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In one of the starkest illustrations to date of the uneven recovery from the recession, a new study finds that the gap between high and low earners in the District is at its greatest in 35 years.
The report, from the D.C. Fiscal Policy Institute, analyzes Census Bureau data to conclude that hourly wages for low-income workers have been flat since 2007, and some groups have substantially higher rates of unemployment than before the recession. Meanwhile, wages for the top 20 percent of earners have continued their steady climb to reach their highest mark of the past three and a half decades.
The bottom fifth of earners have seen their wages rise by just 7 percent since 1979, while the average worker’s wage has grown by 35 percent and the top fifth have gained 55 percent.
“The gap between low- and high-wage earners in the District is the widest it’s been in 35 years,” Ed Lazere, DCFPI’s executive director, said in a statement. “As the cost of living in D.C. continues to rise, more must be done to help residents earn a living wage.”
Because the recovery in wages has been so uneven while housing and other costs grow, the recovery years have actually been harmful for many low-income Washingtonians and Americans. Here and elsewhere in the country, family homelessness has spiked during the recovery, as decent jobs for people lacking college degrees are scarce but housing costs rise.
The recovery has also had a disparate impact among racial groups. The overall unemployment rate in the city has declined since the recession, although at 7.6 percent last year, it’s still higher than the pre-recession 5.5 percent. But for black Washingtonians, unemployment is far more prevalent—stuck at 16 percent, compared with 10 percent before the recession. That’s more than four times the unemployment rate for white residents.
Likewise, while D.C. residents with a bachelor’s degree have fared well throughout the recession and recovery, never even reaching 5 percent unemployment, the unemployment rate for those with just a high school diploma or no diploma at all has hovered near 20 percent. Still, the latter rate has dropped slightly since its peak immediately following the recession.
The D.C. region’s economy has been something of an anomaly in the past seven years. The area weathered the recession better than nearly all others, buoyed by steady federal employment. But since the recession ended, D.C.’s economic growth has slipped from the among country’s best to its very worst. According to the DCFPI report, private employment provided nearly 35,000 more jobs at the end of 2013 than it did in 2007. But government employment has dropped since 2011, contributing to sluggish growth since that time.
The report praises the ongoing increases to the city’s minimum wage as a start to addressing the growing wage gap, but says the new Muriel Bowser administration must do more. Most of the recommendations don’t address wages specifically, but instead focus on supports to help disadvantaged residents work, such as job training, child care, and paid family leave. Bowser’s already made one move of which Lazere and DCFPI surely approve: She recently tapped Jenny Reed, a former top DCFPI staffer, to be her deputy budget director.
Charts from the report