‘We deserve more’: US workers’ share of the pie dwindles

When Jesse Motte began working at a Starbucks inside a Target store in Columbia, South Carolina, more than two years ago, $15 an hour sounded great. He was excited to start because it was the most he had ever made after working for years in the service industry.

The excitement has dissipated due to his inconsistent and erratic work schedule, the rising costs of necessities and the minuscule raises he and his co-workers receive annually. His most recent annual wage increase was $0.37 an hour.

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Motte is not alone. This week, the Bureau of Labor Statistics released its latest estimate for the share labor receives of national income for the first quarter of 2024. The statistics shows the income workers receive compared with the productivity their labor generates.

According to BLS, this income share has declined for non-farm workers from about two-thirds, 64.1% in the first quarter of 2001, to 55.8% in the first quarter of 2024.

Target raised their company minimum wage to $15 an hour in 2017 and has since only increased the range of starting wages, which vary from $15 to $24 an hour.

“I’ve been working here a little over two years and I still have not made it out of the $15-an-hour range,” said Motte. “Last week I got paid, my pay was about $700 for about 60 hours of work I did for two weeks. I still haven’t bought groceries, I’m still eating some canned food that I have.

“I’m still eating a bunch of peanut-butter-and-jelly sandwiches, and drinking protein shakes. I’m scared to go buy groceries because I know if I do, I’m going to spend about $100 for not much.”

Motte explained that working at Starbucks in a Target store, he often has to deal with long lines toward the end of his shift while managing the closing duties, and that he can get pulled to work in different departments within Target. He said that for the work he and his co-workers do and their role in running Target stores, their pay is not enough, especially compared with the Target CEO Brian Cornell’s compensation.

In 2022, Target’s CEO was paid more than $17.6m in total compensation, 680 times more than the median worker at Target, and more than double the average for S&P 500 corporations. The company reported $5.7bn in profits in 2023.

CEO pay has soared 1,209.2% from 1978 to 2022, according to an analysis by the Economic Policy Institute, compared to a 15.3% rise in typical workers’ pay.

It’s part of several contributing factors to runaway income and wealth inequality that has resulted in low-income workers’ share of the pie dwindling as the distribution of wages in the US has trended toward high-end wage earners receiving more and more.

“We have an incredibly corrupt corporate governance structure,” said Dean Baker, a senior economist at the Center for Economic and Policy research. “CEOs in the US get paid way more than their counterparts in other wealthy countries.”

He cited other contributing factors, such as the fallen corporate tax rate, patent and copyright monopolies that enable industries such as pharmaceuticals to price-gouge medications that are cheap to manufacture, industries such as Wall Street that are not taxed properly and are heavily subsidized, and policies that are unfriendly to labor unions.

“We could structure the market differently in ways that didn’t produce as much inequality as we have now,” Baker added. “The bulk of the story of wage stagnation for the typical worker has been that an increasing share of wage income has gone to high-end earners.”

Erica Groshen, a senior economics adviser at Cornell University and the former commissioner of the Bureau of Labor Statistics, also noted the median workers’ share of the national income had declined.

“We have these different components, and these influences have led both to a widening inequality and this declining share, particularly for workers on the lower end of the education spectrum,” said Groshen.

Rita Blalock has worked at McDonald’s in Durham, North Carolina, for 10 years. She recently received a wage increase that she spent years fighting for, to get her over $15 an hour.

Comparatively, the McDonald’s chief has one of the highest CEO-to-worker pay ratios in the world, at 1,224 times the median worker pay. A typical McDonald’s worker would have to work more than 1,200 years to make his compensation for a year.

“We deserve more than what we are getting paid. We deserve $25 an hour. Because executives are paid seven to eight figures, so they can afford to go have fun, go on vacations. Here I am, I have to sit here and work hard for them at their store,” said Blalock. “We are shorthanded. The customers are not happy. We tell them if pay was better, then maybe we could keep people longer and we wouldn’t have to work ourselves to death because we’re so short-staffed.”

Blalock’s sentiments are reflected in data on income and wealth inequality in recent decades.

From 1979 to 2022, wages for the top 1%of wage earners in the US rose by 171.1% compared to 32.9% for the bottom 90% of wage earners. In the same period, the share of total earnings for the bottom 90% declined 8.8% while it increased for the top 0.1% of earners by 4.6%.

Billionaires alone have gained $2.7tn since March 2020. According to a 2020 report published by the Rand Corporation, the wealthiest 1% in the US have taken $50tn from the bottom 90% in recent decades.

Productivity has failed to keep up with wage growth; from 1979 to 2019, net productivity for US workers increased by 59.7%, while typical compensation for a worker only grew by 15.8% in the same period. The median worker would have made an extra $9 an hour if the rates had grown together.

The federal minimum wage has remained $7.25 an hour since July 2009, the longest period in the minimum wage’s history without an increase, and it’s worth 29% less today than 15 years ago.

Cecilia Ortiz makes a little more than $16 an hour as a wheelchair attendant at Phoenix international airport in Arizona, where she has worked for a little less than two years.

She made $13.85 when she started and only received a raise after getting a promotion. Ortiz has been homeless and has health issues. But she receives no benefits from work; no healthcare, no vacation time or paid sick time, and she has to pay $50 a month for parking at the airport where she works.

“I love my job, I’m very good at my job, I have good relationships with my passengers during the time I’m with them, but I have to kind of sugarcoat the real situation, because they automatically assume that working in the airport I must be making good money. For the 1.5 years I’ve been working for these airlines, I’ve been sleeping on an air mattress. I still can’t afford to buy a dresser for my clothes,” explained Ortiz.

During a shift, Ortiz said, she can walk up to 15 miles. Her ability to take breaks is limited, depending on management’s preference, and she isn’t allowed to carry water with her through the airport, despite the exposure to Phoenix’s intensely hot temperatures in parts of the airport where there isn’t air-conditioning, such as the gate bridges to airplanes.

Her employer is a contractor for major US airlines, where CEOs receive millions of dollars in compensation, including $31.4m for the American Airlines CEO in 2023 and more than $34m in 2023 for the Delta Airlines CEO.

“There are thousands of us doing the same thing, we’re just trying to get by. We would like to live comfortably as well,” added Ortiz. “We’d like to be appreciated a little bit here. and it’s really not too much to ask, it’s a shame we have to ask. It’s an even bigger shame that we have to fight.”