The myth of wage stagnation
Over the last few decades, employees have been receiving an increasingly larger portion of their overall compensation in the form of benefits such as health care, paid vacation time, hour flexibility, improved work environments and even daycare. Ignoring the growth of these benefits and looking at only wages provides a grossly incomplete picture of well-being, and the increase in compensation for work. While it is difficult to adjust for all of these benefits that workers are now receiving, one measure of wage and salary supplements show they have nearly tripled since 1964. Total compensation, which adds these benefits to wages and salaries, shows that earnings have actually increased more than 45 percent since 1964.
.. Furthermore, “purchasing power,” the amount of stuff people can buy with each dollar, has changed dramatically over the last half decade and, surely, must be considered when evaluating the state of the average worker based on his or her take-home pay. CPI is notorious for overstating inflation, and thus understating the growth of real wages received by workers. Adjusting the data with the more appropriate Personal Consumption Expenditure index brings the growth in average hourly wages from 5.58 percent to more than 35 percent and the growth in total compensation of employees from more than 45 percent to more than 87 percent.
.. According to the economist Mark Perry of the American Enterprise Institute (AEI), 100.5 hours of work was required to purchase a washing machine in 1959 compared to just 23.3 hours of work (for the average worker) in 2013. Purchasing a TV demanded an astounding 127.8 hours of work in 1959, whereas a worker in 2013 could purchase one with only 20.7 hours of work.
.. Daniel J. Smith is an assistant professor of economics at the Johnson Center at Troy University, a research and educational center dedicated to understanding the moral imperatives of free markets and individual liberty.