Tuesday, February 3, 2015

Real median wages surged in Q4 2014

 - by New Deal democrat

Something that hasn't gotten much attention from last Friday's GDP report is the brisk increase in real median wages during the 4th quarter of last year.

While the monthly jobs report gives us average wages, median wages aren't reported monthly.  There are several quarterly measures, including usual weekly earnings (which will be the subject of a separate post), and the Employment Cost Index, which is reported as part of GDP.

Here is the quarterly % change in the ECI for wages since the inception of the series in 2001:

In the 4th quarter, we had nearly a 1% increase, the best showing since the last time gas prices plummeted in late 2008.  The other two times the ECI grew by 0.5%+ in a quarter, in 2001 and 2006,  also coincided with substantial declines in the price of gas.

What is perhaps most noteworthy is that median wages grew more than average wages during the fourth quarter.  Here's a graph comparing average wages on a quarterly basis, with median wages from the ECI, normed to be equal at the end of the Great Recession:

As a result, median wages are now also within 0.5% of their highs.  Average wages are only 0.2% below their 35 year high.

That median wages grew faster than average wages suggests that higher wage jobs grew significantly relative to lower wage jobs, a long-awaited boon.