The U.S. unemployment rate reached 9.7% in August and millions of workers who have kept their jobs have seen hours, wages, or some other form of compensation such as retirement plan contributions, cut. In a new Briefing Paper published ahead of the Labor Day weekend, EPI President Lawrence Mishel and Economist Heidi Shierholz discuss how whats bad for the worker is bad for the overall economy. These lost wages, the authors note, do not just lower living standards, they threaten to further delay an economic recovery.
It will be a drag on the economy, Mishel and Shierholz write in the paper, The Recessions Hidden Costs. Wage growth is central to the growth of household consumption. That consumption is required if we are going to lift the demand of goods and services, a demand that is essential for a robust economy.
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