Contrary to popular belief, when Humpty-dumpty used words they meant
whatever he wanted them to mean. Also contrary to popular belief,
Procrustes' bed could accomodate guests both tall and short. Marvin Koster
gives everyone a pay boost by defining average pay in a most peculiar way.
Whew is right!
>FYI Marvin Kosters (Item 2) was Bush's 1992 nomination for Comm. of
>Labor Stats. The nomination wasn't acted on since the office has a
>fixed term of 4 years. Whew!
>
>Dave
>Contrary to popular belief, average pay has steadily risen in the last
>25 years, according to a report by American Enterprise Institute
>economist Marvin H. Kosters. Kosters said incomplete and in some cases
>inaccurate data have given the false impression that average American
>workers are falling more and more behind. AEI is a nonprofit research
>organization, supported by businesses and foundations ....Kosters said a
>major mistake analysts have made in charting wages over this 25-year
>period is using average hourly wages from the BLS payroll survey. Using
>this measure, average real earnings appear to have deteriorated during
>the past quarter century ....Compensation - including benefits and
>bonuses as well as wages - is a more accurate and complete measure of
>how workers are faring, he said. The average earning series covers only
>production and nonsupervisory workers. Other government data series
>measure changes in hourly compensation, which includes benefits as well
>as wages. The Employment Cost Index is also a better data series,
>Kosters said. The average hourly earnings series leaves out more
>skilled, highest paid employees ....Adding to the misconception of
>falling real wages, Kosters said, analysts often deflate the average
>hourly earnings by a rise in the CPI-U. Instead, Kosters adjusted the
>compensation data by the CPI-U minus 0.5 percentage point each year
>....He justified this reduction of 0.5 percentage point by pointing to
>the opinion of many economists that the CPI-U overstates inflation
>....Kosters said he chose this reduction because this is about the
>extent of reduction in the CPI-U caused by a series of improvements BLS
>made and will make in the data series. Also, Kosters said he wanted to
>avoid controversial opinions of the CPI advisory panel, which led the
>group to say the inflation measure overstates inflation by 1.1 percent.
>With these suppositions, Koster said inflation-adjusted wages have risen
>by 10 percent in the last 25 years and compensation has advanced by 15
>percent ....While Kosters believes wage inequality has widened in the
>last 25 years, he added the broadening has been caused by an increased
>premium on education ....(Daily Labor Report, page A-6).
Regards,
Tom Walker
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