Averages can be deceiving

Vermont’s average annual wage rose to just over $54,000 last year. The increase, nearly 10 percent, was the largest since at least 1988.

It’s nothing to celebrate, though. We aren’t really better off.

The average went up last year because the COVID-19 pandemic took its biggest toll on low-wage jobs. If you ranked jobs from the lowest paying to the highest paying and divided them into three equal groups, you’d find there were almost 17 percent fewer jobs in the bottom group last year than there had been in 2019. Jobs in the middle group declined about 6.5 percent, and the group with the highest wages had the lowest job loss,  just over 3 percent.

The average increased not because people were making more money—although some certainly were. Instead, more low-wage jobs disappeared than high-wage jobs, so the average pay of the remaining jobs was higher.

There is some hope that we could see a real wage increase—as opposed to a statistical increase—as more Vermonters get vaccinated and the economy slowly opens up again. Employers are complaining that they can’t find workers. That should induce them to offer higher wages, which could mean we consumers would need to pay a little more, too.

But better wages, combined with better tax policy, is the way to reach the goal of a livable income for Vermont families. For a few months last summer, $600-a-week federal unemployment benefits helped some Vermont families achieve that goal. The challenge now is to see that full-time work—along with tax policy that doesn’t favor investors over workers—will be enough for families to support themselves and meet their basic needs.

Otherwise, we will fall back into the pattern of the 40 years before the pandemic when more and more income and wealth went to the top 1 percent. When Jeff Bezos and Mark Zuckerberg get richer, it does raise the average, but the rest of us aren’t any better off.

Posted by Jack Hoffman on June 30, 2021 at 2:45 pm

2 Responses to “Averages can be deceiving”

  1. Doug Hoffer says:

    Good piece.

  2. Tim Swartz says:

    Well put, Jack. It’s always good to point out when statistics, even those that use accurate data, present a misleading picture. The use of averages (I’m guessing the average used for this post is the mean) often leads to this sort of distortion of meaning.
    I understand that this post is presenting this “simple” averaging to make the point about unequal distribution of income gains. One of the things I appreciate about PAI’s statistics is that they are usually more clear than this–by presenting income gains for different quintiles of income levels, for example.
    Keep up the good fight!