report. "My bonus is a significant part of my overall compensation," says one respondent. "It is about one-half of what it would normally be."
"My bonuses went from $40k to $6k," an engineer reports. "This year there will probably not be any bonus."
Indeed, some 46 percent of our U.S. EE sample collected bonuses last year, averaging about $6,000. By comparison, in 2000, 62 percent of our sample got bonuses. That's a drop of 16 percentage points in just three years, illustrating that bonuses hinge on the company's performance and are not to be depended on.
Another tactic corporations are deploying to cut costs is requiring workers to take paid (or even unpaid) vacation time while the company shuts down for a couple of weeks.
As one engineer summed it up: "We are back to the 'lucky-you-have-a-job' economy that we last 'enjoyed' in the early 1990s."
Helping to offset the pullback in salaries for engineers is the income produced by their spouses. Among the 81 percent of our U.S. sample who are married, total household income runs an average of $117,000, placing engineering families amid the higher income brackets among professions.
Engineers invest in stocks; 87 percent of our sample have some holdings. Like almost everyone, about 62 percent report decreases in the value of their portfolios, while 15 percent probably consider themselves lucky to be at the same level they were a year ago. Despite the up-and-down market, 22 percent of the sample say they're ahead of the game today.
To this point, most engineers responding to our survey see no real impact on their lifestyle from the three-year decline in stock prices since 2000. Only 8 percent have had to cut back their day-to-day spending.
Rather, the effect is being felt most acutely in retirement plans, where 32 percent report lower values. Stock options are another area where cutbacks are being felt. Values have gone down-sometimes drastically-stretching out plans for retirement or for purchase of big-ticket items.
"My stock options are so far underwater they are actually a retention disincentive," says one reader.
Another options holder chimes in: "I worked for a startup that was acquired by a larger company. A few years back, I could have retired."
In 2002, 59 percent of the respondents owned stock options in their company, worth around $25,000. Although we didn't ask the question this year, we wouldn't expect a drastic change in the percentage of people with options. But the value may well have dropped, as it did for this correspondent: "Company stock options are currently worthless and cannot be used to supplement base salary." We'll revive the question again next year to find out more.
Salary by job title
So who ended up with what? No one should be surprised that design managers earned more than staffers, averaging a cool $110,000 vs. staffers' $85,800. Our handful of corporate managers collected $124,000. But 2003's managers are bringing home less than last year's group, which could reflect the overall reduction in bonuses and performance incentives. Our vice presidents of engineering averaged $11,000 less than last year, at $111,000 vs. 2002's $122,000. Similarly, chiefs of engineering dropped $2,500 from last year's $102,500 mean salary. Both categories are relatively small in terms of number of respondents.
By contrast, our biggest survey groups fared pretty well:
But the averages fell for several larger categories:
Salary by region
As they have for many years now, our San Jose, Calif., respondents (incidentally, our largest regional group) led the way in the salary parade. On average, they earned $111,800 in the past year, easily outpacing other metropolitan areas. Before you call the movers, however, check out Silicon Valley home prices, among the highest in the nation. And even before that, check out the want ads in San Jose. There have been significant cutbacks in the area, and the boom in startups that partially drove demand has been suffering as venture capital has withered.
Other major centers of engineering talent and their salaries:
Overall, the Western region, at $94,100, remains the best-paying area of the United States, with the Northeast averaging $91,600, the South Central region (including Texas) $87,900 and the North Central area, $78,900.
Salaries by age
Traditionally, the salary curve starts off at its lowest point among twentysomethings, peaks at the lower 40s, levels off into the early 50s and then starts a decline. Engineers have complained that while they may start their careers as high earners, with salaries in the $40,000-plus range, they hit a plateau at a time when lawyers or doctors are bringing in top dollars.
This year's group of EEs and managers does level off in the lower $90s at about the age of 40, and stays there until they reach the 55-59 age group. Then the veterans buck the trend, turning in average mean base salaries of $98,910, the highest of any age bracket. We don't have a really good explanation. Only 11 managers are represented in the 55-59 bracket, so their generally higher salaries are not a factor.
There are more military/aerospace engineers in this age group than any other types, and while that's not our highest-paying industry, it is the most stable. Respondents working at defense contractors have the longest tenures of any of our industry segments (12.7 years vs. 8.8 overall), the most experience (19 years vs. 17) and are tied with components for the lowest unemployment rate this year (5.6 percent vs. 9.2 percent overall). Defense engineers may not get the biggest bucks to start with, but as they go gray, it's possible they encounter less job turbulence-and perhaps even less age bias?-than in the more go-go, younger atmosphere of, say, communications vendors.
Here is the breakdown by age:
Salaries by industry
As mentioned, military/aerospace is not the highest-paying industry. It averages $86,938. The big pay is in communications, computers and components. Despite the upheaval in the computer and communications industries in the past three years, pay is substantially better than in other sectors.
Education pays
To the age-old question, "Should I go for my master's?" the answer is an unqualified "Yes"-that is, if you're thinking in terms of what you're likely to earn afterward. Indeed, some readers have taken the opportunity of a layoff to go back to school for that master's degree. The salary level by education:
It's not a given that a PhD degree, even in a technical field, translates into a long, prosperous career. A few years ago, during the last recession, doctorate holders complained that they couldn't land jobs easily, because companies preferred hands-on, less-expensive engineers.
Salary by country of origin
Some 87 percent of this year's respondents are native-born U.S. citizens. As you'd expect, because they are overwhelmingly represented in the survey, their mean salaries parallel the mean for the whole sample ($88,379 vs. the mean of $88,900).
Our sampling of respondents who hail from other countries but are now working in the United States is small, when taken individually, and therefore somewhat suspect statistically. But for information purposes, we'll pass the results along, listed according to the size of the sample.
But based on this data, coupled with replies from previous years, it seems clear that no one is taking undue advantage of immigrant engineers from India or China-or at any rate, not the ones who answer American surveys. Those who don't read English well, who are temps or who are not readers of EE Times may have other experiences.
Incidentally, some 85 percent of the 842 respondents describe themselves as white, and they earn $88,491. Those of Chinese heritage (including lifelong U.S. citizens as well as immigrants) collect $89,363. Those of Indian heritage earn $95,258 and Hispanic engineers pull in $83,541. African Americans trail, at $77,900. Only 3.6 percent of the respondents were women, who averaged $85,000, vs. $88,934 for the males.
Related charts:
A lot of the major A/E consortiums (AECOM, Tetra Tech, etc) have stopped paying bonuses, regardless of how well they are doing.
After 20 years in the engineering field, I have gone over to the General Contracting side, where bonuses and substantial salary increases are not dirty words.
The engineering field, at least as related to the MEP engineers designing buildings, has been prostituted to the degree that I wouldn't recommend it to college bound students.
They are better off getting a degree in Construction Management.
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Recent Trends in Wages, Incomes, and Wealth in the United States Paper prepared for panel on "Trends in Economic Well-being in North America, Canadian Economic Association Meetings, Ottawa, May 31, 1998
I. IntroductionThis paper reviews recent evidence on the level and distribution of wages, income, and wealth in the United States. The principal focus is on how these three measures of economic well-being have changed over the current business-cycle recovery. The principal findings for the 1990s are:
We have converted all nominal values to real 1997 dollars using the CPI-U-X1 series. The CPI-U-X1 corrects the official CPI for problems in house prices prior to 1982. Since the Bureau of Labor Statistics has not produced a CPI-U-X1 series prior to 1967, we deflate earlier years using a series created by chaining the pre-1967 CPI to CPI-U-X1. Tables 1A, 1B, and 1C summarize developments in the hourly wage distribution between 1973 and 1997. Table 1A shows the real hourly wage in 1997 dollars for the 10th, 50th, and 90th percentile of all wage and salary workers, ages 18 to 64. The data cover the years 1973, 1979, 1989 (all cyclical peaks, defined by low-points in the national unemployment rate) and each year in the 1990s through 1997, a year with a national unemployment rate that is probably close to the lowest level to be achieved in the current business cycle. For the 1980s, the table tells the now-familiar story of declining real wages for workers at the middle and the bottom of the wage distribution. Between 1979 and 1989, real wages of workers at the 10th percentile fell at a 1.6% annualized rate between; at the median, real wages declined an average 0.2% per year over the same period. (The table also demonstrates another, less-widely commented, aspect of the 1980s wage distribution: even at the 90th percentile real wages grew little over the period --from $22.46 per hour in 1979 to $23.46 per hour in 1989, an annualized growth rate of just 0.4% per year.) Table 1A also shows the year-to-year changes in wages over the decade of the 1990s. The most striking development over the current business-cycle is the reversal of fortune of low-wage workers, with real wages at the 10th percentile rising on average 0.2% per year between 1989 and 1997, up considerably from the 1.6% per year decline for 1979-89. A closer look at the pattern of wage changes suggests that a combination of increases in the federal minimum wage and low unemployment may have helped to boost wages at the bottom. Real wages at the 10th percentile rose in only three of the eight years in 1990s: 1990, 1991, and 1997. These are all years when the federal minimum wage increased (in 1990 from $3.35 per hour to $3.80; in 1991, to $4.25; in 1997, to $.4.75). While the federal minimum wage lies below the 10th percentile wage in all three years, even modest spillover effects could explain the small increases at the 10th percentile. 2 The data for 1997 suggest an independent role for low unemployment in explaining real wage growth at the bottom. In 1990 and 1991, as unemployment increased, real wages at the 10th percentile grew about 1.1% per year; in 1997, as unemployment fell 0.5% to below 5.0%, real wages at the 10th percentile increased at a much faster 3.2% annual rate. 3 A second feature of the 1990s is the worsening performance of real wages at the middle and the top. Between 1989 and 1997, the median real wage fell at twice the rate it did in the 1980s (-0.4% compared to -0.2%). Over the same period, real wage growth at the 90th percentile decelerated from 0.4% to 0.2% per year. At the median, real wages were generally flat through the recession in 1992 and then, perversely, fell continuously over the recovery from 1993 through 1996. In 1997, however, real median wages grew 2.2%. At the 90th percentile, no clear pattern emerges, with real wages rising and falling over much of the period, ending with a 1.5% increase between 1996 and 1997. The deterioration in performance at the middle and the top together with the rise in real wages at the bottom mean that the rise in overall wage inequality has decelerated during the current business cycle, with wage inequality (defined by the 90-10 differential) actually declining between 1994 and 1997. A final feature of the data in Table 1A is the failure of the vast majority of workers to keep pace with average productivity after 1973. The median hourly wage fell 0.2-0.4% per year after 1973, while average productivity grew at about a 1.0% annual rate (see Appendix Table 1). Even at the 90th percentile, annual wage growth ranged between 0.2-0.4%, still well below the average gain in labor productivity. Tables 1B and 1C show the same real wage data separately for men and women. These data demonstrate another well-documented pattern: while women’s wages remain below men’s wages at comparable positions in the respective wage distributions, over the last 25 years or so, women’s wages have generally grown more rapidly than those of men. Table 1B demonstrates that men’s wages at the 10th percentile have been following continuously over the business cycles of the 1970s, 1980s, and 1990s. The decline in male wages at the bottom was strongest in the 1980s (-1.3% per year), but the deterioration has continued, albeit at a slower pace, in the 1990s (-0.5% per year). At the median, male wages fell rapidly through both the 1980s (-0.9% per year) and the 1990s (-0.8% per year). Male wages at the 90th percentile were virtually stagnant over the entire 1973-97 period, growing at annualized rate little more than 0.1% per year. For women (see Table 1C), wage developments were generally better. Women at the 10th percentile saw rapid real wage increases in the 1970s (3.6% per year); steep declines (worse than for men at the 10th percentile) in the 1980s (-1.8% per year); and a considerable recovery over the 1990s (0.3% per year). Women’s median wages have risen over the three business cycles, most rapidly in the 1980s (0.6% per year) and much less rapidly in the 1990s (0.1% per year), far outperforming men at the median over the same time periods. Women at the 90th percentile posted the highest wage increases of any group, with a 1.6% per year increase in the 1980s and a 0.8% increase per year in the 1990s. B. Real Wages By Education Level Since much of the discussion of rising wage inequality during the 1980s and 1990s has focused on the role of formal education as a proxy for workers’ broader "skill" levels, we present wage data by education level in Tables 2A, 2B, and 2C. Again, much of the story is familiar. Wages for less-educated workers (see Table 2A), whether male (see Table 2B) or female (see Table 2C) have all declined in the 1980s and the 1990s. Discussions of wage trends over the last two decades, however, have not fully addressed another important feature of the data in the tables. The real wage declines extend far beyond those workers with the lowest level of formal education (less-than-high-school-educated workers), who account for about 15% of the total workforce. Real wages have also fallen for the 40% or so of the U.S. workforce with a terminal high school degree and the 20% or so of the workforce with one-to-three years towards a four-year college degree. Even the real wages of workers with a four-year college degree (but no further education) –about a 15% of the workforce— have seen real wage increases at (in the case of women) or below (in the case of men) the average increase in productivity over the period. The only education group that has done consistently well over the last two decades are those with advanced degrees (just over 5% of the workforce). 4 Using the education breakdown, the real wage pattern in the year-to-year data in the 1990s differs somewhat from that in the overall distribution. In the overall distribution, wage increases during the 1990s were largest at the bottom. By education level, where all the average wage levels are well above the 10th percentile wage, wages grew slowest at the bottom of the educational distribution and most quickly at the middle and the top. Even in the boom year of 1997, the real wages of less-than-high-school-educated workers, for example, did not change. Over the same period, real wages increases rose for all better-educated workers (high-school, 1.7%; some college, 2.1%; college, 2.9%; and, college plus, 1.1%). C. Poverty-Level Wages Widening wage inequality with stagnant and declining wages, on the one hand, and apparently rapid rates of job creation, 5 on the other, gave rise in the 1990s to the view that the jobs being created in the U.S. economy were of poor quality. In the spring of 1996, the Council of Economic Advisors (1996) entered the debate with an influential study of the quality of job creation between February 1994 and February 1996. Since the U.S. government does not collect data on "new" jobs, 6 the CEA divided respondents to the CPS into about 400 industry-occupation categories. The CEA then calculated the median wage in each industry-occupation category in 1994 as well as the total employment in each category in both 1994 and 1996. The CEA used changes in the estimated total employment in each of the categories over the two-year period to identify where the "new jobs" were being created. The CEA finally compared the 1994-96 job creation data with the 1994 wage data to see whether the net job creation was occuring in high-wage or low-wage industry-occupation categories. The CEA concluded that most of the jobs were being created in industry-occupation categories where the median wage was above the median for the economy as a whole. Another recent study, by Ilg (1997), uses a similar methodology with more recent data to arrive at a similar conclusion. We have several objections to this approach. First, neither the CEA nor Ilg examined how wages in their categories changed over the same periods that they examine employment changes. An analysis of Ilg’s data, for example, shows that while job growth was indeed strongest in those categories where the median wage was above the national median, the median real wage also fell in every job category, including those that paid above the national median. Second, the approach is at best indirect, since we can never observe new jobs, but only infer, where, on net they are being created. That the median real wage is falling across categories suggests that the new jobs may be below the median for the category and are therefore not necessarily themselves above the national median. Third, the approach focuses too much attention on net job creation, which has averaged only 1.2% per year in the 1990s, rather than on gross job creation, which has probably been about 20 times larger on an annual basis (just slightly higher than gross job destruction). 7 Even if the CEA analysis could clearly demonstrate that the net new jobs being created in the economy were "good jobs", 8 the vast majority of the gross new jobs created could still be of poorer quality than the gross old jobs destroyed. This final point can be taken one step further. In slightly imprecise terms, it is difficult to explain large changes in the wage distribution by concentrating on the 1% or so of new jobs created each year, while ignoring what is happening to the "other 99%" of jobs. Our own view is that the deterioration in the U.S. wage structure since the end of the 1970s is not primarily a function of the quality of new jobs created, on net, since that time. Rather, the principal problem stems from the institutional changes in the labor market that have undermined the bargaining power of workers in the vast majority of "existing jobs". Given the problems with approaches based on the wage levels of new jobs, and our own concern with what is happening across the entire stock of jobs, we prefer to examine "job quality" using the approach outlined in Table 3. We have converted the wage distributions for 1973, 1979, 1989, and 1997 into real 1997 dollars and then grouped workers in each year into categories based on ratios of the 1997 "poverty-level wage" (the hourly wage rate necessary to earn the federal poverty-level for a family of four if a worker works 40 hours per week, 52 weeks per year). The data for men and women together (see panel (a)) show that jobs paying "poverty-level" wages or less jumped markedly between the 1970s (about 23.6%) and 1989 (28.5%). The number of poverty level jobs, however, had not changed much by 1997 (28.6%). Between 1989 and 1997, jobs paying just above the poverty-level wage (100-125%) grew slightly as did those paying 300% or more of the poverty-level wage. This cut of the data suggests that the overall wage distribution is shifting simultaneously toward both lower-paying and higher-paying jobs. The patterns for men (panel (b)) and women (panel (c)) separately show important differences. Poverty-level jobs for men increase across every business cycle peak from 1973 though 1997. In the 1990s, the share of men holding a job paying below the poverty-level wage grew from 21.2% to 22.5% of male employment. The share earning near-poverty-level wages (100-125%) also increased. At the same time, the share of men earning 200-300% and 300% or more of the poverty-level wage fell a combined 3.6 percentage points. While many more women than men earned poverty level wages in 1997 (35.3% of women compared to 22.5% of men), the share of women earning low-wages fell over the 1990s business cycle, as did the share earning near-poverty-level wages. Over the same period, women also saw a 1.8 percentage-point rise in the share earning 300% or more of the poverty-level wage. The gains for women in the 1990s, however, are mixed compared to the 1980s. The increase in the share of women earning high wages was much more rapid in the 1980s than in the 1990s. At the same time, the 1990s saw some improvement in the composition within the lowest-paid categories, after a dramatic increase in the 1980s in the share of women in the lowest wage category (0-75% of the poverty-level wage).
The distribution of family income in the United States grew more equal between 1947 and 1973. Table 4 demonstrates that between 1947 and 1967, the share of family income going to each quintile grew for the bottom four quintiles and declined for the top quintile. Meanwhile, the Gini coefficient fell from 0.376 to 0.358. The data in Table 5, which looks at the annual income of families at the 20th, 40th, 60th, 80th, and 95th percentiles, show that, across the board, family-income growth was strong, but skewed slightly in favor of less well-off families in the 1947-67 period. Annual growth rates in family income, for example varied from 2.8-2.9% for the 20th and 40th percentile families to 2.5% for the 95th percentile family. Between 1967 and 1973, family income continued to grow rapidly (between 2.2% and 3.0% per year), but families at the bottom experienced the slowest growth. After 1973, growth in family income decelerated and grew more unequal. The share of the bottom two quintiles in the total family income fell over the 1973-79, 1979-89, and 1989-96 cycles; the share of the bottom four quintiles declined in 1979-89 and 1989-96. The 1990s produced what is arguably the worst family income figures for the postwar period. Between 1989 and 1996, real family incomes fell at the 20th, 40th, and 60th percentile; were flat at the 80th percentile; and grew at just a 0.3% annual rate at the 95th percentile. Over the same period, the annual growth rate in average income (0.3%) was the slowest in any postwar business cycle. The income share of each of the bottom four fifths of families declined, while the share of the top fifth in total income grew 2.2 percentage points. The year-to-year numbers for the 1990s show the typical cyclical pattern in family income. At the 20th, 40th, and 60th percentiles, family incomes fall through 1993 and then recover continuously through 1996. Growth rates at these same percentiles, however, are actually slower in 1996 than they were in 1995. At the 80th and 95th percentiles, real income hits bottom earlier (1991 for the 95th percentile, 1992 for the 80th) and recovers more strongly through the rest of the cycle. B. Poverty Rate One important aspect of the income distribution is the share of persons living in poverty. Table 6 reports the poverty rates for selected years between 1967 and 1996 according to two definitions of poverty. The first definition is the official U.S. government poverty rate, which is based on a minimum consumption basket established in the 1960s. The second definition is based on a relative poverty measure that is more typical for international comparisons. According to the official definition, poverty dropped sharply between 1967 and 1973 and then grew continuously over the business cycle peaks in 1979, 1989, and 1996. The cyclical pattern of poverty rates is obvious in the yearly data for the 1990s. Poverty grows uninterruptedly between the cyclical peak in 1989 through the cyclical trough in 1992 and even into the "jobless recovery" in 1994. Poverty then fell in 1995 and by a smaller amount in 1996. Table 6 also allows us to compare the official poverty rate with a common alternative definition based on relative incomes. Using the broadest measure of relative poverty --the share in families receiving less than half of the median income-- the poverty rate increases substantially between 1973 and 1979 and again between 1979 and 1989, but changes little over the decade of the 1990s. The broad definition puts about 22% of the population in poverty in the 1990s, above the 13-15% official rate over the same years. A narrower definition --those receiving less than one-fourth of the national median increases significantly between 1979 and 1989 (from 6.7% to 8.3%), and then by a smaller amount between 1989 and 1996 (from 8.3% to 8.6%). Unfortunately, the Survey of Consumer Finance, which is the underlying source of the wealth data in Tables 8 and 9, is not an annual survey. We therefore cannot report the distributions for the peak years as in previous tables. Instead, we will concentrate on general characteristics of the distribution and how the distribution changed between 1989 and 1997 (using Wolff’s projections for the latter year). Table 7 demonstrates that the wealth distribution is more unequal than either the wage or income distribution. The share of wealth held by the top quintile has been above 80% in every survey year since 1962, with the share increasing slightly in each survey. Even within the top quintile, wealth is heavily concentrated in the top one percent of the full distribution, which controls more than one-third of all wealth. Table 8, panel (d), attaches dollar figures to the share figures in Table 7. In 1997, the estimated average net worth (assets minus liabilities) of the top one percent of households was about $9.5 million compared to about $53,400 in the middle quintile, and to just $3,100 among the least wealthy 40% of households. Between 1989 and 1997, net worth for the top one percent grew by almost $1 million; declined about $1,600 in the middle quintile; and grew about $6,900 for the bottom 40% (from a negative net worth of -$3,800 to a positive net worth of $3,100). B. Stock Market Boom Table 8 also demonstrates the impact of the recent stock market boom on the overall wealth distribution. Panel (a) shows the gross value of direct and indirect stock holdings across the household wealth distribution. Between 1989 and 1997, the value of stock held by the top one percent of households rose $1.2 million, from about $1.1 million to about $2.3 million. In dollar terms, the level and growth in stock holdings were much smaller for the bottom 80% of households. The average stock holdings in the fourth quintile (from the 61st to the 80th percentile), for example, grew from $8,300 in 1989 to $18,600 in 1997. For households in the middle quintile, average stock holdings grew from $3,500 to $7,500. Households in the bottom 40% of the wealth distribution saw their holdings more than double – from about $600 to $1,500. Nevertheless, large problems remain and some have even grown worse in the 1990s. Wages in the middle and top of the wage distribution have grown more slowly over the current cycle than they did in the 1970s or 1980s. The distribution of family income, at least through 1996, has grown more unequal, with the bottom four fifths of the distribution experiencing stagnant or declining real incomes over the period. Not surprisingly, given the family income trends, the poverty rate rose from 12.8% to 13.7% between 1989 and 1996. Finally, the already highly unequal distribution of wealth grew even more unequal between 1989 and 1997, in part, as a function of a stock market boom, whose benefits are still rather narrowly confined.
1 For a complete description of the CPS wage data, see Webster (1997). 2 The combined 1990-91 increases, for example, raised the minimum wage about 24% in nominal terms. Real wages at the 10th percentile grew about 1.1% in both years. The decline in 10th percentile real wages, despite a rise in the federal minimum wage in 1996, however, argues against the importance of the minimum wage. 3 A preliminary analysis of CPS ORG wage data for 1998, a year in which unemployment continued to fall, also suggests an important role for unemployment in the determination of wages at the 10th percentile. 4 Education shares are approximate and refer to 1989. For a more detailed breakdown, see Mishel, Bernstein, and Schmitt (1997), Tables 3.18, 3.19, and 3.20. 5 Job creation rates over the current business cycle (about 1.2% per year between 1989 and 1997) are slow even by recent historical standards. Job creation rates averaged 1.7% between 1979 and 1989, and 2.5% between 1973 and 1979. 6 U.S. government employment numbers generally come from two sources: the Current Population Survey, which interviews individuals in noninstitutional households; and the Bureau of Labor Statistics' Establishment Survey, which asks establishments about overall staffing levels. 7 See Davis, Haltiwanger, and Schuh (1996). 8 This would involve answering the sticky question about which of the "gross new jobs" were "net new" ones.
APPENDIX TABLE 1
Source: Economic Report of the President (1985, 1998).
TABLE 1A
TABLE 1B
TABLE 1C
TABLE 2A
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As long as you mentioned it, I have never met an EE in that salary range. Fact is EE times is a trade rag and they shill for the industry that needs to constanly attract fresh meat into the profession.
And as for my graph, you fail to comprehend that a negative growth rate would show-up as a negative percentage, which would place that blue line below the horizontal axis (the line that runs from left to right, and vice versa).
2. After you finish your remedial reading class refer to table 2A - college graduates suffered a decline in real wages from 1973-97 ($ 18.60 to $ 18.38/hr) - I don't believe that even you would describe college graduates as people with little or no education.
3. Grow up.
And since you persist in mis-reading my graph, let me ask you, since when is a drop in the rate of increase in something considered a drop in something's level? Please, don't ask a Democrat.
2. Your graph does not show a drop in the rate of increase - it shows that real wages are lower now than they were in 1973.
3. Grow up.
It happens. Suck it up.
One thing is for sure. If you live in Silicon Valley on $89k your're sleeping in your car. $89k wouldn't cover rent and food.
With the cost of housing in San Jose, the EE salary is way too low. A co-worker moved from the Pittsburgh area to SJ and retained the same salary. A significant increase in cost of living followed :).
True, but your average EE is not slaving away under the hood everyday. I enjoy working on my cars, but not for a living.
My Mercedes mechanic neighbor back in AZ suggested I look into rebuilding transmissions if I wanted to make any money working on vehicles.
Really? Let's take a look at what the author wrote. Again.
Average hourly earnings in private, nonagricultural business increased in real terms by about 16 percent during the past 40 years . . . .
Say, do you have any figures for paraplegics during this period? [hoot]
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