Is there wage stagnation?
Tue, 2014-03-18 17:41
News Staff
By Walter E. Williams
Many economists, politicians and pundits assert that median wages have stagnated since the 1970s. That's a call for government to do something about it. But before we look at the error in their assertion, let's work through an example that might shed a bit of light on the issue. Suppose that you paid me a straight $20 an hour in 2004. Ten years later, I'm still earning $20 an hour, but in addition, now I'm receiving job perks such as health insurance, an employer-matched 401(k) plan, paid holidays and vacation, etc. Would it be correct to say that my wages have stagnated and I'm no better off a decade later? I'm guessing that the average person would say, "No, Williams, your wages haven't stagnated. You forgot to include your non-monetary wages." My colleagues Donald Boudreaux and Liya Palagashvili discuss some of this in their recent Wall Street Journal op-ed, "The Myth of the Great Wages 'Decoupling'" (http://tinyurl.com/ oq7z4a3).
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