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February 15, 2005

Reply to Matt on Wage [non]-Growth

Matthew Yglesias responded to my post on why most Americans don't think wages have increased much.

I pointed out that real wages for median workers had actually been treading water for the last few decades -- falling in the 70s and 80s, with a small comeback in the 90s. This is important because most Americans are no doubt confused that wage indexing actually promises to increase social security benefits more than indexing those benefits to the cost of living.

The answer is that mean wages, distorted by the hypergrowth in the wages of the wealthy, actually have increased substantially more than inflation.

Matt still wants the average person to be ashamed that they don't recognize that wages are increasing, so he quotes EPI's State of Working America to the effect that "real median family income" continued to grow over the last few decades.

But Matt, "median income" is very different from "median wages," since the growth of median income in the last few decades is tied to more families having both spouses in the workforce. As EPI stated, while real wages made a bit of a comeback in the 90s, "median wages fell from the early 1970s to 1995." Wages can (and do) drop for family members, even as family income can increase due to more total hours worked by multiple members of the family.

The point here is that for many Americans, indexing anything to the rise in inflation sounds like a great idea compared to the uncertainty in wage growth they've seen in the last few decades. Statistically, indexing social security to mean wage growth is a great deal for workers, but it's quite understandable that since median wages have not grown much in the last decades, it doesn't sound so good to them. So this is a dangerous statistical area where the Right has room to play if liberals aren't careful and assume too blithely that wage indexing sounds like such a great deal to the average voter.

One more point- the odd thing is that these numbers actually just make Bill Clinton look rather better than you'd expect (one reason I'm kinder to him than some lefties), since his Presidency is an oasis of wage gains for most workers in a multi-decade desert of falling wage standards. You'd think Matt would be kind of proud of that fact, but he does seem to have some stubborn attachment to the idea that Reaganism was not devastating to workers' lives.

Posted by Nathan at February 15, 2005 03:57 PM