Friday, May 1, 2015

Four measures of real wage stagna-- ... er, slight improvement

 - by New Deal democrat

In the last several years, I have written a number of posts documenting the stagnation in average and median wages, for example here and here.  Courtesy of the crash in gas prices, there has been a bit of a change in the last 8 months.

We have a variety of economic data series to track both average and median wages:
  • The most  commonly known measure is that of average hourly pay for nonsupervisory workers, which is part of the monthly jobs report.
  • The Bureau of Labor Statistics, which conducts the household employment survey, also reports "usual weekly earnings" for full time workers each quarter
  • The BLS also measures the Employment Cost Index quarterly.  
  • The BLS also measures "business sector real compensation per hour" quarterly. 
All of these except for the last have now been updated through the first Quarter.  Let's take a look at them.

The first graph tracks monthly average (mean, not median) hourly wages (blue), median wages from the employment cost index (red), real compensation per hour (brown), and median usual weekly earnings (green). All are adjusted for inflation.  Since the quarterly index of median wages only started in Q1 2001, I have normed the indexes to 100 at that time:

The median measure of the Employment Cost Index made a new high.  Real compensation per hour through the end of last year equalled its past highs. Average wages for nonsupervisory workers made a new 35 year high. Only the median measure of real weekly earnings is still languishing well off their 2010 high.

Here is the same data measured YoY:

While this is noisy, it shows the impact of the big decrease in gas prices late in the recession, their increase back to near $4 in 2011 and 2012, and the big decline in late 2014.  Here's a close-up of the same YoY data since the beginning of 2014:

How this breakout is affected by the complete absence of inflation is shown when we look at the raw numbers nominally:

Median wages as measured by the Employment Cost Index did indeed show accelerated growth in Q1, while average wage growth actually decelerated, as did growth in real usual weekly earnings.  So, there's some qualified good news here. Real wages have actually increased by nearly all measures.  But by most measures it isn't due to workers suddenly getting better raises.