Why Better Wages Are Tied to Healthcare Costs

Real, or inflation-adjusted, compensation has risen 61 percent since 1970; wages, on the other hand, have increased less than 3 percent in real terms in that period.

This is a tale that has gotten short shrift in this political season. Much of the narrative of the 2016 election is about middle-class anger over the lack of economic progress in an era of increasing financial inequality. Residual frustration with the financial crisis and bank bailouts isn’t making voters feel any better either.

As the data cited above implies, the economics of pay gains are more complex than can be presented in a sound bite or in a two-minute debate answer. A closer look at the facts reveals some surprises, and an unexpected conclusion. You may not be happy with the bottom line, but it’s rather hard to argue with the underlying data.

Start by looking the chart below. This shows two ways to measure employee compensation:

Where’s My Raise?


The gray line is real wages, adjusted for inflation. This is the number most people think of when they consider their paychecks. It is their pretax gross pay, what they negotiate when they take a new job,  and what they hope to see rise each year.

As you can see, real wages have been little changed for more than 46 years, increasing a minuscule 2.7 percent during that period.



Continues at: Health-Care Costs Ate Your Pay Raises