Skip to main content
The FRED® Blog

Posts tagged with: "LNS12027660"

View this series on FRED

What happened to the median wage in 2020?

The power of the composition effect

Our first FRED graph traces the evolution of the median weekly wage in the United States. See the spike in 2020? Does this huge increase mean everyone got a huge raise? No, it does not. As we’ll try to show in this post, the so-called composition effect is misleading us here.

We’ve discussed the composition effect before, which is basically that group averages can mask true individual experiences.

Our second graph shows employment for various education levels, excluding non-salaried workers: We see that more education made it less likely to lose a job in 2020.

The third graph shows the number of employed people by education, including non-salaried workers: All categories decreased, but the decreases were disproportionally larger for the less educated.

The second and third graphs show us where that composition effect kicks in: After losing more low-wage jobs than high-wage jobs, the median wage had to go up. Remember: With a median, in this case median wage, half the jobs are above and half are below. If you remove more jobs from the bottom half than the top half, the median wage will rise.

How these graphs were created: For all graphs, start at the Weekly and Hourly Earnings from the Current Population Survey release tables and navigate to the table of interest. Check the series you want to display and click “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: LEU0252881600Q, LEU0252916400Q, LEU0252917000Q, LEU0252918800Q, LEU0252919400Q, LEU0254929100Q, LNS12027659, LNS12027660, LNS12027662, LNS12027689

Employment losses are largest for the least educated

The FRED Blog has discussed how unemployment rates are inversely related to educational attainment and how they change during recessions. In short: Workers with more education are richer in so-called human capital and tend to be able to adapt more easily to changes in large-scale labor market conditions.

The FRED graph above shows employment levels after the COVID-19-related recession began. The length of the bars represents the percent change,  relative to a year ago, in the number of employed people 25 years and older. And these workers are divided into groups according to educational attainment.

Workers who didn’t graduate from high school had the largest losses in employment. Workers who did graduate from high school, including those  with some college or an associate degree, also experienced significant losses in employment but fared a bit better. Workers with a bachelor’s degree or higher were able, for the most part, to remain employed.

The second FRED graph shows the same four groups of workers but for the previous recession, from December 2007 to June 2009. Although these bars don’t go as far into negative territory, we see a similar pattern: At least initially, the more-educated labor force was more resilient. As the recession passed the 12-month mark, however, all education groups started to report losses in employment.

Low educational attainment isn’t necessarily a permanent trait, so it’s possible for workers who are laid off to exit the labor force, gain more human capital through formal education, and re-enter the labor force as more-educated workers. When they do this, they can expect to enjoy steadier employment. To learn more about education’s effects on employment stability, read the work of Isabel Cairo and Tomaz Cajner.

How these graphs were created: Start from Table A-4 of the Current Population Survey, select the series you want shown, and click “Add to Graph.” From the “Edit Graph” panel, select units “Percent Change from Year Ago” and click on “Copy to all.” From the “Format” tab, select “Graph type: Bar.” Adjust the sample period to match the dates displayed in each graph.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: LNS12027659, LNS12027660, LNS12027662, LNS12027689

U.S. labor before FRED was born

A happy-birthday backward glance at 1991

Today, FRED celebrates its 28th birthday. On this happy occasion, the whole family (FRED, ALFRED, GeoFRED, and the little one, FREDcast) are gathering to read the 2018 Annual Report of the Federal Reserve Bank of St. Louis, much of which is dedicated to FRED.

Let’s look back at the U.S. economy before the birth of FRED (on April 18, 1991) and compare it with the economy of today. The graph above shows the unemployed according to the length of their unemployment spell: We can see there are many more long-term unemployed today. The second graph, which uses a dataset first released right after FRED was born, shows that the U.S. labor force has also become more educated.

We can’t offer our readers any cake, but we do have pie…charts. The two charts below compare men and women in the labor force and show that the share of women has increased a bit in the past 28 years. The change may not be obvious until you hover over the chart to verify it.

How these graphs were created: Start from the Current Population Survey, navigate to the release table you’re interested in, check the series you want displayed, and click “Add to Graph.” For the first two graphs, use the “Edit Graph” panel’s “Format” tab and select graph type “Area” with “Percent” stacked. Adjust the start date for the first graph. For the pie charts, chose graph type “Pie” and adjust the dates.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: LNS11000025, LNS11000026, LNS12027659, LNS12027660, LNS12027662, LNS12027689, UEMP15T26, UEMP27OV, UEMP5TO14, UEMPLT5


Subscribe to the FRED newsletter


Follow us

Back to Top