October 28, 2005

Have Wal-Mart's Real Wages Dropped by 10% Since 2001?

I'm tempted to write Barbaro and Greenhouse to ask where they obtained their wage figure... :

Some health experts praised the plan for making coverage more affordable, but others criticized it, noting that full-time Wal-Mart employees, who earn on average around $17,500 a year, could face out-of-pocket expenses of $2,500 a year or more.
One would presume that in such an important article, they're not using data from 2001, rounding down, and reporting it as if it were in today's dollars.

If so, the current figure is $300 lower than the figure reported for 2001 by those suing Wal-Mart. Granted, the Wal-Mart Class statistician was using only full-time hourly associates who had worked at least a year, so there could be definitional changes. But let's assume that the $17,500 represents recent data for full-time hourly employees who have worked at least one year.

Then we find, astonishingly to me, that Barbaro and Greenhouse are implicitly assuming that Wal-Mart has lowered real (BLS inflation adjusted) wages roughly 10% since 2001 (in 2001 dollars). I think that this would be an important point to make in the face of plans to lower benefits costs that have skyrocketed in double digits annually...

(Here is the calculation: 10% = 17800-(17500*175/190)/17800 , where 175 is the CPI-U for 01/2001, and 190 is the CPI-U for 01/2005) Note that I'm ignoring price changes in Wal-Mart itself, which some have argued are not well captured by the BLS.

Posted by Kevin on October, 28 2005 at 07:49 AM