Will Middle Class America Ever See A Real Raise Again?

For Decades, Annual Incomes Have Remained Virtually The Same.

ByABC News
August 4, 2010, 4:26 PM

August 6, 2010— -- For Teresa Law, the struggles started long before the economic downturn. Her sense of despair predated the bursting of the housing bubble that nearly brought the economy to its knees in 2008.

"I hadn't seen a raise in 13 years," said Law, 49, a home care attendant in the rolling hills of south central Ohio. "There was nothing new in your budget except for bills. There were very few dinners out. Things that normal American families are shown on television were not done in my home for a very long time."

For millions of working Americans, the phenomenon economists call "median wage stagnation" has become a way of life. For decades, their annual incomes have remained virtually the same, leaving many just a paycheck or two from the street.

Experts attribute the causes to various factors: the decline of organized labor, the erosion of the minimum wage, the shift from a manufacturing-based to a service-based economy, and the transformation to a more globalized economy. But a common thread is the choking of America's besieged middle class.

"For the average worker in this country, there is a sense of despair, there is a sense of hopelessness and growing anger because they're now seeing that corporate profits are hitting record levels again, corporations have extraordinary savings, and that CEO's always manage to pay themselves more," said Stephen Lerner, director of banking and financial reform for the 2.2-million-member Service Employees International Union. "And people are saying something's fundamentally broken here."

A government report today shows the economy lost 131,000 jobs in July, worse than the 87,000 job loss economists expected. The nation's unemployment rate remained unchanged from June's 9.5%, but the jobs data means 7.5 million jobs have been lost since the beginning of the recession.

For working people, wages remain stagnant. In fact, median weekly wages, when adjusted for inflation, fell slightly for both high school and college graduates from 2000 to 2009, according to a recent analysis by the Economic Policy Institute, a Washington think tank.

For high school graduates, median inflation-adjusted wages were $626 per week in 2009, compared with $629 in 2000, according to the EPI analysis. That comes to $32,552 in 2009, down from $32,708 in 2000.

For college graduates, weekly wages were $1,025 in 2009, compared with $1,030 in 2000, according to the study. Over the course of a year, that's $53,300 in 2009, down from $53,560 in 2000.

The long period of wage stagnation predated the recession.

"Between 2002 and December of 2007, the country was in a period of economic expansion and for most of that time, from 2003 through 2007, wages fell," the EPI study said. "Wages had improved in the early part of the decade on the momentum of the rapid wage growth of the 1990s, but that progress was halted by the spike in unemployment during the 2001 recession, and never reestablished itself."

With growing economic uncertainty and soaring unemployment, the future seems bleak for many Americans.