Yesterday’s New York Times reported that hourly pay is not keeping up with inflation.
Although you can’t read too much into numbers from a month or two, the news should come as little surprise. Adjusted for inflation, hourly pay for “nonsupervisory workers” (i.e., everyone but management) in the United States peaked more than 30 years ago, in 1973. Hourly wages fell from the late 1970s through the early 1990s, and although they recovered somewhat towards the end of the 1990s, they never regained the highs of 1973.
Leaving aside the inherent difficulty of measuring inflation in a time of rapid technological change and rising standards of living, it’s difficult to escape the conclusion that it’s harder for a family with a single earner to make ends meet than it used to be. So perhaps the most telling quote of the article is this:
On its own, the decline in workers’ wages is unlikely to derail the recovery. Though they account for some 80 percent of the work force, they contribute much less to spending.
But what kind of “recovery” is it, if the average earnings of some 80 percent of the workforce are declining? Just one more reason to believe we need a better definition of “recovery”—or, more generally, economic wellbeing.
(Thanks to Kevin Drum Washington Monthly for pointing out the article.)