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