Characteristics of the Production-Worker Compensation Series

by

Lawrence H. Officer
Professor of Economics
University of Illinois at Chicago
Lawrence@mswth.org

The production-workers compensation series (PWCS) was constructed and made available in MeasuringWorth, because of the glaring need for such a series. The series has properties that no other U.S. wage or compensation series possesses in total and that very few possess even in part. In particular:

1. Length of Series: Many U.S. macroeconomic variables are represented by long-run time series, but a wage series is not among them. The PWCS is the first U.S. wage or compensation series that is available annually and continuously from 1800 to the present.

2. Inclusion of Benefits: The PWCS includes benefits in compensation all the way back to when benefits became measurable, which is the year 1906, although benefits do not affect compensation until 1912 and are not a noticeable component of compensation until the late 1930s.

3. Restriction to Production Workers: Production workers-also called wage-earners, nonoffice employees, and manual workers-are the subject of the series, because these workers are paid per high-frequency time worked. Originally, these workers were paid daily, then hourly. (Of course, for time consistency of the series, data on a daily basis are converted to an hourly basis.) Compensation per hour is a useful series in many areas of study: productivity, unionization, standard of living, and so on.

4. Exclusion of Nonproduction Workers: Nonproduction workers (clerks, superintendents, managers, executives, salespeople, and so on) are fundamentally different from production workers in two ways. First, they are not directly involved, with tools, machinery, or equipment. Second, they are paid at regular and lower-frequency time intervals, per week or month. Nonproduction workers are also called office workers (although that is too narrow a designation), white-collar workers, and salaried employees. It is only logical to exclude such workers from the series, for reason of consistency.

5. Manufacturing Sector: Although production workers are present in several sectors of the economy, the series incorporates production workers only in manufacturing. Again, this restriction enhances the consistency of the series.

6. Skilled and Unskilled Workers: The PCWS incorporates both skilled and unskilled workers. Many long-run wage series are limited to unskilled workers, with skilled workers-even skilled production workers-ignored. That is a serious omission, because unskilled workers in manufacturing would largely be laborers. A earnings series of laborers alone would be a poor series to represent all manufacturing production workers.

7. Integration of Existing Series: The PWCS takes the best of existing official and scholarly series of worker compensation and integrates them in a consistent way. Thus the PWCS is a "composite series". While it would have been preferable to have created the series from first principles and consistent principles throughout the time period, information to do so does not exist.

8. Current Weighting Pattern: Some wage series have fixed weights, such that component wages are weighted by a fixed number of workers engaged in the occupation or industry (for the PWCS, meaning subindustry of manufacturing), this fixed number (from a base period) applicable to all years. The PWCS uses current weights, so that each year has its own weighting pattern. The advantage of current weights is that they incorporate the changing industry and occupation distribution of the workforce over time. For most purposes, one wants such a weighting pattern. For example, this pattern incorporates shifts of workers between occupations and industries as the workers move to enhance their earnings.

9. National Series: Many 19^th-century, and especially pre-Civil War ("antebellum") series are restricted to the Northeast region of the country. The PWCS is a national series, representing all U.S. regions (data permitting), even though creative techniques must be used to expand Northeast earnings to other regions of the country.

10. Inclusion of Female Workers and Young Male Workers: The PWCS pertains to females as well as males, and to boys as well as adult males. This characteristics is in contrast to virtually all antebellum wage series, which are almost entirely restricted to adult males. From the 1830s to the Civil War, adult males constituted less than two-thirds of the total production workers in manufacturing. Because their wages differed from adult-male wages, a misleading earnings series results from ignoring female and young‑male workers.

The latest observation of this series have not been available from the BLS, so we have had to interpolate using the total compensation of all manufacturing workers for the 2009 and 2010 observations.