Interesting economic facts

In today's NYT there is a story which I found a bit strange. The title was "Real Wages Fail to Match a Rise in Productivity." The story comments "The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation." After discussing some data about how wages have changed over time in relation to productivity changes the article quotes Jared Bernstein, who is at the (liberal) economic policy institute. (The Times notes that by the way.) He says “If I had to sum it up,” said Jared Bernstein, a senior economist at the institute, “it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth.” If the trend is indeed true, if I had to sum it up I might look at a lot of other factors. The decline of unions (bargaining power) may not be one of them - although it is a frequent topic of the Institute. There are lots of alternative explanations.

In rapid fire succession the Times then presents a series of conclusions that seem to contradict Bernstein's spin "Nominal wages have accelerated in the last year, but the spike in oil costs has eaten up the gains. Now the job market appears to be weakening, after a protracted series of interest-rate increases by the Federal Reserve." (Comment - the relative importance of oil in the economy is considerably diminished in recent years - so Bernstein's conclusion may not be true.)

"Unless these trends reverse, the current expansion may lack even an extended period of modest wage growth like one that occurred in the mid-1980’s." (Comment: but only if these trends are a) real and b) continuing.)

"The most recent recession ended in late 2001. Hourly wages continued to rise in 2002 and peaked in early 2003, largely on the lingering strength of the 1990’s boom." (Comment: but nominal wages increased in the last year - presumably that is beyond 2003 and average family income adjusted for inflation (see below) has advanced at a good clip.)

"Average family income, adjusted for inflation, has continued to advance at a good clip, a fact Mr. Bush has cited when speaking about the economy. But these gains are a result mainly of increases at the top of the income spectrum that pull up the overall numbers. Even for workers at the 90th percentile of earners — making about $80,000 a year — inflation has outpaced their pay increases over the last three years, according to the Labor Department."

It then goes on to fret whether there is substantial movement in the electorate about this set of issues.

Then comes something from economist James Galbraith. He suggests that the seeming changes in wage inequality can be substantially discounted by eliminating the data from only five counties in the US (Manhattan, King's County(WA), San Mateo, Santa Clara and San Francisco. That suggests, at least for me, that the quick rise in incomes for computer entrepreneurs and some financial managers has distorted our understanding of what the whole economy is doing. That should give us greater caution when looking at a bunch of other statistics - for example, do we have a firm understanding of the part of a family's income wages make up? Has that changed in all income classes over the last couple of decades? Have consumption patterns for families changed over time? (for example, is gas really less important to the family budget?)

What is the point here? Is the economic position of the average wage earner declining, holding steady or advancing? In this case the common logic may not be correct.