Not so fast!
from David Ruccio
Everyone has read or heard the story: the labor market has rebounded and workers, finally, are “getting a little bigger piece of the pie” (according to President Obama, back in June).
And that’s the way it looked—until the Bureau of Labor Statistics revised its data. What was originally reported as a 4.2 percent increase in the first quarter of 2016 now seems to be a 0.4 decline (a difference of 4.6 percentage points, in the wrong direction).
What’s more, real hourly compensation for the second quarter (in the nonfarm business sector) is down another 1.1 percent.
So, already in 2016, the decline in real wages has eaten up more than half the gain of 2.8 percent reported in 2015 (and after a mere 1.1 percent gain in 2014).
And, since 2009, real hourly wages have increased only 4 percent.
Workers may be getting a little bigger piece of the economic pie since the official end of the Great Recession but the emphasis should really be on “little.”
P.S. I’m not a conspiracy theorist by nature. And I don’t plan to start now. As far as I’m concerned, the revision in the real-wage data should not be understood as any kind of deliberate manipulation by the Bureau of Labor Statistics. But it does represent a cautionary tale about the precision of the numbers we use to understand what is going on in the U.S. economy—and about the willingness of some (like Paul Krugman) to dismiss workers’ anxiety about the state of the economy.