While many observers believe that the economy is in the process of recovering from weak growth and a dismal labor market, there is still considerable evidence that the recovery is not serving everyone.

While many observers believe that the economy is in the process of recovering from weak growth and a dismal labor market, there is still considerable evidence that the recovery is not serving everyone.

Recent data shows that real average hourly wages for production and non-supervisory workers (about 80 percent of the population) have declined over the past several months -- reversing all of the gains since the end of the recession. (See graph below.)

Source: Economic Policy Institute, Economic Snapshot, July 16, 2004

The Economic Policy Institute attributes this decline to three factors: 1) a continuing weak labor market with unemployment stuck at 5.6%, 2) the new jobs created by the current economy appear to be lower quality jobs, and 3) a recent up-tick in inflation.

In addition, the share of gross domestic product (GDP) going to labor compensation is near 40-year lows. All this comes at a time when corporate profits are at record highs as a share of GDP.

For more information, see

• Inflation-adjusted wages fall again in June Economic Policy Institute
• Hourly Pay in U.S. Not Keeping Pace With Price Rises New York Times July 18, 2004
• Corporate Profits at Record Highs, While Labor Compensation at 38-year Lows OMB Watch