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Wages vs. Inflation, 1977-92
Hourly wages, while not directly comparable to annual incomes and applicable to a limited subset of workers, still provide another way of measuring the economic success of an administration's economic policies.
As with other trends during the Reagan years, the economic policies of the Reagan administration reversed a decline that was underway during the previous administration. Reagan's pro-growth and anti-inflation policies helped turn plummeting real wage levels into a level trend where wages kept up with inflation over the eight years the Reagan economic policies were in effect.
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Average Hourly Wages And Percent Changes
1977-92 (annual average wage) Total Private[1] |
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|---|---|---|---|
| Year | Hourly Earnings (constant 1982 dollars) | Percent Gain | $10/hour at start turns into... |
| 1977 | $8.66 | NA | NA |
| 1978 | $8.67 | 0.1% | $10.01 (Start of Carter years) |
| 1979 | $8.40 | -3.1% | $9.70 |
| 1980 | $7.99 | -4.9% | $9.22 |
| 1981 | $7.88 | -1.4% | $9.09 (End of Carter years) |
| 1982 | $7.86 | -0.25% | $9.98 (Start of Reagan years) |
| 1983 | $7.95 | 1.15% | $10.09 |
| 1984 | $7.95 | 0% | $10.09 |
| 1985 | $7.91 | -0.4% | $10.05 |
| 1986 | $7.96 | 0.6% | $10.11 |
| 1987 | $7.86 | -1.26% | $9.98 |
| 1988 | $7.81 | -0.6% | $9.92 |
| 1989 | $7.75 | -0.8% | $9.84 (End of Reagan years) |
| 1990 | $7.66 | -1.16% | $9.88 (Start of Bush 41 years) |
| 1991 | $7.58 | -1.0% | $9.78 |
| 1992 | $7.55 | -0.4% | $9.74 |
| 1993 | $7.52 | -0.4% | $9.70 (End of Bush 41 years) |
| Net change for four years under Carter: -9.1% | Average yearly change: -2.275% | ||
| Net change for eight years under Reagan: -1.6% | Average yearly change: -0.2% | ||
| Net change for four years under Bush 41: -3.0% | Average yearly change: -0.75% | ||
| Summary: hourly wages dropped precipitously under Carter (almost 2.3% per year) but remained almost constant during the Reagan years (only a 0.02% annual decline) then accelerated again to a 0.075% decline under President George H. W. Bush. | |||
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1 Data relate to production workers in
mining and manufacturing; construction workers in construction; and
nonsupervisory workers in transportation and public utilities;
wholesale and retail trade; finance, insurance, and real estate; and services.
This table does not include salaried employees and is not directly comparable to annual earnings. |
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Putting it all together
The data here show that hourly wages remained just about level during the Reagan years. That is, they kept pace with inflation. The same can not be said of the Carter years, when real hourly wages dropped more than 2 percent annually. Similarly after Reagan left office real hourly wages once again dropped on an annual basis, though at a more moderate 0.75% annual pace.
Coupled with the data on family and household incomes (which increased every year in real dollars) we see that the American wage earners did quite well during the Reagan administration. Hourly wages kept pace with inflation and total annual incomes increased every year, outpacing inflation.
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