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Thursday, July 03, 2014

Correcting WSJ Graph Error on Wages

by Calculated Risk on 7/03/2014 09:42:00 PM

For fun, here is an incorrect graph on wages from the WSJ today: U.S. Jobs Report: 288,000 Positions Added

WSJ Graphic
Click on graph for larger image.

This graph just looked wrong (one on the right). If wages had to increase from $22.15 per hour to $26.99 per hour to track inflation over the last 5 years, then inflation must of been 4% per year!  That isn't correct.

So I pulled up the actual wage and CPI data.

MonthTotal Private
Average Hourly
Earnings of All
CPIInflation Adjusted
June 2009$22.15 214.79 
June 2014$24.45 237.0831$24.45
1CPI is for May 2014 (per WSJ).

The wage data is from the BLS and is correct on the graph. But instead of multiplying $22.15 times the increase in inflation, they must have multiplied the June 2014 wages times inflation. Oops!

The correct story is that real wages have gone nowhere for 5 years (the BLS has a series on real hourly wages, and of course the series shows essentially no change from June 2009 to May 2014).  The article actually had the story correct: "The average hourly wage for private-sector workers rose six cents to $24.45. That's up just 2% from a year earlier, basically in line with consumer-price inflation."