Income is a major factor we use to judge economic progress, but are there alternative income measures and do they all show the same trends? N.C. State University economist Mike Walden answers.
“There are alternatives, and they don’t all show the same trends — which means that you really need to listen when someone is quoting you a number about how people are doing and how the standard of living has changed.
“If you look, for example, at simply average household or family income, you see a trend where that improved dramatically since World War II. But it’s been pretty stagnant over the last 10 to 12 years.
“One problem with that measure, however, is that it does not adjust for the fact that households and families have been getting smaller. Also, households and families have been aging. So you need to keep that in mind.
“Another statistic that is looked at is simply to look at the average wage rate that a worker owns. Here we see that’s been pretty flat — No improvement over about 20 years.
“Lastly you can look at a broader measure of what people earn; it’s called compensation earned per hour. That’s going to include not only what you get paid in your paycheck, but the value of the benefits that you earn, like for health insurance and vacation. Here we see that that has climbed over the last 30 years and actually has continued to climb.
“So, once again, you have to pay attention; What is the statistic being quoted, and what does it mean?”