Thursday, November 13, 2014

The mighty Krgthulu has spoken: median income =/= median wages

 - by New Deal democrat

I've called median household income The most misused statstic in the econoblogosphere.  People routinely cite it to claim that wages have fallen since the onset of the Great Recession.  They have not.

The "households" included in the statistic include all those headed by anyone over age 16, including the burgeoning cohort of elderly retirees. Even excluding that age cohort, it includes households including the unemployed.  Strip out the elderly and adjust for unemployment, and household incomes show the same stagnation as wages.

But now the authoritative voice of Krgthulu Has spoken
although Leonhardt talks about wages, the chart he shows is median income, which is a somewhat different story. Wages for ordinary workers have in fact been stagnant since the 1970s, very much including the Reagan years, with the only major break during part of the Clinton boom.
 I hereby invoke Delong's Rule:

1. Paul Krugman Is Right. 2. If You Think Paul Krugman Is Wrong, Refer to #1