Real wages decline; literally no one notices

[PatrickUES]

4. The rest of the story

Real wages are declining in the last 12 years because of inflation - and the data would be eve more damning if they measured inflation accurately. Inflation is the result of expansionary fiscal and monetary policy.

Real wages have declined since 1980. But total compensation has not. Total compensation rose, in line with productivity growth. Non-wage benefits costs increased at a faster rate, which has squeezed potential wage increases. The employer pays $X to employ you. If a larger fraction of X comes in the form of health benefits, sorry but that leaves less left over for wages. Benefits costs are up because healthcare costs are up. Healthcare costs are up because the government keeps financing new drugs and other ways to keep old people alive but not healthy; because end-of-life care cost has increased and must be covered by insurance, and because of obesity, smoking and other bad habits. This pushes premiums up even for those who do not engage in these habits because of community rating standards.