In September a front-page New York Times story reported that while productivity is up, workers aren't getting their fair share of the gains: The real median hourly wage is down 2 percent since 2003, and wages and salaries now make up the smallest share of GDP since at least 1947. Meanwhile, corporate profits are at their highest point since the 1960s.
Sounds bad but the Times may have given its readers a distorted picture. As George Mason University economists Donald Boudreaux and Russell Roberts point out, there are several problems with the paper's interpretation of the data. For one thing, it picked an odd year to start with: The recession ended in November 2001, but the Times analysis begins in 2003. Furthermore, the paper's calculations exclude benefits. Says Roberts, "For every year since the recession of 2001, real hourly compensation has actually increased. It's up since 2003 as well. And this year it's up quite dramatically." Real hourly compensation is up 40 percent since December 1973, and up a little more than 1 percent since 2003. For a different perspective on how American workers are doing, Boudreaux and Roberts suggest looking at the total package workers get for their highly productive labor.
Graph (not available online): Percent Change in Real Hourly Compensation, 1948-2006
Source: Bureau of Labor Statistics