Earlier this week Econlog and Marginal Revolution had a good discussion about an article by
Terry J. Fitzgerald in the Minneapolis Fed Review.
The article goes into a great deal of detail about the weak performance of average hourly earnings in recent years.
One point in the discussion was the new experimental measure of average hourly earnings being developed by the BLS. This measure has been getting a lot of attention lately with the widespread expectations that the new measure would show that the old measure of average hourly earnings has been significantly understating the rate of gain for average hourly earnings.
We now have some 16 months of results from the new experimental measure of average hourly earnings. it shows.
In the first year the new measure grew 3.3% while the old measure expanded 4.0% and over the first 16 months the old measure of average hourly earnings grew 5.4% as compared to a 4.3% increase for the new experimental measure.
So far it looks like the new experimental measure is demonstrating just the opposite results that what was expected by those who believe that average hourly earnings has been significantly understating the income growth of the about 80% of employment that punch a time clock rather than earn a salary or commission or are self employed.