My Own Measures and What the Statistics Say
By Steve Gillman - October 17, 2015
(Photo by Bill Jacobus on Flickr)
Are wages going up or falling? You might think it's an easy
question to answer, but there are so many different ways to measure
how much we make that it is difficult to know exactly what's
happening to employees in the United States.
For example, should we look at household income as being indicative
of how well people are doing? The problem with this figure is
that it might remain the same as more and more households have
two people working or employees work longer hours. Can we really
say that we're doing no worse if we need to work harder than
ever to make the same amount of money?
I have my own ways of comparing what I experienced in the
past to the situation today. For example, my old journals and
notes tell me that I averaged $8.63 per hour as a pizza delivery
driver in 1985, in Traverse City, Michigan. The BLS inflation calculator says that's equivalent
to making $19.09 per hour today. A friend who was recently delivering
pizzas in that same city tells me he was making about $14 per
In 1991 I worked for a temporary labor agency and was paid
differing rates according to the particular assignments I accepted.
For example, I made $8 per hour handing out samples in grocery
stores. That would be two-cents short of $14 per hour today.
Do you think small town temp workers are getting that for handing
I was paid $9 per hour for more physical labor, like a four-hour
gig I had unloading rolls of insulation at a Home Depot. That
would have to be $15.73 per hour to have the same purchasing
power today. Not a likely wage for that work anywhere today.
In fact, between businesses and other jobs I happened to work
at a temp agency in 2013, doing construction and cleaning tasks.
I made $7.63 per hour -- the minimum wage here in Florida at
the time. Notice that is less than half of $15.73 per hour.
To look at that another way, $7.63 per hour is equivalent
to making $4.46 in 1991. I would have laughed and refused any
job that offered that. It seems we get used to the new normal.
What About College Graduates?
My experience with jobs is mostly at the low end (business
and investing have been good to me, but jobs... not so much).
What if you have a college degree? Certainly you'll make more
if you get a job based on your degree.
But even here there is bad news. NBC news reports that college graduates are making 2.5 percent less
upon graduation than they were 15 years ago. And women graduating
college make $3 per hour less than men. And these lower wages
coincide with students having more debt than ever.
Other Ways to Measure Wages
So yes, it seems that wages are falling. Except for corporate
executives; CEOs in particular are doing just fine. Their pay rose 21 percent in just three years
(2010 to 2013), even as employees saw wages drop. In 1965 the
average CEO made 20 times as much as the average worker. Now
CEOs make 295 to 510 times as much as workers, depending on the
People may have different ideas about what can be done to
correct falling wages and rising income-inequality. But the fact
that the middle class is stagnating (or worse) economically seems
There is one last measurement that provides a stark contrast
between the past and the present in terms of what workers at
the low end make. It involves the per-capita GDP and the minimum wage.
Per-capita GDP (gross domestic product) is a measurement of
how much we produce in the country, divided by the number of
people in the country. In constant dollars this was $20,208 in
1965 versus 49,310 in 2013. In other words all the hard work
people are doing results in production worth 144 percent more
than 50 years earlier.
Now, it is true that management and good ideas and other factors
contribute to that value. And so the owners of capital (the rich,
for lack of a better way to put it) have gotten richer. In fact,
one could argue that even if the proportion of economic output
that went to them was the same, they would be 144 percent richer.
But maybe they got more than that.
The minimum wage in constant 2012 dollars was $9.18 in 1963.
Now, what if minimum wage workers had seen an increase proportional
to how the economy did? In other words, what if they continued
to get a proportional share of what their labor helped to produce?
In that case the minimum wage would have been $22.40 in 2013.
In fact, it had dropped to $7.25.
Yeah, maybe wages are falling.