Hello, Raises. It’s Been a While. What Will Make You Stay?<br />Josh Bivens of the Economic Policy Institute replicated the exercise for the economic expansion<br />that ended with the demise of the housing bubble in 2007: Unemployment, he found, had to fall below 4.6 percent to keep workers in the bottom 10 percent from losing ground.<br />From the mid-1970s to the late ’80s, they found, an unemployment rate of 6.2 percent<br />or lower would keep wages at the bottom tenth of the pay scale from declining.<br />After declining mercilessly since the early 1970s, the hourly pay of private-sector production<br />and nonsupervisory workers — nurses, cashiers, manufacturing workers on the shop floor and such — hit bottom in 1995 and rose by more than a tenth in real terms over the following eight years.<br />The hourly wage of workers at the bottom tenth of the income distribution rose<br />11 percent from 1995 to 2000, according to the Economic Policy Institute.<br />To keep it closer to full employment, he proposes a set of policies, including raising the Fed’s inflation target from its current<br />2 percent, creating a fund to bolster job creation in moments of slack and engaging the government in job creation.
