A Question About Non-Wage Benefits for Nonsupervisory Workers

by Don Boudreaux on September 1, 2006

in Standard of Living

In his NYT column today, Paul Krugman returns to one of his favorite themes: the unjust suffering of ordinary Americans whose incomes, Krugman insists, haven’t risen in 30 years.

Consider this part of Krugman’s column:

The stagnation of real wages — wages adjusted for inflation —
actually goes back more than 30 years. The real wage of nonsupervisory
workers reached a peak in the early 1970’s, at the end of the postwar
boom. Since then workers have sometimes gained ground, sometimes lost
it, but they have never earned as much per hour as they did in 1973.

the decline of employer benefits began in the Reagan years, although
there was a temporary improvement during the Clinton-era boom. The most
crucial benefit, employment-based health insurance, has been in rapid
decline since 2000.

I wonder — not sarcastically, but sincerely — where Krugman’s data on employee benefits come from.  After spending too much time fruitlessly scouring the BLS site for such data, I asked the BLS for such data.  I was told that the BLS "does not provide either total compensation nor non-wage benefits for non-supervisory workers.  We produce only earnings data for non-supervisory workers."

The BLS does have a data series on annual-percentage-rate changes in real total compensation for all nonfarm employees.  (Russ cited it in this recent post; it’s Series #PRS85006152.)  According to this series real nonfarm-worker total compensation has increased about 40 percent since December 1973 — but much or all of this increase might be due to increases in real compensation paid only to the economy’s most bodaciously rich workers.

But who knows?  How does Krugman know?  (Again, I am here not accusing him of having no basis for his claim; I just want to know what that basis is — because it isn’t the BLS.)  Can someone direct me to a reliable source of data on either the real total compensation of nonsupervisory workers, or on the real value of nonwage benefits paid to nonsupervisory workers?

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Allen September 1, 2006 at 5:09 pm

What I find interesting about this subject is that those who normally claim that it's total quality of life that matters the most, not money, are the ones that seem most upset over the claimed lack of dollar growth in paychecks for American workers.

Miracle Max September 1, 2006 at 5:32 pm

The new State of Working America (Table 3.2) reports data on compensation from the NIPA and the BLS Employer Costs for Employee Compensation (ECEC) survey.

By NIPA data, real hourly compensation (RHC) grew an annual average of .8% for 1979 to 1989.

With ECEC data, the RHC change from 1987 to 2005 is from $22.62 to $24.17 ($2005). In this amount, the 'voluntary' benefit component goes up from $2.53 to $2.66. (The total comp #s here include payroll taxes, which might not sit well with you. For the same time period, the latter account for $.24 of the increase.)

Average increases aside, the percentages of workers getting employer-paid health insurance or pensions are clearly down since 1979, going by CPS data.

The ECEC survey does not cover government employees. I am not an expert on these data sources. The book has details on sources and methods. I suggest you not infer 'spin' without reading the text.


Kevin September 2, 2006 at 8:15 pm

Here's a suggestion: drive to a working-class residential neighborhood built in 1973.

Now drive to a working-class residential neighborhood built today, or anytime in the last decade.

Who's wealthier — people of 1973 or us?

The answer's pretty obvious, and you don't even have to consider the vehicles, the cell phones, the XBoxes, the PCs and Internet access, the frequency at which people eat at restaurants, the quality and variety of nearby stores, etc. Just look at the houses.

Reality Hammer September 3, 2006 at 11:01 pm

This is the data series I see most often used (very inappropriately) in response to annual total compensation data:


Even the authors of the study state that it is not directly comparable to annual earnings but people with an agenda use it anyway.

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