ETA: The table linked by Landsburg has been called into serious question by Evan Soltas [H.T. CronoDAS]. I edited the post to leave only the table to provide context for the comment discussion of its status.
Economist Steve Landsburg has a post [H.T. David Henderson] about the supposed stagnation of median wages in the United States in recent decades. In the linked table median wages have risen for:
Interesting data.
I have one bone to pick with the original article:
... then the supply curves would have shifted around and people in each group in the counterfactual 1980's would have been earning a different amount to what they did in the real 1980's.
So can anyone who understands economics help me - is the overall stagnation a supply or demand side thing? The data hint that cheaper labor is entering the workforce and driving wages down, but could it also be that the economy only supports a certain number of jobs, and regardless of how demographics shift around the median wage won't go up?
You're making an unwarranted assumption that the overall stagnation needs a macroeconomic explanation.
Imagine, for a moment, that most of the increase in a workforce happens in low-wage, low-cost-of-living regions. It's entirely possible for average wages to stagnant even as average buying power increases, with no changes to any local costs of living; what mechanism in supply and demand can explain this? Is cheap food entering the country from Mexico and driving the cost of food down? That's the problem with hidden variables.
Instead of looking for an ex... (read more)