BLS charts show interesting trends in real (inflation-adjusted) weekly earnings. Men are getting clobbered relative to women, but everyone is losing lately. 
Median Weekly Real Earnings
- In the first quarter of 1979 men were making $408 weekly. Today, men are making $391.
- In the first quarter of 1979 women were making $250 weekly. Today women are making $330 weekly.
- Collectively, people were making $335 then and now they are making $365.
Men are getting clobbered, down 4.2 percent, while median women’s earnings have risen 32 percent. These numbers may look silly but you can verify them on the St. Louis Fed FRED database.
Wait, you say, people are taking home more than $365 weekly. Yes they are, in nominal terms. Normally I take numbers and adjust them for inflation. This data is already inflation adjusted, so I had to un-adjust the data.
Median Weekly Earnings and Real Earnings Since 1979
In nominal terms, men were making $282 weekly in 1979 and $1,186 weekly today. Adjusted for inflation, $282 bought 4.2 percent more in 1979 than $1,186 does today.
Women have certainly fared better. In nominal terms, women were making $179 in 1979 and $1,001 today. In real terms that’s a jump from $250 to $330, a gain of 32 percent.
Nominal and Real Average Wages
In contrast to the first set of data where wages are weekly, and calculated quarterly, the BLS produces hourly data monthly. The calculation for this set is the reverse. The BLS shows nominal hourly wages and I calculate real wages.
Last week, someone on Twitter asked what earnings look like adjusted by the PCE price index. Economists tend to use 2012 as the base year for PCE so that is what I used as well. It doesn’t matter, so don’t dwell on the difference in the index year.
For both charts, I went back as far as the data was available. This chart is for production and nonsupervisory workers, not all workers. The hourly data for all workers only dates to March of 2006.
The BLS does not break out average hourly wages by sex. In terms of average hourly wage, the peak was February of 1973. For comparison purposes it’s too bad that data for the first chart does not go back as far.
As a cross check of the first chart calculation, take $28.82 hourly x 40 hours per week and you get $1,153 weekly.
February 1973 vs Today
- In nominal terms, production workers were making $4.06 per hour. Today they are making $28.83.
- In real PCE terms, production workers were making $17.56 then and $22.67 now, a 29 percent total jump over 30 years, about 1 percent a year.
- In real CPI terms, production workers were making $21.05 then and $21.72 now, a 3.2 percent total jump over 30 years, essentially nothing.
We can deduce from the first chart that men are getting clobbered relative to women in both median and average terms. You can also say women are slowly catching up to men. Since we do not have a job-by-job breakdown, it’s not easy to quantify these expressions accurately.
What About Housing?
Case Shiller National and 10-City home prices indexes plus OER, CPI, and Rent indexes from the BLS.
Chart Notes
- The latest Case-Shiller home price indexes is for May. It represents repeat sales of the same house in roughly a March-April timeframe.
- OER stands for Owners’ Equivalent rent. It’s the price one would pay to rent one’s own home, unfurnished, without utilities.
- CPI is the consumer price index.
- Rent of primary resident is just what it sounds.
- CPI, OER, and Rent as as measured by the Bureau of Labor Statistics (BLS).
Home prices wildly disconnected from the CPI in 2000 and in 2013. The disconnect accelerated in 2020.
After a two-month decline in most markets, prices are again on the rise.
Housing Not Directly in the CPI or PCE
Please recall that housing prices are not directly in the either the CPI or PCE inflation indexes. For those wishing to buy a home, both measures of inflation are dramatically understated.
That means real hourly earnings are even dimmer than I presented above.
For discussion of home prices see The Housing Bubble, as Measured by Case-Shiller, Is Expanding Again.
And please consider this question, Is It Time to Bet on an Inflation Overshoot?
Equal pay for equal work is a nice concept. Nothing wrong with that. But it rarely happens. Life isn’t fair. Never has been. Never will be.
Free markets tend to lower wages for workers with fewer skills and education (since there is usually a lot of them) and raise them for the highly skilled and educated (who are often in limited supply). And in today’s economy, we need more highly skilled and fewer low skilled.
Unions can provide bargaining power for some workers, but only 11% of US workers are unionized, and unions are disappearing. Don’t pin your hopes there.
Global competition and the relentless pursuit of automation also tend to hold back wages.
Net result: the vast majority of workers are on their own. It is up to each individual to get the skills and education needed to earn a good income (including becoming an entrepreneur).
There is little point in whining and complaining about how life isn’t fair. That won’t get you much.
Thank you Papa.
I’ve missed you.
Hope you’re in good health.
Where else did Dumb, Dumber and Dumbest think the wealth they “made” from their “home” and “portfolio” came from? The Tooth Fairy?
Wealth has to be produced. By workers engaged in P.r.o.d.u.c.t.i.o.n. Of something. As much as at least Dumbest, may struggle comprehending something so complimecated: The mold in his home walls is not engaged in production. But instead in the exact opposite: Depreciation. Yes, Dumbest, your “home” does not create value sitting there decaying. Instead it, tah-dah, decays. Surprise, surprise!
Hence, in order to fund the maintenance of such feelgood delusions for Dumbest: First, someone else, a productive worker, has to work to produce something of value. Then, that value has to be taken from this productive worker, and handed to Dumbest. Such that Dumbest can preen around pretending he was “smart” and his “home” “made money.” A process which, at least those more arithmetically savvy than poor Dumbest himself, recognises makes the productive poorer and poorer. And Dumbest richer and richer.
It ain’t all that difficult. Shouldn’t be. At least not for anyone other than poor Dumbest.
I wonder whether there should be two CPI-type measures: One for women. One for men. Men and women buy different things, after all.
How about one CPI for the rich and one for the masses that obviously don’t count.
Interesting way to slice and dice the CPI!
I wonder whether CPI-ish measurements fall prey to the problems that arise when we use an average in situations where a median should be used. For instance, CPI-ish measurements might over-emphasize “the rich” simply because price changes are probably more Pareto-curvy than bell-curvy.
I don’t know many white collar working men with jet skis and dirt bikes. The ones I do know would want nothing to do with that stuff. Golf and bourbon maybe. Anything requiring real physical exertion forget it.
Women on the other hand that work white collar jobs, I have never met one that does not like nice clothes, shoes, beauty products, massages and absolutely a hair stylists. It’s all they talk about. It’s a very deceptive form of spending too, far exceeding an average tee time and bourbon.
I don’t have a lot of nice clothes, shoes, make up and a hair stylist. My husband owns more clothes than I do. I like to spend my money to the savings account. We prefer to spend money traveling.
Sounds like my wife. We travel a lot, that is our vice not outward appearances.
Depends on where the tee is located and how old the bourbon is.
Tin foil hat: When people are squeezed, they look to the government for answers. The government always has an answer.
“Average”… Hmmm, maybe “Median” would be more useful. The top 1% saw their income go up big time, right? If the average remains about the same, it would mean that half of the people are actually worse off.
1) After the civil war, during the Gilded age, the south was in a deep depression. The north was”booming”. Tariffs protected “infant” industries from GB and Germany. Real wages deflated.
2) Coal mines and steel mills employed Catholic immigrants from Italy, Germany and
eastern Europe. Police shot strikers. They were replaced by other immigrants and freedmen from the south. The RR tycoons employed coolies. Recessions were deep and frequent.
3) Mortality rate was high. Life expectancy in PGH PA was 40 years. New immigrants kept coming to the mid west industrial ctr, the coal mines and the gold mines in CA and Nevada.
4) We replace China with high/ low tech industries in US. Strikes are back. Workers can be replaced. WFH in “voluntary resignation”, no compensation. Women are dispensable. Real wages will deflate. Most people will barely survive. Landlords will barely collect rent…but real productivity will rise.
…but real productivity will rise…
and have no one to sell to.
Anecdotal [don’t believe in continually redefined govt stats], but still:
—When I grew up in the sixties, the street (suburban middle middle-class) was full of families with 2-5 children, stay at home wife, a car, a bungalow, vacations, sports, etc., all from a single pay check (white collar or unionized labor). Try that now.
—When I was a teen-ager, I could go to the movies with a date/friend and buy a snack from 1 hour of labor. My youngest daughter needed to work 8 hours to get the same when she was 16.
—Where I live now (Europe) people spent 17% of their disposable income on housing in 1960 [not anecdotal]. Today young people often spend >50% of their income on rent alone (not including utilities), and for many, a place of their own is far-off goal. The average home price requires 2× the modal income to finance a mortgage.
—My wife’s family sold a house in 1957 that is today worth 1000× as much [village has become upscale].
Around 1960 my Dad bought a 3 bedroom home for about one third the price of a 2023 car. Back then a Volkswagen was around $1500.
And that was about $1400 worth of metal!
And for comparison purposes, a you can probably get a $1500 car right now that’s way, way better than a 1960 VW (my 1st car – compression wipers, no real heat or defrost, very loud, no gas gauge, walking speed up hill, new engine needed every few thousand miles, but, hey, great in snow!).
Without comparing household debt to income over the same period, this topic is incomplete.
Household (not just government) debt has jumped almost 50% in the same period.
The point where Reagan was able to convince enough voters that tax cuts for the wealthiest campaign donors would “trickle down” to the rest of us is where this ugly mess began, forcing the Fed to continuously lower rates to make debt servicing affordable.
We are no longer a Democracy, but a Neo-Feudalist Plutocracy, the Fed decides how much disposable income we’re allowed to have, unions are long gone, there are no labor/wage lobbyists in D.C.
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The mess really started under FDR, and became unworkable under LBJ.
Not at all true.
The US has never paid back what FDR borrowed, they just keep paying interest.
Debt to GDP plummeted from 1945 to 1980.
So despite 45 years of huge technological advances (not to mention the accompanying productivity increases) wages have actually gone down?
It’s actually been like this since the industrial revolution. Small textile businesses were replaced with huge textile factories in the 1800s, but the standard of living of the workers producing the textiles went down, not up.
The U.S. Golden Age in Capitalism was where small savings were pooled, gov’t insured, and expeditiously activated in largely real investment outlets.
They went down in real terms for men, but not overall.
Standards of living have gone up a lot. Pretty much everything is better now. Maybe food is kind of the same or worse. And rent/housing likely cost a higher pct of income, but the homes are better.
The BLS undercounts inflation, especially in housing, so the chart Mish presents is a lie. Look at average wages to buy a house, a car, a men’s suit, etc.
As far as everything being better now, you need to take a good look at what American towns and cities look like today.
Would you rather live in 1979? I wouldn’t.
I’d rather live in the early 1960s, which was when the U.S. was at its peak.
The music was much better in the 70’s.
Any machine that can do a job devalues the humans that can do that job.
I agree, unfortunately a lot of humans are worthless.
Oh I don’t know.
I consider not dying of diphtheria an increase in the standard of living.
The “catch-up” in women’s compensation is obscuring the deceleration in real job level wages.
The reality is that people can’t maintain a train of thought. Banks aren’t intermediaries as Powell thinks. That has disastrous repercussions.
Powell: “When times are good in the economy, banks and other lenders tend to have a lot of money to LEND. And in case you didn’t realize, banks are in the business of making money off of loans. So if they can LEND to more people who they believe will pay them back on time, they’ll make more money.
But right now it’s costing banks more to get the funds they need to make loans. Part of that goes back to the Fed’s interest rate hikes. But the other part comes from the recent bank failures. Since many depositors withdrew money from mid-size and regional banks, these banks have less money to LEND.”
Dr. Philip George arrived at the pervasive error through induction. Dr. Leland Pritchard arrived at it through deduction.
George: “For nearly a century the progress of macroeconomics has been stalled by a single error, an error so silly that generations to come will scarcely believe that it could have persisted for as long as it has done.”
Pritchard: “savings aren’t synonymous with the money supply”
The neutrality of money has been denigrated “Neutrality of money is the idea that a change in the stock of money affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption.”
The rise of income inequality and crime is associated with this economic error. In fact, it is a math equation.
The GINI coefficient just took a big hit:
link to fred.stlouisfed.org
That hit to the GINI you pointed out was 3 1/2 years ago.
This is now.
I would be interested to see how benefits play in here. I suspect benefits represent a larger chunk of total compensation than they did 40 years ago.
I don’t know. Health insurance costs more but in the past people had pensions instead of 401k’s. Pensions are a lot costlier.
Probably so, but I’m not sure how many people were actually covered by pensions whereas 401k’s seem to be fairly ubiquitous in corporate America and usually have some match. Also I would bet vacation time has become more generous. I’m not sure what else is in there, but you really need to look at total compensation to make an argument that men are no better off. I don’t know, but I suspect including benefits would paint a different picture.
I think its the opposite. Used to be that health insurance was a benefit almost everywhere without any employee contributions. Now becaue of skyrocketing premiums there is a fairly substsantial employee contribution and huge deductibles and copays for medical care. Also most copanies had pensions and now employees have to contribute. I would say overalll benefit levels have decreased for the employee effectively reducing his income even more.
Women spend a lot of money on attire, beauty products, hair. They likely do make more on average but do they keep more on average? Highly unlikely. My spouse does well but holy smokes does she have a lot of clothes, shoes, beauty products and the hair salon, massages….meh. Factor all that in she is taking home less than her lower paid male counterparts.
The gap between men and women has shrunk, but women still don’t make more on average.
All that stuff is the female equivalent of jet skis and dirt bikes… the value is hedonic.
Men spend an awful lot of money trying to get laid.
Women spend an awful lot of money trying to get men to want to lay with them.
She takes home what she earns, then she sends it-great for the economy!
Mish,
It would be nice to see wages overlayed with productivity. If productivity is only increasing 1% year, then a 1% increase in wages should be expected. If it is more, then the question is where that money is going if not in the pockets of working folks.
Up until recently it had been going to above trend corporate margins. That has certainly reversed recently as wages have skyrocketed while productivity plunged. Margins have historically been mean reverting fwiw.
Dr. Leland James Pritchard, Ph.D. Economics, Chicago 1933, M.S. Statistics, Syracuse. As the economic syllogism posits:
#1) “Savings require prompt utilization if the circuit flow of funds is to be maintained and deflationary effects avoided”… (that’s called secular stagnation).
#2) ”The growth of commercial bank-held time “savings” deposits shrinks aggregate demand and therefore produces adverse effects on gDp”… (banks don’t lend deposits)
#3) ”The stoppage in the flow of funds, which is an inexorable part of time-deposit banking, would tend to have a longer-term debilitating effect on demands, particularly the demands for capital goods.” Circa 1963
—-
“CapEx (short for Capital Expenditures) is the money invested by a company in acquiring, maintaining, or improving fixed assets such as property, buildings, factories, equipment, and technology.”
—-
“Multifactor productivity (MFP) is a measure of economic performance that compares the amount of output to the amount of combined inputs used to produce that output.
Combinations of inputs can include labor, capital, energy, materials, and purchased services.”
—-
We have a bifurcated economy:
Per Stockman – BEA’s Per Annum Growth of Real Personal Income Less Transfer Payments:
Feb. 1960 to Feb 2000: +3.62 percent;
Feb. 2000 to Feb. 2020: +2.08 percent;
Feb. 2020 to May 2023: +0.61 percent.
“Inflation Adjusted, Men Are Making Less Money Than in 1979…”
Except for the men in the C suites, along with star athletes, entertainers, and politicians.
The difference is flat lining of real wages is pretty much entirely explained by the rise of part time work. Wages for full time workers rose fairly strongly, regardless of sex. It was a time period you did NOT want to be an unskilled or less than college-educated worker.
I bet if you compared US c- suite salaries to the rest of the world they would be an outrageous outlier. These salaries are way out of line with what they contribute and are basically raping the shareholders who are oblivious to whats happening. Don’t know why there has never been a shareholder revolt against this garbage.
The shareholders like the dividends they are collecting.
Besides, what’s C-suite pay like in London, Hong Kong, Tokyo, Singapore, Paris, Moscow, etc. And don’t forget our new favorite – Kiev.
Those be not me – they be (demi)gods!
That is why we have to cut the minimum wage, or even make it ZERO. Then the free-market magic dust will rain on everyone and everybody’s income will skyrocket! /s
A minimum wage has never eliminated poverty.
Denninger once said that the reason STEM education was being pushed, was to drive down wages by creating an abundance of STEM workers. Factories were moved to China to reduce labor cost. Hollywood moved production to Canada and elsewhere, to reduce labor cost. I worked for a liberal Hollywood producer, who opposed his company becoming unionized. IATSE failed by 2 votes.
Correct. Simple market forces at work. Kids tend to major in areas with high pay and lots of job openings. But by doing that they ensure there will soon be glut of workers which will depress wages.
Not only does minimum wage not eliminate poverty, it also eliminates entry level jobs for high school and college kids to do during the summer. So they don’t learn hard work and good work habits and we wonder why they are ‘quietly quitting’ when they get in the real world.
It also encourages automation. Which means no jobs instead of minimum wage jobs.
Well, the cure for that is built-in. If people have no wages, then the products created using automation will have no buyers.
It is self-correcting. But the capitalists want to keep the fraud going as far as it can be. That is why they got people with poor wages to get further and further into debt. This is a 40-year trend and will lead to a bad ending.
As the minimum wage ratchets up more and more folks aren’t worth the minimum wage.
That’s how things work. Men and women’s wages are conversing. The higher wages come down. It is also how the plan for the economy will work. Rather than raise up the poor, we will lower the middle class. Spreading the misery!
Read my own comment. Converging not conversing.
It’s not as much a ‘plan’ as it is simple market forces.
When you are in high school and picking a major, most kids probably pick the major with the highest pay and most job openings because it offers the best chance to get ahead.
Of course since LOTs of kids do that, there is soon a glut of workers in that area and that naturally lowers wages with out any need for a ‘plan’
Engineering majors tend to weed those guys out before they get a degree.
They do, or at least did when I was in those programs.
But even if 800 kids start Engineering (my starting class back in the mid 80s) and only 100 graduate (10%), when you multiply that by hundreds of schools you get 10K graduates a year. There needs to be that many jobs created a year to absorb them all (minus some retirement attrition).
Just saying that when I graduated in the late 80s there were reams of businesses who came to my school looking to hire on career day (esp in computer science). I wonder if that happens any more or whether kids have to actively apply now.
And if you start with 1982 instead? That 1979 seems pretty convenient.
Pretty sure that data series only goes back to 1979.
Men giving way to women in corporate white-collar jobs in the major blue zoos.
Mish, remember The White Palace Grill on Roosevelt and Canal in Chicago, at the southwest edge of The Loop? Had some major action around there over the weekend. CWB . Com vids. A different scene than that in About Last Night a few decades ago.
Let the idiot white suburban lawn sign women keep coming in for the prestigious office jobs. Whatever WFH arrangemen they may have, like 1-2 days week, will not allow them to move from metro area. Guys are just saying f- it.
A lot more women graduate college than men now. A trend that’s been growing for decades. Women tend to get lower paying degrees, but, overall people with college degrees earn more.
Coupled with the demise of labor unions in private business (ie auto, steel etc) which artificially raised men’s pay in the 70’s and 80’s in what were/are menial jobs that required no education.