Thursday, October 15, 2009

Real Hourly Earnings Rise 4.4 percent for the Year

The BLS reported that real average hourly earnings in Sept 2009 were 4.4 percent higher than they were in Sept 2008.

If the combination of productivity and capital had not increased, it would take a 15 percent employment decline to make employers willing to pay so much more.

In fact, employment and hours have not fallen anywhere close to that amount. That's because producivity has surged, which tells us a lot about how this recession's economy is different from that of previous recessions.


fl said...


If I understand this correctly, then this accounting exercise takes an aggregate production function, reduces Labor in that and asks by how much tfp would have to change to generate the given pay-change.

What about selection issues? What do you think happened to the average quality of the employed. If the least productive lost their jobs first, we would see wages conditional on employment go up. This is what is reported in hourly real pay. Do you think this matters empirically?

Sara Zmith said...

THis is the fact of life now... poorman is going to be poor more and richer become more richer.
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