A Closer Look

Wages in US – What is really happening ?

Over the past 12 months, average hourly wages rose 3.2 percent, according to the latest jobs report from the Bureau of Labor Statistics. But the longer-term story is contested. Many analysts and commentators lament the situation of stagnating wages, while others celebrate wage growth. To take just two of hundreds of examples, our colleagues in the Hamilton Project here at Brookings report “long-run wage stagnation for lower-wage workers”, while Michael Strain over at AEI writes that “the wages of a typical worker have increased by 32% over the past three decades. That’s a significant increase in purchasing power”. Though we would be remiss if we did not point out that this corresponds to less than a one percent increase per year.

The honest but boring answer to the question of what is happening to wages is: It depends. Specifically, it depends on how you measure it. As so often, methodology really, really, really matters. In the case of wage growth, four analytical decisions bear heavily on the results: which time period, which deflator, which workers (by gender), and which workers (in terms of position). We discuss each of these four below and show how they influence the wage story.

Chosen excerpts by Job Market Monitor. Read the whole story at Are wages rising, falling, or stagnating?

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