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March/April 1996, 
Vol. 78, No. 2
Posted 1996-03-01

Opening Pandora's Box: The Measure of Average Wages

by Joseph Ritter

Is there a wage-price spiral? Are workers better off than they were? Are real wages procyclical? Economists have often used data on average wages to answer such questions. Unfortunately, the three common sources for such data—average hourly earnings, compensation per hour, and the employment cost index—appear on the surface to measure the same thing, but often give different answers. In this article, the author provides some of the reasons for this.