#167 How Much Have Employee Earnings Gain in 12 Years?

The most recent announcements from the Office of the US President boasted about the prosperity of wage earners as evidenced by low levels of unemployment.

To examine the credibility of such claims based on employment we have collected information about the average hourly earnings  since 2007 as well as the corresponding consumer price index . This information was obtained from the Federal Reserve Bank (https://fred.stlouisfed.org):

Conclusions:

US employees realized from 2007 through 2019 average gains of only 0.39%/year. From that we need to subtract other charges such as Social Security taxes and State & Local taxes. 

Wage earners show only very small yearly gains as compared with the 7.8%/year realized by an investor in the stock market.  

The difference between a wage earner’s annual 0.39% increase vs. the investor’s 7.8% annual gains arise between gains reaped from current incomes and gains realized from investments that deliver compounded returns.