An Index of the Wage of Unskilled Labor from 1774 to the Present

Samuel H. Williamson
Professor of Economics, Emeritus, Miami University
Senior Editor, EH.Net
President of MeasuringWorth.Com

This is a description of the methods used to construct an Index of the Wage of Unskilled Labor from 1774 to the Present [text file] [excel sheet]. This construction uses three sources: a series published by Paul David and Peter Solar in 1977, the work of Robert Margo published in 2000, and various publications of the Bureau of Labor Statistics (BLS).

For 1774 to 1824, the David and Solar (1977) series is used. (Table B.1 p. 59) [text file] [excel sheet]

For 1825 to 1860, the Margo (2000) series is used. (Table 5B4 p.117). [text file] [excel sheet]

For 1861 to 1973, the David and Solar (1977) series is used. (Table B.1 p. 59) [text file] [excel sheet]

For 1974 to 2000, various sources for the BLS as explained below. [text file] [excel sheet]

For 2000 to the present, the BLS series of the median usual weekly earnings (second quartile) of those wage and salary workers employed full time with less than a high school diploma, and are 25 years and over is used. These data are from the Current Poulation Survey.

In order to continue the David and Solar series after 1973 using current data published by the BLS, two different data series must be merged, using a third series to tie them together. For the period from 1961 to 1974, David and Solar use the index of hourly wage rates of "unskilled plant workers", from the BLS Bulletin #1775-98. In 1974 the BLS stopped publishing this series, however, so I chose as the closest comparable series, the BLS Employment Cost Index of "Handlers, equipment cleaners, helpers and laborers," which is available annually from 1976 to the present (U. S. Department of Labor, 2000, p. 85). The problem here is the missing years between when the David and Solar series ends and when the BLS Employment Cost series begins. Below is an explanation of how these missing numbers were created and the data series were linked.

The data used to link the two series mentioned above also comes from a third BLS source that reports average earnings of "Janitors, porters, and cleaners" from 1967 to 1981 (U. S. Department of Labor, 1983, p. 258). A complication of using this data is that during the period we are trying to link, the BLS changed the month they collected the data from February for the years up to 1975, to July for the years 1976 on. This was also a period of rapid wage increases. Therefore, to give these data observations a "better" annual fit, a fourth order polynomial was fit to the 1973 to 1977 monthly observations with the average earnings as the dependent variable and the month as the independent variable. The resulting fourth order equation was then used to estimate the other months of the years 1973-1977. From these estimates, an annual average was calculated for each of these five years. These are in Column A of the Link to BLS table (Here put a link to the Link BLS to David&Solar table).

To use these data to link the years between the David and Solar series and the Employment Cost series, we begin with the first full two years of observations in the Employment Cost series (Column B1) and take the average of 1976-77 observations divided by the average of the 1976-77 annual observations from column A. This gives a value of 13.9108. This number is then multiplied times the observations in column A for the years 1973-1975 to estimate of the employment cost index for those three years. The complete observations are in Column B2.

The final step to merge with the David and Solar series is to divide the value in their series for 1973* by the Employment Cost Index of the same year found in Column B2, resulting in a value of 92.69, and then multiplying that number times the rest of the values in Column B2 for the years 1974-2003, giving the yearly index of money wage found in Column C.

This completes the index for all the years 1774 to the present. [text file] [excel sheet]
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*At the time, David and Solar did not have the data to compute the final index on a calendar year basis in 1973 and 1974 the same way they computed 1952-1972. They used a regression to estimate these last two observations. Since the publication of their work, updated data from the BLS "Earnings index" allows for the value of 1973 to be observed from the source. The 1973 observation is 3734 and not 3753 .

Sources:

David, Paul A. and Peter Solar, (1977). "A Bicentenary Contribution to the History of the Cost of Living in America," Pages 1-80 in Volume 2 of Research in Economic History , Greenwich: JAI Press, Inc.

Margo, Robert A., (2000) Wages and labor markets in the United States, 1820-1860 Chicago : University of Chicago Press

U. S. Department of Labor, (1976), Area Wage Surveys: Metropolitan Areas, United States and Regional Summaries, 1973-74, BLS Bulletin 1795-29, Washington D. C.: U. S. Government Printing Office. Table A-28, p. 88, "Earnings Index-all metropolitan areas," "unskilled plant labor."

_____ . (1982), Labor Force Statistics Derived from the Current Population Survey : A Databook, Vol. 1, Bulletin 2096, Washington D. C.: U. S. Government Printing Office. Table C-26, p.736, "Median hourly earnings of wage and salary workers paid at hourly rates by detailed occupations, May 1973-78."

_____ . (1983), Handbook of Labor Statistics , Bulletin 2175, Washington D. C.: U. S. Government Printing Office. Table 100, p.258, "Average earnings for selected plant occupations in metropolitan areas by sex, industry division, and region, 1967-81," "Janitors, porters, and cleaners."

_____ . (2000), Employment Cost Indexes, 1975-99, Bulletin 2532, Washington D. C.: U. S. Government Printing Office. Table 10, p.85, "Wages and Salaries, private industry workers: Employment Cost Index by occupational and industry group, 1975-99," "Handlers, equipment cleaners, helpers, and laborers."

_____ . (2003), Employment Cost Index. [On-line Database] Available: http://www.bls.gov/ncs/ect/home.htm

_____ . (2009) Quartiles and selected deciles of usual weekly earnings of full-time wage and salary workers by selected characteristics, quarterly averages, not seasonally adjusted.[On-line Database]  Available: http://www.bls.gov/cps/

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