On this Labor Day it is good to celebrate the hard work of American workers, but there would be more cause for celebration if pay were at least as good as it was back in 1972. That was a pretty good year for American workers. Real average weekly earnings (an annual average of weekly earnings divided by the cost of living as measured by the Consumer Price Index, 1982-84 base) for all private sector production and nonsupervisory workers was at a high of $343 in January 1972.
From there, real average weekly earnings fell almost without interruption until reaching a low of $262 in January 1995. There was some recovery. By January 2012, annual real average weekly earnings were $289, still just barely above the $287 in January 1981.
During the Great Recession, there was retrenchment. Average weekly earnings fell to a seasonally adjusted $279 in July 2008. During the painfully slow recovery, weekly earnings rose to $292 by April of 2013, again barely above levels in 1981.
There are lots of causes for the lost ground on wages. Well paid jobs in American manufacturing are fewer. The strength of unions is at an all time low. Free trade has opened American workers to competition from low wage labor abroad.
On the other hand, the productivity of American workers is among the highest in the world. But capital rather than labor has profited most from the higher productivity. Profits are high and rising in most industry sectors.
On this Labor Day 2013, labor is left out of the party, with wages barely equal to those of 30 years ago.