Why did U.S. workers suddenly see a "surprisingly large increases in pay at the end
of 2004?"

According to a new comprehensive look at employment and wage trends across 317 of the country’s
largest counties, the gain seems to be
bolstered by commissions and end-of-year bonuses, which are included in the
counts:

The report showed wages are growing, from suburban areas like
Williamson County, near Austin, Texas, to big cities like New York. It also
helped clarify a muddled national picture on the state of worker pay. Economists
have been puzzled for months about why national income seems to be rising at a
healthy pace while measures of hourly wages are barely keeping up with
inflation.

The latest report lends weight to the argument that end-of-year
bonuses and commissions were a factor, economists say.

The statistics showed that weekly wages averaged $812 throughout
the nation. Workers in Williamson saw the biggest increases in weekly wages,
with a 17.8% jump to $893 from a year earlier. Williamson County, the home of
Dell Inc., is benefiting from the recovery in the tech sector and from
robust single-family housing construction, according to Moody’s Investors
Service.

The report notes that robust real estate markets contributed in many counties, as commissions and bonuses are included in this measure of income.

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click for larger chart
Wages_economy07192005201118
graphic courtesy of WSJ

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Source:
Weekly Salaries Rise an Average of 5.7% in U.S.
RAFAEL GERENA-MORALES
WALL STREET JOURNAL, July 20, 2005; Page A2
http://online.wsj.com/article/0,,SB112177493386889374,00.html

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “Wages & Personal Income”

  1. touche says:

    My guess is that real estate companies are flushing out broker and agent commissions at year end to avoid paying corporate income taxes on any unpaid amount. Think about it. Record real estate sales x 6% x brokers’ share of commission has to equal some big bucks.

  2. leewhee says:

    What a perfectly useless and misleading WSJ graphic.

    The heading “Where jobs are growing fastest” implies ROC, yet the data shows nominal numbers. So the data doesn’t indicate how fast jobs are growing at all, simply the net number of jobs gained YOY.

    So a 58K gain in LA County—the most populous county in the nation by far—is a spit in the ocean, a rounding error.

    Garbage in, garbage out.

    And as was mentioned, most of the job gains (spurious as they were) were concentrated in housing boom markets. When that craters or simply cools, look out below for job creation (or preservation) in these supposed “fast-growth” job markets.

  3. dc says:

    sorry, you just have idea how real estate commissions work. they are paid at the time of sale. brokerages pay their agents right away. there is no withholding.

    geesh

  4. Stormy says:

    Second dc’s comment. Real estate people are paid at the time of sale…no year end bonus, except the Christmas party–at least the brokerages I am familiar with.

  5. I think you are misreading a specific sentence — or, that sentence was poorly written.

    “The report notes that robust real estate markets contributed in many counties, as commissions and bonuses are included in this measure of income.’

    Commissions refer to RE; Bonuses were also included, but they are not referring to RE