Wage stagnation in the US: more than meets the eye

If you can, always look below the surface of data.

Via the Economist journalist Daniel Knowles comes a good example of why its important to look below the surface of statistics. American economist Steve Landsburg addresses a commonly heard refrain – that the wage of the median worker has barely risen in the past thirty years – and shows that all is not as it seems.

Landsburg cites a book by economist Edward Conard (first chapter, containing what we're talking about, here), which itself cites the Census Bureau. I confess that, without a more specific citation, I can't find the exact data Conard uses, but have found similar enough data (pdf, table A-5) to confirm the overall thrust of the argument.

Conard shows that from 1980 to 2005, median income in the US rose just 3 per cent once inflation is taken into account, from $25,000 to $25,700. 2005 is pre-crash, as well, so this isn't a tale of the recession.

But when you break the data down by race and gender, a very different story appears:

  1980 Median 2005 Median Increase
All Workers 25,000 25,700 3%
White Men 30,700 35,200 15%
Nonwhite Men 19,300 22,300 16%
White Women 11,200 19,600 75%
Nonwhite Women 10,200 16,500 62%

For every single demographic group, there was a much bigger increase in the median wage than we see when the groups are combined. The reason for this is obvious when it's pointed out: demographic change in the US means that there are far more (low-salaried) women and people of colour working now than there were in 2005, which pushes the overall average down.

Landsburg illustrates it with a farmyard analogy:

Imagine a farmer with a few 100-pound goats and a bunch of 1000-pound cows. His median animal weighs 1000 pounds. A few years later, he’s acquired a whole lot more goats, all of which have grown to 200 pounds, while his cows have all grown to 2000. Now his median animal weighs 200 pounds.

A very silly person could point out to this farmer that his median animal seems to be a lot scrawnier these days. The farmer might well reply that both his goats and his cows seem to be doing just fine, at least relative to where they were.

This is almost an example of Simpson's Paradox, a well-known (to stats nerds) effect where the direction of a correlation disappears when that correlation is disaggregated. I was taught it with an example involving racial discrepancies in application of the death penalty:

Sixty per cent of white murderers are executed for their crimes, and fifty per cent of black murderers. Are black people discriminated against in the application of the death penalty?

Now suppose that we break down the murder victims by race as well. We find the common pattern that people tend to attack victims of their own race:

Number of murders where death penalty is applied

White Murderer Black Murderer
White Victim 50/70=71% 25/30=83%
Black Victim 10/30=33% 25/70=36%

What about now? Does it begin to look like black people are discriminated against? In this example, black people are more likely to be executed for the murder of black or white victims; but because the murder of black victims isn't taken as seriously by the courts, the fact that murderers predominantly attack people of their race makes it look like black people are less likely to be executed than white people.

The median income example isn't quite a case of Simpson's Paradox, because there is still a positive increase in wage whether or not the statistics are disaggregated. But it's still an example of a time when it is best to dig beneath the surface.

But there is more to be said on the story of wage stagnation. Because a second claim normally accompanies the belief that US wages have stagnated, and that is that there has been a "decoupling" of wages. Due to rising inequality, the median household wage hasn't risen as fast as the mean wage:

If we've seen that the median wage grows faster when disaggregated, then the solid red line is likely to take a steeper ascent. But what happens to the dashed red line when disaggregated?

Sadly, I cannot find the data required to answer the question. If anyone knows where to look, tell me, and maybe we can put the issue to rest.

An immigrant worker protests in Orlando, Florida. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Article 50 deadline: Nick Clegg urges Remainers to "defy Brexit bullies and speak up"

The former deputy Prime Minister argued Brexiteers were trying to silence the 48 per cent. 

On Wednesday 29 March, at 12.30pm, Britain's ambassador to the EU, Tim Barrow, will hand deliver a letter to the European Council President, Donald Tusk. On that sheet of paper will be the words triggering Article 50. Nine months after Britain voted for Brexit, it will formally begin the process of leaving the EU.

For grieving Remainers, the delivery of the letter abruptly marks the end of the denial stage. But what happens next?

Speaking at an Open Britain event, former Deputy Prime Minister and Lib Dem Leader Nick Clegg had an answer. Responding to the concerns of a scientist in the audience, he declared:

“The most important thing of all is people like you make your voice heard. What the hysterical aggression from the Brexiteers means is they want to silence you.

"That’s why they attack everyone. The Bank of England - how dare you speak about the British economy? How dare judges make a judgement? How dare Remainers still believe they want to be part of the EU? 

"What they systematically try to do is bully and delegitimise anyone who disagrees with their narrow world view.

"It’s a ludicrous thing when 16.1m people - that’s more than have ever voted for a party in a general election - voted for a different future, when 70 per cent of youngsters have voted for a different future.

"It is astonishing these people, how they give themselves the right to say: 'You have no voice, how dare you stick to your views how dare you stick to your dreams and aspirations?'

That’s the most important thing of all. You don’t get bored, you don’t get miserable, you don’t glum, you continue to speak up. What they hope is you’ll just go home, the most important thing is people continue to speak up."

He urged those affected by Brexit to lobby their MPs, and force them to raise the issue in Parliament. 

After Article 50 is triggered, the UK positioning is over, and the EU negotiators will set out their response. As well as the official negotiating team, MEPs and leaders of EU27 countries are likely to give their views - and with elections scheduled in France and Germany, some will be responding to the pressures of domestic politics first. 

For those Remainers who feel politically homeless, there are several groups that have sprung up to campaign against a hard Brexit:

Open Britain is in many ways the successor to the Remain campaign, with a cross-party group of MPs and a focus on retaining access to the single market and holding the government to account. 

Another Europe is Possible was the alternative, left-wing Remain campaign. It continues to organise protests and events.

March for Europe is a cross-Europe Facebook community which also organises events.

The People's Challenge was a crowd-funded campaign which, alongside the more famous Gina Miller, successfully challenged the government in court and forced it to give Parliament a vote on triggering Article 50.

The3million is a pressure group set up to represent EU citizens in the UK.

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.