Michael Pollak wrote:
I'm not quite sure what you're saying here, Paul. Are you saying that even though real wages per hour fell, real wages per year rose because people are working more hours (and specifically, more than 10.8% more hours)? Even if true, I'm not sure that qualifies as a rise in real wages. By this logic, if I work twice as many hours to earn the same amount of money, my wages have remained constant.
But certainly if this were true it could explain how annual real wages (and the pensions indexed to them) were going up even as real wages by the standard hourly measure were going down.
Do you have any stats for this?
On the Social Security angle, see also <http://www.ssa.gov/OACT/TR/TR04/VI_OASDHI_dollars.html#wp133537>. The glossary <http://www.ssa.gov/OACT/TR/TR04/VI_glossary.html> defines the average wage as " The average amount of total wages for each year after 1950, including wages in noncovered employment and wages in covered employment in excess of the OASDI contribution and benefit base. (See Title 20, Chapter III, section 404.211(c) of the Code of Federal Regulations for a more precise definition.) These average wage amounts are used to index the taxable earnings of most workers first becoming eligible for benefits in 1979 or later, and for automatic adjustments in the contribution and benefit base, bend points, earnings test exempt amounts, and other wage-indexed amounts."
And 20CFR404.211(c) is:
(c) Average of the total wages. Before we compute your average
indexed monthly earnings, we must first know the ``average of the total
wages'' of all workers for each year from 1951 until the second year
before you become eligible. The average of the total wages for years
after 1950 are shown in appendix I. Corresponding figures for more
recent years which have not yet been incorporated into this appendix are
published in the Federal Register on or before November 1 of the
succeeding year. ``Average of the total wages'' (or ``average wage'')
means:
(1) For the years 1951 through 1977, four times the amount of
average taxable wages that were reported to the Social Security
Administration for the first calendar quarter of each year for social
security tax purposes. For years prior to 1973, these average wages were
determined from a sampling of these reports.
(2) For the years 1978 through 1990, all remuneration reported as
wages on Form W-2 to the Internal Revenue Service for all employees for
income tax purposes, divided by the number of wage earners. We adjusted
those averages to make them comparable to the averages for 1951-1977.
For years after 1977, the term includes remuneration for services not
covered by social security and remuneration for covered employment in
excess of that which is subject to FICA contributions.
(3) For years after 1990, all remuneration reported as wages on Form
W-2 to the Internal Revenue Service for all employees for income tax
purposes, including remuneration described in paragraph (c)(2) of this
section, plus contributions to certain deferred compensation plans
described in section 209(k) of the Social Security Act (also reported on
Form W-2), divided by the number of wage earners. If both distributions
from and contributions to any such deferred compensation plan are
reported on Form W-2, we will include only the contributions in the
calculation of the average of the total wages. We will adjust those
averages to make them comparable to the averages for 1951-1990.
So, it looks like we're talking annual wages, not hourly, with upper incomes pulling up the means.
Doug
