Where your raise went

Most companies worship profits and stock prices, which is why wages aren't rising

An empty wallet.
(Image credit: jesadaphorn/iStock)

This is the editor’s letter in the current issue of The Week magazine.

It would seem to be a paradox: The U.S. economy is booming, unemployment is below 4 percent, and corporations are racking up billions in profits. Yet while incomes at the top are soaring, a new Pew Research Center analysis finds that the average American wage, adjusted for inflation, has the same purchasing power it did in 1978. This year, workers are getting average raises of only 2.7 percent — below the 2.9 percent rate of inflation. A majority of Americans say they live paycheck to paycheck. Why isn't more of all the newly created wealth reaching the middle and working classes? Economists cite a host of reasons, but I think the critical factor is this: Most companies no longer feel any obligation to share their success with their workers.

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William Falk

William Falk is editor-in-chief of The Week, and has held that role since the magazine's first issue in 2001. He has previously been a reporter, columnist, and editor at the Gannett Westchester Newspapers and at Newsday, where he was part of two reporting teams that won Pulitzer Prizes.