November 01, 2015
The Wall Street Journal had an article on slow pay growth in recent years that was headlined, “shift to benefits from pay helps explain sluggish wage growth.” The article goes on to explain that one of the reasons that wages are not growing is that an increasing share of compensation is going to benefits like health insurance.
The problem with this explanation is that it is clearly not true. According to data from Bureau of Economic Analysis, wages accounted for 83.2 percent of labor compensation in the corporate sector in 2007 (Table 1.14, Line 5 divided by Line 4). In the most recent quarter they accounted for 83.8 percent of labor compensation. This means that the wage share of compensation has increased by 0.6 percentage points over the last eight years. That goes the wrong way for the WSJ’s story.
Note: Typo and link corrected, thanks Robert Salzberg and ltr.
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