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Real Wages Declining?

http://www.lraonline.org/charts.php?id=8

Chart shows real wages going down.
Source: U.S. Bureau of Labor Statistics
in real life, we are a hell of a lot richer than we used to be. you can work at McDonalds and buy a computer now that is far better than computers only the very rich could afford 30 years ago.

hmm, so how do they do it? (make the statistics lie so much)

well first of all they divide the number of jobs by the total amount paid out in a week. if you get a part time job b/c your parents are rich and give u half ur money, you just lowered the "real wages" per week! all the college students with part time jobs are lowering "real wages". they (bureau of labor statistics) even say their real wages statistic is a lot lower than the real wages for full time workers.

worse, if you get 2 half-time jobs, then you have added 2 to the job count, so you lower real wages compared to having one full time job. yes, it's that stupid. "real wages are going down" could mean "ppl have more jobs for less hours"

next, if ppl work less hours per week (b/c they are rich enough they don't have to) then the "real wages" go down. that's another way the numbers come out dead wrong.

and next they tie these real wages to the consumer price index (CPI-W). this is supposed to measure how much people have to pay for the same basket of goods. so essentially it takes inflation into account.

what's wrong with the CPI-W? well to start with, it takes into account sales tax. if sales tax goes up, "real wages" go down. there is a sort of logic to that, but that's nothing to do with how productive we are. and it doesn't take into account income tax though, for some reason, so that seems inconsistent.

all this stuff so far probably isn't nearly bad enough to get real wages to appear to go down. so what else did they do?

the idea of the CPI-W is to figure out how much it costs to buy a basket of representative goods. they represent the cost of living. so it has food, rent, etc.

http://en.wikipedia.org/wiki/United_States_Consumer_Price_Index
Because people's buying habits had changed substantially, a new study was made covering expenditures in the years 1934-1936, which provided the basis for a comprehensively revised index introduced in 1940. During World War II, when many commodities were scarce and goods were rationed, the index weights were adjusted temporarily to reflect these shortages. In 1951, the BLS again made interim adjustments, based on surveys of consumer expenditures in seven cities between 1947 and 1949, to reflect the most important effects of immediate postwar changes in buying patterns. The index was again revised in 1953 and 1964.

In 1978, the index was revised to reflect the spending patterns based upon the surveys of consumer expenditures conducted in 1972-1974.
wait? they changed what"s in the basket. if ppl start buying stuff that is more valuable, they put that in the basket and call that the new cost of living. it's the cost of living a new and richer life style. so saying that real wages decreased when you update the "cost of living" to include a richer life style is totally missing the point. it's a bit like saying people keep spending the same proportion of their money, and therefore life isn't cheaper.

Elliot Temple on April 7, 2007

Comments (2)

actually it's true: real wages have decreased

You're missing it. Certain things are cheaper than they were years ago, not because we're getting richer. It's because production is getting cheaper. What I mean is the process of manufacture is refined and automated making it less expensive to build things...like computers.
You should think about these points: What percent of the average person's income is spent on housing, food, clothing, transportation? Then you can figure out real wages. Discretionary income will always be spent with discretion. Unfortunately real wages have declined over the last 30 years, and will continue to decline as everyone suffers from socialist elements leeching value out of our society.

mr. burns at 2:46 PM on August 23, 2009 | #1882
You have to factor in quality. Many people buy higher quality housing, food, and transportation than was available or affordable to people in the past. It makes sense that as people get richer they'd spend more in the same categories to get better stuff.

Elliot at 2:49 PM on August 23, 2009 | #1883

What do you think?

(This is a free speech zone!)