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How to lie with wage statistics

by Greg Krehbiel on 4 August 2017

There’s an interesting insight in this article that makes me doubt the usefulness of aggregated wage statistics: Why America’s Wages Are Barely Rising.

If you look at an average of all the wages of everybody in the country, that figure hasn’t been increasing the way it has in the past. That’s a bad thing, right? It means people aren’t getting raises, right?

Not necessarily.

If we assume that most of the population starts off at a lower salary and does better and better as they age, and if we’re in a time when a disproportionate number of people are retiring (because of the baby boomer generation), you might expect the average salary to stay stagnant, or even decrease, since the proportion of workers in their later (higher-earning) years is lower.

I don’t know if that’s the explanation, but it tells me to be skeptical of conclusions from aggregated numbers. They don’t necessarily mean what you think they mean.

2017-08-04  »  Greg Krehbiel

Talkback x 2

  1. Dave Krehbiel Dave Krehbiel
    4 August 2017 @ 9:18 am

    It seems to me that one way to react and respond to such an article is to argue about national policies and tax rates and government programs and other things which none of us reading this blog have any reasonable chance of influencing.

    I would like to suggest an alternative. Rather than complaining and arguing and debating things which are extremely difficult to understand and impossible for us to control and change, what about focusing on your own situation? Given the facts as we understand them, what opportunities are there for each of us individually to increase our income and quality of life and future prospects?

  2. Greg Krehbiel Greg Krehbiel
    4 August 2017 @ 10:58 am

    Coincidentally, today’s Kiplinger Today email has a link to this.

    34 Ways to Earn Extra Cash in 2017