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Wages & Personal Income

Posted By Barry Ritholtz On July 25, 2005 @ 6:31 am In Economy | Comments Disabled

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 [1]
graphic courtesy of WSJ [2]

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Source:
Weekly Salaries Rise an Average of 5.7% in U.S. [2]
RAFAEL GERENA-MORALES
WALL STREET JOURNAL, July 20, 2005; Page A2
http://online.wsj.com/article/0,,SB112177493386889374,00.html


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[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/wages_economy07192005201118.gif

[2] WSJ: http://online.wsj.com/article/0,,SB112177493386889374,00.html

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