TRENTON - Despite being one of the largest economic expansions in state history, the boom of the 1990s did not bring real income and wage gains for the majority of New Jersey workers and households. Only those at the top of the labor market emerged from the decade in better shape than they went in.

"Indeed," the report states, "for most New Jersey residents the boom was a story about someone else."

This situation stands in stark contrast to how workers fared in the 1980s, when average employment, output and wage growth were greater. In the 1990s, the tightening of the labor market that helps increase wages at the bottom and the middle came too late and did not last long enough to have a major impact on wage growth.

These are major findings of The State of Working New Jersey: Putting the Boom in Perspective, a comprehensive portrait of changes in earnings and income during the decade of the 1990s. Written for New Jersey Policy Perspective by Leslie McCall, a professor in the Departments of Sociology and Women's and Gender Studies at Rutgers University, the report is based on data from the U.S. Census Bureau, the federal Bureau of Labor Statistics and New Jersey state data. All figures in the report are adjusted for inflation. NJPP is a nonprofit, nonpartisan organization that conducts research on state issues.

During the 1990s the distance between those at the top and those at the bottom of the economic ladder widened substantially, while living standards stayed pretty much the same or declined for those in the middle. And while in many cases the second half of the 90s produced tangible gains, "earnings and incomes never caught up to their previous peaks," the report says.

"This report challenges conventional wisdom," said Jon Shure, president of NJPP. "Below the surface of the economic boom serious deficiencies and differences among gender, racial, ethnic, educational and employment categories are exposed. "The report provides an understanding of the state economic picture that is essential to bring significant policy changes. Such changes should include overhauling a tax structure that over-relies on property taxes, increasing the minimum wage, making unemployment and disability benefits available to more people and initiating paid family leave. We need to not only mend the economic safety net but make it stronger than it has been for years," he said.

The Boom and Wages

Overall, median wages declined in New Jersey during the 1990s. The decline was greater for blacks and Latinos, so existing racial gaps grew. For example, in 1989 black men made 73 cents for every dollar white men made and Latino men made 67 cents. At the end of the 1990s those numbers were 69 and 61 cents.

For women the gaps are narrower and median wages actually rose for black and white (but not Latina) women. Black women made 84 cents for every dollar made by white women in 1989 and in 1999 that dropped to 79 cents. For Latina women the figure went from 78 cents to 69 cents.

While the gender gap in wages narrowed for all racial groups, this was due only in part to women's wages rising. The rest came from men's wages decreasing. At decade's end women made 76.5 percent of what men made in New Jersey, compared to 68.8 percent in 1989.

In large measure, wage declines were primarily not due to people changing from one type of work to another. Rather, changes within industries were by far the major factor. In other words, many people were getting paid less than what they had gotten before for doing substantially the same work.

Using educational attainment as a yardstick, wages fell for all but those who were college graduates. Even among college graduates, wages rose only for women and not for men. Hardest hit were those lacking a high school diploma; their wages fell by 17.6 percent.

The Boom and Income

Household income inequality rose in the 1990s, a phenomenon that occurred among all types of households. All told, households at the bottom end of income levels took in less during the 1990s than households at the bottom took in during the 1980s. The opposite held true for households at the top: they were better off at the end of the 90s than they were at the end of the 80s.

Income inequality between whites and other racial groups didn't increase in the 1990s as much as income inequality between low- and high-income groups overall. But the level remains astonishingly high: throughout the decade, black households made about 58 percent of what white households made and Latino households made 60 percent of what white households made.

Work was less likely to be the route out of poverty in the 1990s than previously had been the case. The working poor constituted 15.2 percent of the workforce at the end of the 90s compared with 13.2 percent at the end of the 80s. Latinos sustained the greatest increase in percentage of working poor. At 25.3 percent, Latinos were most likely to be working poor, compared to 15.8 percent of African Americans and 12.6 percent of whites.

Measured by whether a person makes enough money to be self-sufficient, income insecurity also could be seen to rise in the 1990s. The share of workers not earning a living wage rose to 29.9 percent at the end of the 90s from 27.5 percent at the end of the 80s.

Again, there were improvements in this situation in the second half of the decade (in 1995 the percentage making less than living wage had reached 30.2), but they were not enough to reverse the negative impact of the early 90s recession on the low end of the labor market.

Nearly half of Latinos, one-third of African Americans and one-fourth of whites didn't make a living wage at the end of the 1990s. A living wage at the end of the 1990s was $12.75 per hour for a family of four, compared to the $8.50 per hour officially classified as a wage that puts a family of four above the federal poverty line - or the state's $5.15 per hour minimum wage.

Women at the end of the 1990s were 40 percent more likely than men to make less than a living wage. Almost one-fourth of all men in New Jersey and more than one-third of all women held jobs at the end of the 1990s that paid under a living wage.

TAX REFORM

WORK & WAGES

BUDGET & FISCAL POLICY

TRANSIT ISSUES

ECONOMIC DEVELOPMENT

VOTING & GOVT REFORM

© 2008 New Jersey Policy Perspective