VICTORY FOR THE PROLETARIAT?….Mickey Kaus claims vindication for burger-stand economics: a week after he posted about an encouraging help-wanted sign at a local In-N-Out stand, official government reports show that unemployment is down and wages are up. Hooray! I wouldn’t get too excited about a single month’s data myself, but hey — fair enough.
Except for one thing. Mickey then goes on to note that “the government’s ‘average hourly earnings’ figures have been controversial in the past because they appear to understate wage gains.” So maybe things are actually even better than the government’s wage figures indicate?
Sadly, no. The study Mickey links to is about alternate methods of calculating average wages. I have no idea if the authors’ critique is reasonable or not. However, Chart 1 makes clear that they think BLS data consistently understates wages, not that it understates wage growth. In fact, over the study period of 1988-1999, their alternate measure increases about 42% while the official BLS data increases 46%. If anything, they’re claiming that the BLS data overstates the rate of growth.
But don’t worry about it. Virtually every measure of middle class and working class wages — median wages, cash wages, cash plus health benefits, lowest quintile, etc. — has been close to flat for over 30 years despite steady gains in productivity during the entire period. 30 years! Tyler Cowen, for some reason, says he is “increasingly of the belief” that this disconnect between wage growth and productivity growth is a thing of the past, but gives no clue why we should believe that. I’d recommend a bit more skepticism that a few months of wage growth really suggests the end of a three-decade pattern of productivity gains going almost exclusively to the wealthy. It’s still a grand time to be rich and powerful in America, and Republican economic policies aim to keep it that way.