The Most Messed Up Chart You'll Ever See Related to Wage Increase History in America...

You want to see some #@**?

Take a look at the chart below and let's talk about it after the jump...

Five Observations:

1. This chart shows the percent change year over year of wages for hourly and non-supervisory employees.  Although there's some other things that can go into this, this is basically a chart that shows relative merit increases for these workers.  I'm assuming that workers giving themselves a raise by jumping companies is factored into this, but I'm also assuming that people losing their jobs and going to work elsewhere for less money is also reflected in these numbers.

2. Year over year increases in earnings were at an all time low in 2012.  Welcome to the new world order, sparky.

3. There's a huge increase from 1965 to 1975.  What are the reasons?  A spike in the Military complex related to the Vietnam war?  Unions having more power than they do today?  Hippies smoking dope and making peace, not war by handing out more coin?  Wait - those people weren't employed at that time.  Your thoughts on the reasons are welcome in the comments.

4. I'd buy a Regan shirt right now if you put it in front of me with a catchy, anti-left slogan, but this certainly doesn't help his legacy in my mind.  

5. This is one of the scariest charts I've ever seen.

I'm completely freaked out.  The lines way up at the top to the left?  No China messing with the US, a war going on and my parents driving a big #$@ maroon LTD that I backed into a car as a kid.

Unrelated?  I'm not sure.

It's a more complicated world these days.  Show this graph to anyone who tells you every generation faces the same thing.

I think not.

Comments

[AkaBruno]

1. The minimum wage increased from $1.00 to $1.25 in 1964, to $1.40 in 1967, and in 1968 to $1.60. Remained that amount from 1968-1972. In 1973, it was raised to $2.00 (a nice 25% increase. In 1974 it increased to $2.20, and in 1975 it went up to $2.30. (In that 11 year period, minimum wage increased 130%; we would have to increase the Federal Minimum wage to $16.68 over the next 11 years to match that growth).

As a result, the minimum wage increase pushes other wages upward as well.

[KD]

Bruno -

Good stuff on the minimum wage. I also thought about inflation, which would certainly be tied to the min wage impact, then I looked up this chart and that didn't fly as much. There are some spikes in the run up period, but also some spikes that would have been addressed by that theory in the flat period as well.

Any thoughts about the flat line averaging about 2.7% to the right?

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

[Justin]

Definitely inflation. A 9.5% increase in a year with sustained 12 - 14% inflation is a pay cut in real terms. The peaks and valleys post-'80 are just cyclical.

[Bob]

The grey lines are recessions and they correlate with all spikes/peaks in wages. When people get paid too much and businesses can't turn a profit things get messy.

[Jim Durbin]

Inflation has a big impact on this - we've not seen double digit inflation since the 70's. At the same time, technology and globalization has created an enormous deflationary effect on wages, while increasing the value of goods we purchased.

What was a computer worth in 1980? In 1990? How much impact did it have on your work? Now fast forward to today, where a smart phone can be had for $200 in current dollars, and can do 90% of the work you need for business.

Keep in mind that after World War II, most of the rest of the world was in chaos. We had an intact manufacturing base and a large and growing population. Much of the rest of the developed world was recovering, and third world status hadn't yet brought competition.

[Lruettimann]

As we come out of a recession, our average hourly wage drops.

We seem to learn lessons from our recessions. Just the wrong ones, I suspect.