THE Important Graphic from April’s Unemployment Report
What happens when you downsize a large number of people? Well, it depends on the cohort downsized. In this case,
Figure 1
That’s correct; Average Hourly Earnings skyrocketed from $28.67 to $30.01: up $1.34.
For context, that one-month change matches the average hourly earnings growth from September/October of 2018 until March of this year–18 months of increases in a month. And all it took was eliminating the jobs of about 6% of the U.S. population (not just workers).
Taking this to its logical conclusion.
What would the numbers look like if companies laid off everyone but the CEO?
This is really interesting. I wouldn’t have expected such a large change here. The unemployment burden must be heavily weighted on those with lower income.
I can’t decide if this is good or bad news. The implication is that those still working will have more to spend when the economy reopens, but it also implies that as lower wage workers are rehired, it will have less economic impact.
Consider the GDP. The blue states are where economic activity is concentrated and are the ones most tightly locked down. With the possible exceptions of Florida and Texas. a red state reopening will have much less impact.
Hourly earnings are fairly poorly sampled. I
I expect to see this graphic on Faux News as evidence that: a) lock downs don’t work; b) pandemics are good for workers; or c) Trump’s response to the pandemic has resulted in an economic miracle. Probably all three at once in one breathless verbal spew by one of their idiot talking heads.
That is why averages are such a bad statistic. The median will move much less, but better still is average income.
This is of course another reason I am a UBI person and not convinced that strong unions are sufficient (they only help people with jobs – and their power goes down with higher unemployment).
that’s what happens when you pull all of your food service and retail workers out of the average…
this data is distorted by the work at home situation.
In general the people who can work at home are professionals or other highly skilled individuals while the laid-off tend to be the least skilled.
For example,waiters and retail clerks can not work at home
so they are laid-off..
consequently, the lower paid members of the labor force are disproportionally excluded from this years sample of wages while they were included in previous samples. So the sample that is used to calculate average hourly earnings is highly skewed or distorted this year.
the big jump in wages is useless information.