July 6, 2015

NO ONE HAS IT HARDER THAN THEIR FATHER DID:

Just How Stagnant Are Wages, Anyway? (JOSH ZUMBRUN, 7/06/15, WSJ)

But this analysis ignores one of the major shifts in the labor market in recent decades: Employers have paid larger and larger health insurance bills for their employees. "From the employer's standpoint, the costs of each worker is the total package of cash wages and benefits," Mr. Rose writes. And from the standpoint of many employees, too, receiving good health insurance is a valuable part of a compensation package.

When the cost of employee benefits is included in Mr. Rose's chart (using a definition of total compensation from the Congressional Budget Office), suddenly workers are doing quite a bit better. Real median compensation, adjusted for the consumer-price index, is up 25% from 1979. For women, it's up 56% and for men-even after the losses of the recession-compensation is 3% higher than in 1979. That's still a pretty stagnant set of decades for men.

But Mr. Rose argues that one more change is important: using the right inflation index. The personal consumption expenditures price index has generally shown inflation to be lower than the CPI. And many economists believe the PCE is the more accurate index, since it better accounts for the ways that consumers' consumption behavior changes over time. The Federal Reserve, for example, prefers the PCE price index.

When Mr. Rose looked at real compensation, adjusted for the PCE price index, the median worker has seen a gain of 38%. The median woman has gained 73% and the median male 13%.

When a meme seems like it must be wrong, it is.
Posted by at July 6, 2015 1:05 PM
  

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