be careful with "real" hourly earnings. if they're using the CPI then it can be very misleading. One need only compare nominal wages vs nominal rents per square foot for the last 50 years to see that actual wages have dropped by 30% and yet the "real" hourly average wage calculated via the CPI is flat, falsly implying that actual wages have not dropped.
> if they're using the CPI then it can be very misleading. One need only compare nominal wages vs nominal rents per square foot for the last 50 years to see that actual wages have dropped by 30% and yet the "real" hourly average wage calculated via the CPI is flat, falsly implying that actual wages have not dropped.
Yes, if you get to pick prices of arbitrary items to compare against, it's easy to come to whatever conclusion you want[1]. That's why CPI uses a basket of goods, specifically to avoid cherry picking shenanigans.
[1] https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-...
CPI functions to obscure disproportionate price increases in essentials by lumping them in with cheapening commodities (e.g. electronics) that have a high demand elasticity. It's as much a choice to to use CPI to come to the conclusion things are fine, as it would be picking "arbitrary items" such as the essentials: food, shelter, medical care, and transportation that would paint a picture distinctly less fine.
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shelter isn't just a cherry picked item. It's by an far the largest spending category, that and healthcare. I couldn't care less about all the other categories, personally.
>shelter isn't just a cherry picked item. It's by an far the largest spending category, that and healthcare.
The BLS agrees. That's why "shelter" is weighted 35.6% in the CPI basket, by far the biggest item.
> I couldn't care less about all the other categories, personally.
If we're going by what people "care" about (whatever that means), the basket would probably be like 70% gas prices, 20% grocery prices, and 10% for everything else. Empirically speaking, those two are far more salient politically than housing.
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