Maybe Real Wages Have Been Rising

From Scott Sumner of Money Illusion.

"Paul Krugman has a column discussing the plight of America’s workers:

The point is that extreme inequality and the falling fortunes of America’s workers are a choice, not a destiny imposed by the gods of the market. And we can change that choice if we want to.

We all know that workers have done very poorly in recent decades, but exactly how do we know this?  Michael Darda sent me an email pointing out that real wages have been rising since about 1994 (ironically when NAFTA was enacted), after falling during previous decades.  Here’s a graph showing hourly real wages, where I use the wage series excluding the higher paid managers.  I presume that’s the series people are discussing. I use the PCE price index, which the Fed seems to think is best (I find all price indices to be equally arbitrary).



Obviously I must have made some sort of mistake.  Which data series are the Democrats using to get so hysterical about real wages in America?

PS.  Or maybe I misunderstood the complaint.  Maybe the left thinks average real wages are fine and that inequality is the problem.  In that case workers making more than average (more than $20.80/hour) should see their wages cut while those making less than average should see their pay increase.  Good luck with that platform, given that a sizable chunk of low wage workers are non-voting teens and immigrants."

http://research.stlouisfed.org/fred2/graph/?g=ozZ


Graph: Average Hourly Earnings of Production and Nonsupervisory Employees: Total Private/Consumer Price Index for All Urban Consumers: All Items