Travel Tips
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By Arun Dahal Khatri
I was filled with admiration and high expectations when I came to the United States in 2022 as an international student pursuing Financial Economics. Coming from Nepal, a lower-income country, I naturally assumed that the United States, often hailed as the world's most advanced and prosperous economy, had long solved its fundamental economic problems. Economic security, upward mobility, and financial opportunity were guaranteed here. However, as I began to study more deeply, observe daily life, and speak with fellow students, professors, and working Americans, I realized that the US faces complex and deeply rooted economic issues. One of the most pressing and silent issues is wage stagnation.
At first, wage stagnation sounded like a textbook concept I had encountered in lectures or readings. However, I quickly understood that it is a real and deeply personal issue affecting millions of American workers. Despite decades of economic growth and innovation, real (inflation-adjusted) wages for middle- and low-income workers have remained flat. This means that while workers are producing more and contributing more to the economy, they are not seeing a proportional increase in their take-home pay. The result is that people are working harder than ever but struggling just to stay afloat.
This economic reality clashes sharply with the "American Dream" narrative—the idea that hard work leads to financial success and upward mobility. In practice, wage stagnation makes it increasingly difficult for families to afford essentials like housing, education, healthcare, and childcare. Even though the US has an advanced infrastructure, a robust financial system, and world-class institutions, the average worker often feels stuck. I met students who worked two or three jobs just to pay tuition and rent, and I spoke with professionals in their 30s and 40s who hadn't seen a meaningful raise in years. It became clear that wage stagnation is not just an economic issue but a widespread social and political concern.
The heart of the issue lies in the growing disconnect between productivity and wages. Since the 1970s, worker productivity in the United States has surged, driven by technological advancements, globalization, and education. However, wages have not kept up with this growth. The benefits of increased productivity have flowed mainly to the top 1% of corporate executives, shareholders, and capital owners, while most workers have been left behind. This disconnect has created a severe imbalance in how economic growth is distributed, leading directly to rising income inequality.
Wage stagflation and rising income inequality are twins. While most workers' wages stagnate, the country's wealthiest are becoming exponentially wealthier in historic proportions. The richest 1% of Americans now have more wealth than the bottom 90% of the population. Not only is this economically ineffective, but it's also eroding the country's social fabric. When working citizens feel the system is rigged against them, they doubt institutions, democracy, and the future.
Why has this root issue been so intractable in a country with sufficiently plentiful resources and an energetic scholar and policymaking class? Policy breakdown in preventing wage stagnation results from policy preference, ideological dedication, and institutional shortage. For decades, US economic policy has been under the thrall of "trickle-down economics," the "theory that lower taxes and cuts in business and upper-bracket individual taxation would, in the end, benefit everyone by generating more jobs and wages. As it happened, the trickle-downs never came. Company profits skyrocketed while CEO compensation shot through the roof and the stock markets zoomed, but the median worker's wages inched.".
The second major reason is the breakdown of labor unions. In the mid-20th century, labor unions possessed bargaining power to obtain better wages and protect workers' rights. However, the number of unionized workers declined year by year due to legal limitations, unethical business practices, and political attacks on union members. Workers cannot bargain for better wages, benefits, or working conditions without collective bargaining rights. Globalization and automation are also responsible for wage stagnation. Most middle-wage jobs vanish when companies attempt to lower costs by outsourcing the job to a foreign nation or automating it. While these trends lowered the product's price and were economically sensible, they've left wages stagnant in local manufacturing. Sadly, policymakers never implemented appropriate safety nets and retraining initiatives for out-of-work individuals to transition into the new economy.
Worst of all is the growing influence of business money in politics. Special interest powers do not desire a higher minimum wage, more worker protections, or taxing the wealthy. The result has been legislative gridlock and diluted reforms that do not confront the root cause. Politically, the process is in the hands of special interests thriving due to the system. Perhaps most troubling is the growing influence of corporate money in politics. Powerful lobbying groups often push against policies raising the minimum wage, expanding worker protections, or increasing taxes on the wealthy. This has led to legislative gridlock and watered-down reforms that fail to address the root of the problem. In many ways, the political system has been captured by special interests that benefit from the status quo. As an economics student, I've been fascinated by how macroeconomic theory interacts with real-world policy. I've lived in the US, where even the most advanced economies can suffer from deep internal contradictions. While the US economy is vast and dynamic, its rewards are not evenly shared. Economic success is increasingly concentrated at the top, while millions of workers are left treading water. This is not just a policy failure; it is a failure of vision.
The consequences of wage stagnation extend far beyond paychecks. It leads to lower consumer spending, rising household debt, declining savings, and reduced investment in education and health. It also exacerbates political polarization and social instability. When people feel left behind economically, they are more likely to support extreme political movements, distrust democratic institutions, and lose hope in the future. But there is still room for optimism. The US has the tools and talent to reverse wage stagnation; it needs the political will. Policies that raise the minimum wage, strengthen labor rights, reform tax structures, and invest in quality education and healthcare can make a real difference. We also need to rethink what economic success really means. It's about GDP or stock market returns, whether everyday people feel secure, valued, and hopeful about their lives.
As someone from a country where poverty and scarcity dominate policy discussions, I have learned that prosperity brings its own challenges. Wage stagnation is America's crisis. It doesn't headline like inflation or unemployment, but it eats away at the foundations of the middle class and the American Dream. It threatens the economy and the social contract that holds this country together if left unaddressed. My journey from a wide-eyed international student to a critically engaged economic thinker has taught me that every country, no matter how advanced, has blind spots. In the case of the United States, wage stagnation is one of them. Solving it is not just a matter of economics—it's a matter of justice.