Economists are still trying to hash out how the country got to this place, where so many jobs pay less, comparatively, and so many workers are struggling to make ends meet. The work of the economist David Autor suggests that automation is partially to blame. His research finds that improvements in technology helped augment a certain class of jobs, making the people in them more productive, while also replacing the more repetitive jobs with computers and machines. That means that the top earners are able to make more money than they were in the past, and that there’s a growing need for people to fill lower-wage jobs that can’t be automated (think janitor or nursing assistant). But the jobs that once built the middle class—bookkeepers, assembly-line workers, call-center employees—have disappeared.
Other economists, such as Thomas Lemieux, argue that a shifting labor landscape is to blame for some of the decline in middle-class wages. As companies outsourced jobs to cheaper locations, U.S. jobs either disappeared or paid less, in order for companies to remain competitive. Additionally, declining union coverage means people who would normally get union wages no longer do, which also puts a downward pressure on non-union wages, since non-union plants no longer have to compete. And because the minimum wage has not kept pace with inflation, Lemieux and others argue, other wages haven’t either. If minimum-wage salaries remain low, other salaries up the income ladder—including those of managers—remain low too.
In addition, American companies have become very good at cutting labor costs, said Harry Holzer, a professor of public policy at Georgetown. They turn people who were once full-time employees into contractors, cut back on wages and benefits, and do everything possible to maximize productivity without sharing those gains with the workers. “Employers have become very good at taking the low road, minimizing labor costs, no matter what it takes,” said Holzer.