SEPTEMBER 2012

The Economic Policy Institute’s The State of Working America, 12th Edition now available online »

The State of Working America, 12th Edition shows that the vast majority of American workers have largely been shut out of the nation’s economic growth over the past three decades. The typical American family has added hundreds of extra hours of work each year, while also earning better education credentials, yet is still struggling to keep up—and The State of Working America, 12th Edition explains why.

Incomes for the middle fifth of American households—the heart of the middle class—would have been an average of $19,000 higher per year by 2007 if the share of growth claimed by the richest households had not grown so much over the past 30 years. Likewise, wealth for the typical American family would have been $62,000 higher in 2010 had the growth in wealth over these same years not been overwhelmingly claimed by families at the very top. The research also shows that growing income inequality has not been offset by increased mobility. These trends have not occurred by accident; economic policies have undercut the ability of workers to benefit from economic growth.

Use the links below to jump to any of the chapters, or start with Chapter 1 for an overview. If you’re in a hurry, you can read a 10 minute summary of our key findings.

Overview: Policy-driven inequality blocks growth for low- and middle-income families

How well is the American economy providing acceptable growth in living standards for most households? EPI’s The State of Working America, 12th Edition looks at the data and concludes that the answer is simply “not well at all.”

This is not because the economy has failed to grow. National income has grown enough to substantially improve the fortunes for all. As the data reveal, however, it is the top 5, the top 1, and fractions of the top 1 percent that have received almost all the benefits of the economy’s growth.

Income: Already a ‘lost decade’

Income, which includes resources earned from work, returns on investment, and government transfers and benefits (e.g., Social Security, Medicare, Medicaid, and unemployment insurance), is a key determinant of living standards. A comprehensive look at family and household income reveals that growing inequality has led to economic progress for low- and middle-income families that lags far behind the economy’s potential.

Mobility: Not offsetting growing inequality

Essential to the American Dream is the notion that hard work will create the opportunities to succeed regardless of where you start in life or your race, ethnicity, or gender. However, an examination of mobility—movement up and down the income and living-standards ladder—shows that turning this dream into reality has not been getting easier.

Wages: The top, and very top, outpace the rest

Wages and salaries constitute nearly three-fourths of total family income—a share that is even greater for the middle class. Analyses of wage and compensation trends are central to understanding the living standards of American families. Productivity has marched steadily upward over the last three decades while median hourly compensation has lagged far behind.

Jobs: A function of demand

Employment is the foundation of the standard of living most Americans will enjoy in their working age and retirement. A healthy job market is one where willing workers can find decent employment in a timely fashion. When the job market misfires, it’s not just those who find themselves jobless who suffer; rising unemployment places stiff downward pressure on wage growth even for those workers remaining employed.

Wealth: Unrelenting disparities

Wealth, or net worth, is a key determinant of living standards for American families. While liquid assets help families cope with cash emergencies, tangible assets—such as cars, homes, and computers—provide people with opportunities and allow them to participate in work, school, and community life. Wealth is distributed even less equally than income and has seen rising inequality over time.

Poverty: The Great Recession adds injury to insult

Before the mid-1970s, economic growth in the United States was associated with falling poverty rates. If that relationship had held, poverty rates would be a small fraction of what they are today. The decoupling of rising growth and falling poverty, however, means that Americans are working longer and harder but becoming poorer and less economically secure.