The economic recovery has yet to arrive for many Minnesotans and many Americans, according to two new reports issued on Labor Day.

The State of Working Minnesota 2004, the first in a series of briefs by the JOBS NOW Coalition and the Minnesota Budget Project, reveals that nearly three years since the recession ended, wage trends in Minnesota remain disappointing.

"As workers and their families set out to celebrate this Labor Day, many have yet to experience an improvement in their standard of living, despite reports of positive economic trends," said Nan Madden, director of the Minnesota Budget Project, an initiative of the Minnesota Council of Nonprofits.

Wage stagnation in Minnesota
Besides comparing the wage trends of this decade to the wage trends of the previous two decades, the Minnesota report examines some of the causes of the current stagnation in wages for Minnesota workers.

"In the current recovery, 85% of corporate income growth has gone to corporate profits, while only 15% has gone to workers. This distribution is exactly opposite what we?ve seen in the past," said Kris Jacobs, director of JOBS NOW, a St. Paul worker advocacy group.

The brief notes that another important factor contributing to poor wage growth is the decline in the real value of the minimum wage.

The high point in the purchasing power of the minimum wage was 1968 when it was $1.60. The minimum wage would be $8.46 per hour if it had kept pace with inflation, rather than the $5.15 it is today. Approximately 450,000 workers in Minnesota earn less than the inflation-adjusted minimum wage of $8.46 an hour.

Support for higher minimum wage
There is strong support among Minnesotans for raising the minimum wage. According to a poll done by the Minnesota Center for Survey Research, 81% of Minnesotans believe the current minimum wage of $5.15 per hour is too low.

Minnesota continues to be the hardest working state in the country, ranking at the top of most measures of workforce quality. The report concludes: "Minnesota's economic advantage is the quality of the workforce. Our economic development policies must build on that quality and not undermine workers' economic security. The most direct way is to maintain and promote high standards for job quality."

The complete report, The State of Working Minnesota 2004 can be viewed at this link. (Note: The report is a PDF document. You will need to download Adobe Acrobat Reader if you don't already have it.

National conditions have worsened
Nationwide, the economic recovery "has been uniquely unbalanced, characterized by weak job creation and falling real incomes," according to The State of Working America 2004/2005, issued by the Economic Policy Institute. The 9th annual edition of the report ? written by EPI's president Lawrence Mishel, senior economist Jared Bernstein, and economist Sylvia Allegretto ? paints a comprehensive portrait of the condition of the economy and its impact on jobs, wages, wealth, and living standards.

"So far, the recovery has not generated either the quantity or quality of jobs families need to lift their living standards," said Allegretto. "The costs of basic necessities like health care, housing, and college keep rising, and many working families' incomes are not keeping pace."

After almost three years of recovery, the job market is still too weak to broadly distribute the benefits of the growing economy. Unemployment is essentially unchanged, job growth has stalled, and real wages have started to fall behind inflation, the authors said. Today's picture is a stark contrast to the full employment period before the recession, when the tight labor market ensured that the benefits of growth were broadly shared.

Prolonged weakness in the labor market has left the nation with over a million fewer jobs than when the recession began, the report notes. This is a worse position, in terms of recouping lost jobs, than any business cycle since the 1930s.

One positive development over the recovery is the 3.8% annual productivity growth between 2000 and 2003, up from the 2.4% growth in the late 1990s and the minimal 1.4% annual growth from 1973 to 1995.

"This faster productivity growth could be laying a foundation for broad-based improvements in living standards somewhere down the road," said Mishel, "but labor market slack and very unbalanced growth have kept those improvements from materializing. Whether this positive trend will yield benefits for working families in the future will depend on policies yet to be decided."

To read the full report, The State of Working America 2004/2005, go to www.epinet.org