An Honest Look at Worker Pay

Michael Strain says that wages have grown more than people think. The usual figures from lefties are rigged, he says, by starting in 1973 and using the CPI to calculate inflation. If you start in 1990 and use the PCE index instead, wages of blue-collar workers¹ have gone up 32 percent. Not bad!

Strain’s math is correct. But let’s take him up on his choice of starting date and inflation index. Here’s the chart he doesn’t show:

It’s true, using Strain’s measures, that worker pay has increased 32 percent since 1990. That’s about 1 percent per year. But overall national income has grown three times as fast. Where is all that extra income going? Here is Strain:

I’m not trying to be sanguine here. Americans have high expectations for wage and income growth, and we shouldn’t be satisfied with the gains we’ve enjoyed over the past three or five decades….But messages matter. If all people hear is that wages have been stagnant for decades as part of a game rigged to benefit people at the top — well, they might believe it.

I’d say that people have every reason to believe this. If national income has gone up 109 percent since 1990, why hasn’t the income of ordinary workers also gone up that much? I think we all know the answer.

¹As usual, I’m using “blue-collar” as shorthand for what the BLS calls “production and nonsupervisory workers.” This includes about 80 percent of the population.