Q&A;: ‘Is It Just Me?’

Four years into an economic recovery that has created millions of jobs, unemployment and inflation are low and the stock market has hit new highs. Economists say a recession is fairly unlikely. Yet many people are worried about their jobs. Here are some questions and answers about the economic forces tugging at workers on Labor Day, 1995:

Q. Wall Street may think the economy’s doing great, but I don’t see it in my paycheck. Is it just me, or is something else going on here?

A. A lot of people these days have got the paycheck blahs.

The average hourly earnings of American workers peaked in 1973 - the year the Arab oil embargo hit the economy.

Last year, the average wage was a little over $11 an hour. To match the buying power of the average wage in 1973, it would have had to be closer to $13. That’s a loss of about 15 percent.

Since the end of the 1990-1991 recession, wages have been pretty flat. Gains in output during this economic recovery have not been matched by bigger paychecks.

Q. If wages are flat, my standard of living isn’t going to improve much. Why is this happening?

A. Labor Secretary Robert Reich says employers are taking higher profits at the expense of workers’ wages in this recovery. But others say it’s a lot more complicated than that.

For example, the pay story changes if you consider workers’ overall compensation, not just cash wages.

Total compensation - wages plus fringe benefits - continued to increase in the ‘80s and ‘90s. While wages slid, fringe costs grew.

Much of the increase in fringe benefits was due to health care costs. As employers paid higher premiums for workers’ health insurance, they held back on wages.

Q. Corporate chief executive officers don’t seem to be in any downward trend as far as their pay, is America turning into a class society?

A. There’s no question that there’s wide inequality of income in America, and the gap between rich and poor has been growing. But America is far from a rigid class society, because upward mobility is a fact of life.

The median - or midpoint - income for American families in 1993 was just under $37,000. (Figures for 1994 aren’t out yet, but the year-to-year change is usually no more than a couple of hundred dollars.)

By comparison, the median salary for chief executive officers at big firms in 1994 was $785,000, with a median bonus of $660,000.

Some studies point to a shrinking of the middle class since the ‘70s, with more people on both the upper and lower rungs of the income ladder.

But studies have also documented that people are constantly moving up and down the income ladder.