January 27, 2013

Infation versus Wages for 2002 to 2011

I've seen a couple blogs talking about wages versus inflation.   Theres a concern lately that wages aren't keeping up with inflation.   Personally every individuals wages and expenses take different paths so what matters to you is your own wage history and your own spending.    Looking at national averages really only gives a very abstract situation.  Still you don't want the national situation to be negative in general.

I got data on wages and inflation from the BLS.

Here's how the wage and benefit costs have changed annually versus inflation :

The cost of wages and the cost of benefits are different for employers.   Employees usually only really look at or even see the wages portion.   You know your hourly pay or salary.   However most employees also get substantial compensation via benefits which our employers pay for.   The cost of the benefits to employers may include reduction in benefits, so the % cost here isn't too useful from the employee perspective.  

If you just look at wage change minus inflation change then its still been generally positive :

If you add up the cumulative changes from 2002 to 2011 then wages went up about 28.5% on average and inflation went up about 26.9%.   The total for the latest 3 years shown isn't as great from 2008 to 2011 wages were up 8.1% but inflation rose 8.4%.   So we lost a little ground in the latest 3 years.

 Of course these numbers don't mean much to an individual who may or may not have gotten a wage increase.   Also the numbers don't really say what the  "average raise" was but instead show the average in wages paid.   Theres a difference there.   A 3% increase in wages doesn't mean people got 3% raises, but that total wage spending was up 3%. 



  1. It might be interesting how that correlates with higher cost of health care. While companies might report that benefits rose, a large part of that might be costs that have been absorbed to cope with the higher cost of premiums. The employee might see little or none of that.

  2. 101 Centavos,

    Yes I agree its quite likely the increased cost of benefits is just higher health care costs. I doubt employees have seen 'better' benefits in this time frame. The benefits are just more costly. That just my assumption at least.


  3. Great breakdown of the data, making it understandable and applicable.

    The hard truth is that compensation is a function of labor availability, not merit, loyalty, longevity, etc. Also agree with your assumption that benefits are not improving. From an employer standpoint, that increase in cost to provide benefits comes right out of the profit margin. Thanks for your work, Jim.


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