Leonhardt Responds

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David makes several points in response to the Dish's debate on his column:

One important thing to keep in mind is that these sizable inflation-adjusted pay gains probably won't last for nearly as long as they did in the late 1990s. They're driven mostly by negative inflation, and inflation now appears to be rising. There's more detail in this post.  I realize that it's hard for many people to believe their real wages have risen. But the numbers are what they are. The trend is there whether you look at hourly data or weekly data, contrary to what Dean Baker implies. 

It's there whether you look at the latest month-to-month data or at year-over-year data. It's there whether you look at only cash pay or total compensation (including benefits). It's there whether you look at one government survey or another. Nominal hourly pay for rank-and-file workers was rising at a modest pace throughout 2008 and early 2009. It was rising only ever so slowly in the spring of 2009 (and, because inflation was bouncing around, nominal wage growth did fall behind inflation during this period). But in the last two months, wages rose at a modest pace again. Since inflation has been negative for most of the past year, the net result has been surprisingly large real pay gains.

Economic historians have pointed out that a similar thing happened during the deflation of the Great Depression -- for those people lucky enough to be employed. As I say, these kinds of gains aren't likely to last. But I think it'd be a lot worse if real wages for most families had already been falling over the past 20 months of recession.

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