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Originally Posted by ThePrince
Thanks for linking - a good read. My confusion came from the years they are using and that you were quoting, as it looks like they are including 2019. And if you include 2019, most of that real wage growth is actually coming from 2019 to 2020, which are actually pre-Biden years and based on how they're structuring the data, pre-pandemic, so I don't think your point holds true. In fact, according to the chart in the appendix, real wages for all groups other than the bottom decline have stagnated or decreased since 2020.
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True, but 2020 data suffers from the massive changes in workforce composition that occurred as a result of pandemic restrictions. Lower wage people (and this would even apply within the quintiles) were far more likely to lose their jobs than higher wage people, which naturally pushes the median wage of the remaining workers upwards, even if wages stay the same. Then when they return to work in 2021 and after, the median would tend to drop back down.
That's what happened generally, and it was almost wholly due to labor force composition, and not people actually getting their pay cut. So the growth in 2020 was more or less artificial and not a reliable measuring stick. That's why they use pre-pandemic as the baseline, as it has a similar unemployment rate to 2023/24. And because we're talking about real wages, the deflationary period in 2020 also created an artificial boost to real wages in 2020 that didn't last.
To be fair, I'm not saying low wage workers should necessarily feel that much richer. Massive growth in asset values has largely left the working class behind, and that's why they generally feel worse off. However, the magnitude of real wage growth compared to the rest of the last 45 years among the low-to-middle income group is definitely worth highlighting. Their real wages were virtually stagnant for 4 decades until the pandemic.