Real wages decline; literally no one notices
Cross-posted from Middle Class Political Economist.
Your read it here first: Real wages fell 0.2% in 2012, down from $295.49 (1982-84 dollars) to $294.83 per week, according to the 2013 Economic Report of the President. Thus, a 1.9% increase in nominal wages was more than wiped out by inflation, marking the 40th consecutive year that real wages have remained below their 1972 peak.
Yet no one in the media noticed, or at least none thought it newsworthy. I searched the web and the subscription-only Nexis news database, and there are literally 0 stories on this. So I meant it when I said you read it here first. In fact, there was little press coverage of the report at all, in sharp contrast to last year.
Below are the gory details. The data source is Appendix Table B-47, “Hours and Earnings in Private Non-Agricultural Industries, 1966-2012.” The table has been completely revised since last year’s edition of the report. The data is for production and non-supervisory workers in the private sector, about 80% of the private workforce, so we are able to focus on what’s happening to average workers rather than those with high incomes.. I use weekly wages rather than hourly because there has been substantial variation (with a long-term decline) in the number of hours worked per week, from 38.5 in 1966 to 33.7 in 2012. The table below takes selected years to reduce its size.
Year Weekly Earnings (1982-84 dollars)
1972 $341.73 (peak)
1975 $314.77
1980 $290.80
1985 $284.96
1990 $271.10
1992 $266.46 (lowest point; 22% below peak)
1995 $267.17
2000 $285.00
2005 $285.05
2010 $297.79
2011 $295.49
2012 $294.83 (still 14% below peak)
This decline is especially amazing when we consider that private non-farm productivity has doubled in this period:
Update: Jon Talton at the Seattle Times has now taken note of this.
THEIR wages didn’t decline.
In fact, they got raises.
In the millions.
Not to mention it.
Thanks for the reporting!
S
Mention wage decline and be accused of class war? Mention wage decline and run the risk of bring up all that nasty union busting right to work stuff?
The “old days” had 2 news streams. One Wall Street/business and the other labor. Wall Street bought the labor news outlets.
Peter Dorman at Econospeak takes a look at the propaganda capital/labor relationship in Europe as part of the ho hum reactions.
http://econospeak.blogspot.com/2013/03/dishonest-data-draghi-edition.html
I don’t believe the following argument is an “excuse” for stagnant wages for workers, but I think you need to be able to answer it:
suppose that I own a company that manufactures hats.
Suppose I have a hundred workers who can make one hat per hour, which I can sell for thirty dollars apiece. I pay the workers twenty dollars per hour, and I pay myself one dollar per each worker. That means I make a hundred dollars per hour. The other nine dollars goes to costs.
First, is my hundred dollars, compared to the workers twenty, per hour, so “unequal” it shocks the conscience? Should i cut my “pay” to 21 dollars per hour so I can afford to pay the workers 20,80 per hour? and then what happens to the 30 dollars per hour I was paying in taxes?
Second, if I find people are willing to pay 40 dollars per hat, can I keep the extra ten dollars… and now I am making 1000 dollars per hour (and paying 300 in taxes), or “must” i give the workers that extra ten dollars per hat (hour)?
Third, if I find I can sell a thousand hats (per hour) at the original 30 dollars, so I hire another 900 workers… at the original 20 dollars per hour, and at one dollar per hour per worker i am now making 1000 dollars per hour… am I being unfair to the workers?
one could take this a little further.
assuming the $295.49 (that 49 cents is material I guess) in 1982 dollars is about 800 in current dollars…
this is not “poverty.” it could even be that it represents something like “all the traffic can bear”… that is, we are up against something like a “limit to growth.”
the money that the very rich have, if redistributed to the “99%” would add something like ten thousand a year (i am guessing) to average waqes. This would be nice at first, and very quickly become unnoticeable. The extra 100k you would spend on a house, or extra 10 k on a car would make you feel “rich” at first.. until you noticed that everyone else had the same car, and the house is the same house you could have bought for 100k less before everyone got a pay raise.
Meanwhile, I am not sure the “money” that goes to the rich is real. It gets “invested” in gambling more than actual production, and gets lost, or the winnings get re-invested in more gambling, until there is a huge amount of “wealth” circulating in the “investment market” that never returns to earth… or when it does, gets pissed away in bottles of champagne.
Don’t get me wrong. I think “inequality” is a real problem. But we need to do a lot better job of defining what that problem is. It is NOT simply the fact that the rich are richer, or that the poor middle class is not.
and yes, we might want to take a careful look at whether it is better for the excess money of the rich to be returned to the economy in the form of the purchases those rich make, or in the form of taxes for the purchases government might make.
currently i favor the latter, but given what passes for government these days, i am not so sure. in either case i don’t think an “ideological” answer will serve.
Thomas says,
“I use weekly wages rather than hourly because there has been substantial variation (with a long-term decline) in the number of hours worked per week, from 38.5 in 1966 to 33.7 in 2012.”
if the decline in hours worked were voluntary and “equitable” among the workers themselves… so that some workers are not working zero hours per week while others are working sixty…
this would be a HUGE increase in standard of living.
time may not be money. it is MUCH, MUCH more valuable than money.
Shorter work time is the key to more freedom and less wage-slavery.
Productivity has gone up, up, up. But under the wage system the product is not owned by the producers; it is owned by others who sell it for profit. The producers get to sell their productivity for an ever falling real wage.
“Real wages decline; literally no one notices”
if that was true this article wouldnt be here for a start, and you have no way of knowing what everyone else notices either.
No one published anything before me. And I know because of 1) Google; 2) Nexis premium news service; and 3) It was too recent for academic publication. But feel free to “meh” all you want.