US wage inequality on par with poor Latin American countries, warns analyst

Despite claims by the US federal government that the economy is doing well, average wages have barely budged (after inflation) over the last 40 years - and for those with the bottom 90% of salaries are falling behind.

The problem in developed countries, such as the UK, Germany, and soon China, is that economic growth is distributed very unevenly, and this is particularly true in the US. According to an analysis of data from the World Bank and the Organization for Economic Cooperation and Development by analyst Josh Bersin of Bersin by Deloitte in a blog on LinkedIn,  US inequality is on par with many poor Latin American countries.

As a result, Bersin said that employers should consider whether they are paying employees enough. Paying people well is an investment, not an expense, with the companies that outperform in today’s economy generally offering the highest salaries in their industry, he added.

To make matters worse, any wage increases are being slowly eaten away by benefits. Since 2000, the percentage of payroll spent on benefits has increased by 32%. Almost half of this figure has gone on a rise in health care insurance premiums, while the rest was spent on retirement and wellbeing perks that employees badly need.

As a result, Bersin said that employers would be advised to continue investing in wellbeing programmes - which have a huge impact on reducing healthcare costs in the US - along with retirement and savings initiatives, financial wellbeing schemes, and the like to help employees lead healthy and fulfilling lives.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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Despite claims by the US federal government that the economy is doing well, average wages have barely budged (after inflation) over the last 40 years - and for those with the bottom 90% of salaries are falling behind.

The problem in developed countries, such as the UK, Germany, and soon China, is that economic growth is distributed very unevenly, and this is particularly true in the US. According to an analysis of data from the World Bank and the Organization for Economic Cooperation and Development by analyst Josh Bersin of Bersin by Deloitte in a blog on LinkedIn,  US inequality is on par with many poor Latin American countries.

As a result, Bersin said that employers should consider whether they are paying employees enough. Paying people well is an investment, not an expense, with the companies that outperform in today’s economy generally offering the highest salaries in their industry, he added.

To make matters worse, any wage increases are being slowly eaten away by benefits. Since 2000, the percentage of payroll spent on benefits has increased by 32%. Almost half of this figure has gone on a rise in health care insurance premiums, while the rest was spent on retirement and wellbeing perks that employees badly need.

As a result, Bersin said that employers would be advised to continue investing in wellbeing programmes - which have a huge impact on reducing healthcare costs in the US - along with retirement and savings initiatives, financial wellbeing schemes, and the like to help employees lead healthy and fulfilling lives.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

A complete guide to minimum wages across China

Growth in global wages worst since financial crisis, says ILO report 

Significant pay gap still fact of life for black women in US