The Standard on Real Wages

The Standard has done a post with a graph showing purported real average weekly earnings from 1990 to 2007.

In 1990 dollars it shows real average weekly earnings staying constant from 1990 to 1999, and then increasing from around $465 a week to $510 a week from 2000 to 2007. They conclude average weekly earnings under Labour increased at 30 times the rate of National.

But it is very very hard to verify the data for their graph. They do not state what the source of their data is. I’ve gone back to an old data series done by the Parliamentary Library (who are neutral) and verified it with the Stats NZ data in the quarterly employment survey.  It is very different to what The Standard claims. Now this maybe because they are using a different data series, but again with no reference I don’t know. I would welcome their clarification and posting of full data, as I have done.

Below I show the following data. The ordinary time average weekly earnings from the quarterly employment survey (series SBAZ9A), the CPI, the real average earnings and the real after tax average earnings. The Standard did not provide after tax figures, but I provide both before and after tax figures for people to do a full comparison.

Jun 90 – $502.95 av earnings, CPI 716, $502.95 real av earnings, $385.81 real av after tax earnings.

Jun 99 – $639.96 av earnings, CPI 832, $550.73 real av earnings, $436.78 real av after tax earnings.

Jun 07 – $846.19 av earnings, CPI 1020, $593.99 real av earnings, $459.32 real av after tax earnings.

Now one is over nine years, and one is over eight years.  If you divide the increase by the number of years you get the average annual increase in real ordinary time weekly earnings as $5.31 from 1990 to 1999, and $5.41 from 1999 to 2007.

And if you look at the average annual increase in real ordinary after tax earnings, then the increase is $5.66 from 1990 to 1999 and $2.82 from 1999 to 2007.

So on the Stats NZ figures, average real weekly ordinary time earnings increased by almost exactly the same annual amount from Jun 90 t0 Jun 99 and Jun 99 to Jun 07. And if you take into account tax, the increase was twice as high in the earlier time period.

Again, if The Standard can provide their full data and reference sources, I would be happy to try and work out why the data is so different.  I did look through many other data series in the QES to try and reverse engineer a series which fitted their data, but there didn’t seem an obvious one that fitted.

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