Higher than previous NBER peak (2020M02):
figure 1: Private nonfarm gross wages (blue, left log scale) and average hourly earnings in leisure and hospitality services (tan, right log scale) for production and nonsupervisory workers in 1982–84. Dates of peak-to-trough recessions as defined by NBER are shaded in gray. Source: BLS via FRED, NBER and author’s calculations.
The CPI is known to be upward sloping (for a number of reasons, including that it is a Laspel index, albeit one that gets smaller over time). I show below a chained CPI version of Figure 1 (where I seasonally adjust the log series using X13).
figure 2: Private nonfarm gross wages (blue, left log scale) and average hourly earnings for leisure and hospitality services (tan, right log scale) for production and non-supervisory workers in M12$ in 1999. Dates of peak-to-trough recessions as defined by NBER are shaded in gray. The authors use X13 seasonally adjusted chained CPI. Source: BLS via FRED, NBER and author’s calculations.
Finally, consider the HICP reduction in real wages. HICP includes rural weights when calculating the price index. Also, it does not contain the equivalent of the “Owner’s Equivalent Rent” section.
image 3: Average hourly earnings in $ of private nonfarm gross wages (blue, left log scale) and leisure and hospitality services (tan, right log scale) for production and nonsupervisory workers in 2015. Dates of peak-to-trough recessions as defined by NBER are shaded in gray. The authors use X13 seasonally adjusted chained CPI. Source: BLS via FRED, NBER and author’s calculations.
Finally, what is the median real weekly earnings of full-time workers, as measured by the Current Population Survey?
Figure 4: Median average weekly earnings for full-time wage earners in 1982-84 (blue, log scale). NBER defines recession dates from peak to trough. Sources: BLS via FRED, NBER.
As of Q1 2023, they are on par with the previous NBER peak in Q4 2019.Note that when looking at the entire sample of workers, the composition effect makes income Among the employed Usually rises during recessions.
