Has Middle America’s Wages Stagnated?

by Catherine on November 4, 2007

{Click on the image to take a closer look}

I found a Federal Reserve article that analyzed the change in Average Hourly Earnings for production and nonsupervisory workers. After adjusting for inflation using the Personal consumption expenditures (PCE) {instead of the Consumer Price Index-Urban Wage Earners and Clerical Workers (CPI-W)} and including an estimate for worker’s benefits, the author concluded that workers’ hourly earnings (wages plus benefits) actually increased by 16% over 30 years (1975-2005) rather than decreased. Here, I graphed the full history, 1964-2006, but used the approach laid out in the article to show the effect of inflation and benefits. BTW, if you earned $16.76 an hour in 2006 that gave you an annual income of $33,520 (assuming you worked full-time).

[tags]income distribution, income inequality, Federal Reserve, wages, middle class[/tags]

Addendum: This was past on to me from a reader who found it on Marginal Revolution

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{ 5 comments… read them below or add one }

1 Nathan: I’m guessing each of the three graphs represent a group of workers, but what groups? Pretty though.

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2 Michael: Oddly, with the exception of the last graph those trends look pretty flat to me. Still, I’ll grant a 16% increase in buying power over the last thirty years. What’s the chart look like for productivity and overall profits? Is that also 16%? Are the people responsible for the alleged explosion in productivity and profit sharing in the fruits of their labor?

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3 Catherine: The wages are for production and nonsupervisory workers and represents maybe 80 percent of nonfarm wage and salary employees. It is not a perfect measure but it can give some clue as to the trend of wages over time.

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4 Maureen Perry: I would be interested in seeing the average income in US leaving out the top 5% which seems to me skews the numbers

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5 John Blickenstaff: You should include the period before that if at all possible. I would like to see the effect of Taft-Hartley.

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