Relative Wages

Felix Salmon finds some interesting charts, from something called the National Employment Law Project.

They looked at the annual Occupational and Employment Statistics for three years — 2007, 2009 and 2012 — and created a list of wages for 785 different occupations. They then split those occupations into five quintiles, according to income; the lowest quintile made $9.49/hr, on average, last year, while the highest quintile averaged $40.23/hr.

As you go down the charts, you can see that until you get to the fourth and fifth quintiles, most jobs fall below the green lines — which means that they’re seeing their real wages fall. You can also see the commodification of low-wage jobs in the the number of occupations in the bottom two quintiles: there are just 47 occupations in the bottom quintile, while there are 186 occupations in the top quintile. (Each quintile, of course, includes the same number of total workers.)

Some remarks:

1. I would have preferred that they split the quintiles in 2007, rather than 2012. That way, you reduce the likelihood of accidental correlation between levels and growth rates. But leave that aside.

2. I would like to see employment data for the various occupations. If employment also fell in the occupations where real wages fell the most, that would suggest that what we are seeing is structural change. In fact, it would suggest that real wages did not fall enough.

3. James Tobin, in a Presidential Address to the American Economic Association over forty years ago, suggested that the Phillips Curve might be explained by downward stickiness of nominal wages when relative wages are in need of adjustment. Raising aggregate demand raises prices, and that in turn helps bring down the real wages in sectors where they otherwise would be too high.