anonymous Tells the story of an old engineer who entertains people with aphorisms like “You may know the significant figures, but do you know what the numbers mean” when talking about what the average person is going through. Here are some easy-to-calculate numbers showing the difference between average hourly earnings and median average hourly earnings (note that typically median weekly earnings are the product of median earnings and median hours worked).
figure 1: Year-over-year CES average hourly earnings growth adjusted from chained CPI (bold black), median average hourly earnings from CPS data (tan), bottom quartile median from CPS data ( blue). Recession peak-to-trough dates as defined by NBER are grayed out. Source: Bureau of Labor Statistics, atlanta fedNBER, and author’s calculations.
Note that median and median wage growth in the lowest quartile have grown faster than average wages over the past few months.
Since the Atlanta Fed’s wage tracker only reports growth rates, I can only show median cumulative growth rates relative to a given date.
figure 2: Cumulative growth in CES average hourly earnings adjusted for chained CPI (bold black), relative to January 2019, median average hourly earnings from CPS data (tan), Lowest quartile median (blue). Recession peak-to-trough dates as defined by NBER are grayed out. Source: Bureau of Labor Statistics, atlanta fedNBER, and author’s calculations.
Cumulative median wage growth has lagged behind the average.However, as I pointed out Before, lower-income groups—such as those in the leisure and accommodation services industries—show greater gains. This is shown as the blue square in Figure 2.
For previous posts on median wages, see here, here, here.
In summary: Engineers aren’t the only ones who think about the importance of numbers.
