Every time I watch the Democrats debate each other, I can count on at least two things:
1. Unanimous agreement among the candidates that "wages have been stagnant" since the year 2000.
2. No pushback at all from the moderators, the audience, or the post-debate analysts.
Why is everybody letting the candidates get away with that misleading half-truth?
"Wages" versus "Compensation"
To illustrate, let's say a friend of yours came to you for some advice as to which job offer she should accept:
• Job offer 1: Wage is $20.00 per hour; no benefits.
• Job offer 2: Wage is $20.00 per hour; benefits are health insurance, plus a matching 401K retirement savings plan.
Assume all other aspects are equal. Given that the wages are identical, which job offer do you advise your friend to accept? Why?
Obviously, "compensation" is more than just wages alone. Compensation also includes the benefits. (In 2007, the average worker enjoys $41 in benefits on top of every $100 collected in wages.) So, that begs the question, Has workers' real compensation been stagnant since the year 2000?
Fortunately for us (and for the presidential candidates), the Bureau of Labor Statistics (BLS) can help us out. They've indexed real compensation (i.e., adjusted for CPI inflation) quarterly for the last 24 years, through Q4 2005, and published it on their data-rich website. Their index uses Q4 2005 as the base quarter for calculating the index. Here's how the BLS describes their compensation data: "The Employer Costs for Employee Compensation product is a quarterly survey that shows the employers' average hourly cost for total compensation and its components."
I charted the BLS numbers, and calculated the change in real compensation for the six years from Q4 1999 to Q4 2005. A pleasant surprise: real compensation per hour has been the opposite of "stagnant"; in fact, it grew by 6.7% in the 2000-2005 interval. That's better growth than any six-year period in the last twenty years, including 1995-2000.
Click to enlarge:
Now that we've discovered that encouraging data, I optimistically anticipate that one of the following two things will happen, any time now:
• The Democratic candidates will correct their rhetoric, and begin praising the trend in workers' compensation since the year 2000; OR...
• The candidates will change nothing, sticking with half-truth talk about "wages"—but will be properly embarrassed by moderators, or audience members, or post-debate analysts who will ask them follow-up questions about the robust growth in workers' compensation since the year 2000.
Which of those two do you think will happen? [It's a good thing I'm not a pessimist, or I'd have to lean towards a third possibility: The candidates will change nothing, and nobody will call them on it.]
• BLS web page (see "ECI Constant-Dollar historical listings, SIC basis").
• BLS text file with several cuts at the data; I used data from Tables 3 and 4.