Average weekly earnings for production workers and non-supervisory service-sector workers -- who account for 80 percent of the employment on private, non-farm payrolls -- rose to $522 in the first three months of this year, up just 1.6 percent from the same quarter a year before, according to Labor Department data. This group includes salaried doctors, lawyers and other professionals, as well as construction workers, janitors and clerical employees.
The Labor Department doesn't calculate estimates of the pay of the other 20 percent of wage earners, a group that includes company executives and other managers in service industries. But the amount can be roughly estimated by comparing different government statistics. The figures indicate the amount for them is climbing much faster than the wages of the larger group, and the rate of increase is accelerating, according to Ray Stone of Stone & McCarthy Research Associates, who analyzed Labor and Commerce Department income data at the request of The Washington Post. These workers do not include the self-employed or others not eligible for unemployment insurance.
Jack Yeaton of New York shows some of the gifts he has purchased for the holidays. This season, the divide between rich and poor has widened.
(Richard Drew -- AP)
Managers made an average weekly wage of about $1,737 in the first three months of this year, the most recent period for which comparable data are available, an increase of 6.7 percent over the first quarter of 2003, Stone found. He said the weekly amount is somewhat overstated because of problems separating out some forms of income. The pay comparison also leaves out other sources of personal income -- which are rising -- such as dividends, interest, rents and inheritances, or capital gains from the sale of assets such as stocks and real estate. But the overall trend is clear.
The rate of wage increases for the higher-paid group had risen for four consecutive quarters through early this year, Stone found. Meanwhile, the pace of wage increases for the lower-paid workers slowed over the same period.
Although directly comparable data for the two groups were not available beyond the first quarter, the strong growth in total wage and salary income this year implies that the higher-paid group must have seen its pay rise at least twice as fast as the lower-paid group in recent months, according to economists who have reviewed the figures.
Fed economists have made calculations similar to Stone's for internal use but have not released them publicly.
Several Fed officials have raised concerns over the past year that the economic recovery could falter again if the payroll job market doesn't strengthen more, and they have used this on occasion as an argument for keeping interest rates relatively low to spur faster economic growth. But some think the expansion will continue if pay gains remain robust for the top 20 percent, because total consumer spending will keep rising at a healthy clip.
The more sanguine viewpoint is "not unreasonable," Stone said. But he remains worried that the job market appears likely to weaken early next year. "I'm not sure we're out of the woods."