Wednesday, November 19, 2014
Trends in wages - some comments
- by New Deal democrat
My biggest focus now is what is happening with wages. I've done quite a bit of number-crunching, but I have to do more time consuming number crunching in order to make the results more presentable.
In the meantime, let me tell you what the general results are:
1. It isn't just a low wage recovery any more. In the last 18 months, 1/3 or more of all jobs created have been high wage jobs. Mid wage jobs, however, are still lagging.
2. Almost all measures of wages, both average and median, have been slowly rising this year, and in particular rose in the third quarter.
Once I have the inflation adjusted charts and graphs ready, I'll post in more detail.
In the meantime, the Economic Policy Institute published an update on wages through the first half of this year, indicating that real wages fell slightly compared with the first half of 2013 across almost all income classes. Although I question the metric - why measure first half to first half of years, if the data is seasonally adjusted? - this is a good and thorough read. I suspect the EPI arrived at a contrary result - wages slightly falling vs. slightly rising - because their source data was from the same panel that the BLS used in its "usual weekly earnings" series. This data had an anomalous big decline in the second quarter, that wasn't present in any other series. BTW, it rebounded in the third quarter.
In the larger view, I share the dismay that wages have been stagnant since the turn of the Millennium, and even as far back as since the 1970s, especially where so much income and wealth has been funneled to the very topmost segment of society. It is simply not an economy which is functioning well if most of its participants do not benefit, or benefit very little, from its growth. In the 1980s, the middle class coped by spouses joining the workforce, and by refinancing debt at lower interest rates. The refinancing at lower rates continued periodically throughout the 1990s and 2000s. Some people benefitted - temporarily at least - from participating in the stock or housing market bubbles.
This is not going to happen any more. Income gains by the middle and working class in the US has since 2009 and will in the future continue to happen, when it happens, the old-fashioned way: by actual real growth.
Tomorrow October consumer inflation will be reported. If it declines as expected, that may mean a significant jump in real average wages. I'll follow up then.