May 25, 2016

MARKET EFFICIENCY:

Have U.S. wages stagnated? Probably not. (Robert J. Samuelson  May 25, 2016, Washington Post)

Typically, the median wage -- the wage exactly in the middle of all wages -- is cited as evidence of stagnation. Indeed, the Fed study confirms this. Median wage increases have fluctuated around 2 percent, unadjusted for inflation. But the median wage is misleading, the report argues, because it's heavily driven by demographic changes: an influx of young and part-time workers whose relatively low wages drag down the median; and the retirement of baby-boom workers whose relatively higher pay no longer lifts up the median.

"Exiting workers with higher wage levels are [being] replaced by entrants to full-time employment who earn less than the median wage," says the study, which was done by economists Mary Daly and Benjamin Pyle of the San Francisco Fed and Bart Hobijn of Arizona State University. The result is that all workers, as judged by the median wage, seem to be treading water when many workers are actually receiving modest increases.

Posted by at May 25, 2016 3:31 PM

  

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