U.S. Wage Growth Is 'Higher Than We Think,' Fed Researchers Say
industryweek.com
industryweek.com
But it doesn't offer numbers about an unweighted average because the unweighted average is -worse-. Tech workers' mid & high level salaries have been keeping a good pace with inflation (even after adjusting to the CoL effects in areas like silicon valley) it's low income workers who have been hit the worst by our modern economy with their hourly wages well behind simple inflation adjusted figures from three decades ago.
This is just... a terribly written article sadly. It's like if you were to say "Global warming is going to be 2-3 deg C" and I argued "No, you're wrong, your numbers are highly suspect and thus I deny climate change (because I am getting figures closer to 4.5 deg C)"... can we classify this type of article as "kicking over the other's kids toys"?
What people are actually citing is a metric that gives greater weight to higher earners than lower earners-- that metric is called Average Hourly Earnings (AHE). The name is confusing: it implies an unweighted average (because the word 'average' alone implies adding up all data points, then dividing by the number of points), but in actuality it's weighted.
If you calculate wage growth the way people assume it to be (an unweighted average), that growth number is greater.
They make a correct observation that the average worker experiences more wage growth than is shown by growth in average wage. But this does not in any way show "what we thought was right is actually wrong" (a naive person might incorrectly their wages will average follow statistical average wages and the observation debunks that, however that's not the conception they claim to debunk). It is more of an apple to oranges comparison. Yes, the average worker experiences both wage growth based on increased averages and wage growth from moving from moving up in their occupation but this second part isn't relevant for any policy discussion of wages, any evaluation of overall benefits people get from society, etc. Averages are average wages, changed each year indeed roughly by continuing workers getting a raise, new workers entering the workforce and older workers retiring - this rough average is what families deal with.
And, of course, their "remarkable" statistical observation isn't a situation that began yesterday but has been true for a long time (including times when inflation-adjust wages were higher, etc).
Over the last decade, engineer pay certainly hasn't kept up with increases in cost of living expenses, especially in places like SF or NYC.
[1] https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs...
This is a statistical effect that has always existed and is fairly well known. Yes, the average worker experiences more wage growth than the statistical value of "growth in average wages" because the average workers starts at the lowest salary in their and gradually progresses higher. That's how individuals experience things but that does not in any way mean that median wages and growth median wages is a flawed statistic. It's reminder for anyone looking multiple measures of income and wealth to look carefully (I've seen economic professors incompetent enough to ignore these but that's a different issue).
a.) Fed raising interest rates to a normal level. Government bonds are now earning close to some of the faster developing countries, without the risks.
b.) Brexit impacting the growth of EU. Germany narrowly avoids recession....for now. But grew only 1.5% in 2018. There's still the matter of a possible US tariff on EU automobiles. And Italy/Greece/Spain debts are still a thing.
c.) Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%. Overall car sales dropped 13%. Stock market dropped 22%. Real estate sales in January 2019 dropped 44%.
d.) Asian countries impacted by China's fall. South Korea's export to China dropped 14% in 2018. Japan dropped 8%. Taiwan dropped 10%. Singapore dropped 8%.
e.) Uncertainties and high debt ratio in developing countries, prompting money to seek safe harbor. Tariff and protectionism impacts.
f.) lastly, US is growing at a healthy 3% in 2018
Global economies are linked. If China isn't doing well, there's a risk that could spill over into other countries (point D), and that includes the US.
Are we saying that the US is doing well, but China is doing poorly because, all else equal, if the China-US trade discussions do not end well, it harms China more than it harms the US? It would certainly hurt both economies. Costs for goods would rise in the US. US Consumers buy less, consumer confidence slides, 70% of economic activity is consumer spending, etc.
There was a study done (can't find the link atm) regarding the impact of the tariffs on US consumer goods, and what they found was that the impact on US goods were negligible. The Chinese suppliers usually ate the tariff cost, which cuts into their margin. This in turn either bankrupts the company - because the private enterprise in China has been suffering from massive debt and government preferences for state owned enterprises - or it prompts the company to move the factories to Vietnam or other places.
> Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%.
Doing better than a "crumbling economy" doesn't mean you're doing stellar. That's setting the bar very low, and then saying "see, we beat it". It isn't necessarily confidence-inducing, even it is better than the others.