Yesterday's post about the number of hours worked by the "average" person in the population (full details here) had some great feedback and an additional request. Before moving on to that, here is an additional chart showing the relationship (strong) between the number of hours worked by the average member of the population and growth in the economy.
And now the request (bold mine) by an anonymous reader:
Now to get the real "eye popper".... multiply the last graph (the red hours worked in the above chart) by the trend in wages. That will reflect the "earning power" (hence spending power) of the population.
Taking the previous chart and multiplying the data by the average hourly wage (I used private wages found here, but open to suggestions if there is better data) going back to 1964 and adjusting to 2009 $$ (via the CPI index), we get the following:
Interesting. Despite the spike in real hourly wages to levels last seen 30 years ago (due to a steady level of pay and deflation in recent months), average weekly wages are down to levels seen in the late 1990's (due to the decline in hours worked).
My guess is that the number of hours worked may be bottoming, but the real hourly wage increase we've seen has a large correction coming sooner than later. Thus, expect the weekly figure to continue its steep descent.
That said, anyone care to help with an explanation the movement in the 1960's and 1970's?