Wage Growth Has Been . . . OK Over the Past Year

There must be something in the water. Today brings us another terrible chart, this time from the Wall Street Journal:

Come on. You can’t compare workers’ earnings to core PCE, which doesn’t include food or energy. Core PCE might be useful for the Fed when they set monetary policy, but it makes no sense when you’re trying to evaluate the real rise of workers’ earnings. Workers, after all, have to buy both food and energy.

It’s also not very useful to chart this as percentage change, since that makes it hard to figure out how much worker pay has outpaced inflation over time. Finally, since the point of the article is that corporations are facing higher worker pay, it makes sense to show total worker compensation over the most recent few years. Here it is:

The Employment Cost Index shows the total cost of compensating workers. The ordinary PCE price index includes food and energy. And the two are indexed to 100 at the start of 2016 so we have a sense of recent changes in worker compensation.

This chart shows clearly that corporations, on average, are indeed paying their workers more. However, it also shows that the total increase has been a steady 0.7 percent annually over the course of three years. If that continues, it will “eat into corporate profits,” as the authors say, but not by an awful lot. Even if it goes up a bit, it won’t change corporate profits by all that much. This is all context that really ought to be included, especially in a publication aimed at sophisticated readers.

On an entirely different subject, there’s not much reason that non-investors should care about this. Business profits have been great in recent years, and if they flatten out or even decline a bit because workers are finally getting paid a little more, that’s just fine. For the vast majority of us, this is good news, not bad.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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