That wages thing..

Leitwolf — Tue, 09 Oct 2012 00:57:26 GMT

Hello everyone

I followed the discussion below ("the myth of faling wages") and got a bit confused over apparently contradicting data. Personally I have no opinion over real wages in the USA. From an Austrian perspective it would be hard to assess anyway.

So I looked up the data myself in order to make sense of it. The "Economic Report of the President" clearly indicates falling wages. Basically there would be a sharp fall between 1973 and 1993. You may want to check these data in the link below, or the table I have posted myself.

http://www.gpo.gov/fdsys/pkg/ERP-2012/xls/ERP-2012-table47.xls

These falling wages however are not consistent with the overall payroll figures. You may relate them either to the number of employees (full time equivalents), or the amount of hours worked (by employees). If you follow this way, you would see rising wages / incomes. I do not present the maths in the table below, but you could easily do it yourself, if you wanted to.

So why is that?

Here is one possible explanation:

http://www.bls.gov/news.release/realer.t02.htm

http://www.bls.gov/news.release/realer.t01.htm

These two tables tell, that wage levels are about 20% higher, if "supervisory employees" are included. The first table, excluding them, would give the same data as in table47 of the presidential report. Thus suggesting, this report was excluding "supervisory employees" as well.

So is that the explanation over all the confusion? It seems so. Yet there are some open points, maybe you could help me with that.

1. What sense does it make to distinguish between normal and supervisory employees? In economic data, that must cause awfull confusion. I have never seen something like this in european statistics. And of couse: where do you draw the line?

2. Table 47 is named "Hours and earnings in private nonagricultural industries". There is no hint, that it would be excluding a specific group of employees.

3. In order to compensate for the falling wages of "normal employees" those with a supervisory function would need to have seen enormous gains. And few top manager would not make a lot of a difference. The middle management has earned better than the average in the 70ies already. Did it yet manage to improve it's relative position that much?

4. Even with the obove explanation, the figures still do not add up. Divided by hours worked, wages & salary accruals would amount to 29,2$ an hour, total compensation would result in 36,3$ an hour.

That compares to 19,5 (excluding) and 23,1 (including supervisory..) $ per hour. So..

5. Is this a matter of definition, gross vs. net wages ? If so, the tax rate would have risen very strongly since the 70ies..?

	Wages:		Emp - full time equ	hours worked	total comp.	wages & salary
	per Hour	per Week	in Mio	in Bio	in Bio $	accruals in Bio$
1970	3,40	125,80	71,23	140,82	617,2	551,6
1971	3,63	133,58	70,85	140,04	658,9	584,5
1972	3,90	143,91	72,67	144,13	725,1	638,8
1973	4,14	152,77	76,03	150,31	811,2	708,8
1974	4,43	161,25	77,14	150,55	890,2	772,3
1975	4,73	170,28	75,38	146,46	949,1	814,8
1976	5,06	182,67	77,71	150,69	1.059,3	899,7
1977	5,44	195,30	80,42	155,78	1.180,5	994,2
1978	5,88	210,50	84,51	162,94	1.335,5	1.120,6
1979	6,34	225,70	87,30	167,63	1.498,3	1.253,3
1980	6,85	241,12	87,22	166,63	1.647,6	1.373,4
1981	7,44	261,89	87,98	167,77	1.819,7	1.511,4
1982	7,87	273,09	85,82	163,78	1.919,6	1.587,5
1983	8,20	286,18	86,35	166,08	2.035,5	1.677,5
1984	8,49	298,00	90,63	174,21	2.245,4	1.844,9
1985	8,74	305,03	92,98	177,61	2.411,7	1.982,6
1986	8,93	309,87	94,66	179,58	2.557,7	2.102,3
1987	9,14	317,16	97,30	184,79	2.735,6	2.256,3
1988	9,44	326,62	100,14	189,67	2.954,2	2.439,8
1989	9,80	338,10	102,76	194,93	3.131,3	2.583,1
1990	10,20	349,75	103,89	196,44	3.326,3	2.741,2
1991	10,52	358,51	102,40	192,29	3.438,3	2.814,5
1992	10,77	368,25	102,51	193,32	3.631,4	2.957,8
1993	11,05	378,91	104,03	196,70	3.797,1	3.083,0
1994	11,34	391,22	106,78	202,07	3.998,5	3.248,5
1995	11,65	400,07	109,75	207,46	4.195,2	3.434,4
1996	12,04	413,28	111,90	210,16	4.391,4	3.620,0
1997	12,51	431,86	114,72	216,60	4.665,6	3.873,6
1998	13,01	448,56	117,76	222,35	5.023,2	4.180,9
1999	13,49	463,15	120,33	226,89	5.353,9	4.465,2
2000	14,02	481,01	123,01	230,61	5.788,8	4.827,7
2001	14,54	493,79	123,19	227,73	5.979,3	4.952,2
2002	14,97	506,75	122,01	225,63	6.110,8	4.997,3
2003	15,37	518,06	121,43	224,10	6.382,6	5.154,6
2004	15,69	529,09	122,55	226,65	6.693,4	5.410,7
2005	16,13	544,33	124,78	229,54	7.065,0	5.706,0
2006	16,76	567,87	127,04	234,82	7.477,0	6.070,1
2007	17,43	590,04	128,43	238,16	7.855,9	6.415,5
2008	18,08	607,95	127,38	234,70	8.068,3	6.545,9
2009	18,63	617,18	121,08	222,52	7.806,4	6.275,3
2010	19,07	636,91	120,30	223,33	7.971,4	6.408,2
2011	19,44	653,16	121,76	227,28	8.242,4	6.636,3

Economics Questions

That wages thing..