This was originally just a comment in the fiat thread, but it was suggested I make it a short post so here it is.

Relevant tweet is here, courtesy of Daniel Altman, chief economist at Instawork:

Yes, real wages are 1% higher than they were before the pandemic.

But real wages rose by much more early in the pandemic – they had to, since working was riskier and labor was in shorter supply – and then they declined for TWO WHOLE YEARS.

That's why people were/are miserable.

He then posts a chart showing a massive spike in average hourly earnings at the beginning of the pandemic. His claims are false.

The problem is a change in composition—a lot of low-wage workers lost their jobs (just look at the employment ratio—it drops a full ten percent at the start of the pandemic), so they dropped out of the calculation. Average goes up, but it's not like employers handed out a 7% real raise to the workers that were left.

To see this, you can look at the Atlanta Fed Wage Growth Tracker. The advantage of this tool is that it tracks wage changes in the same individual, thus solving the composition issue. Nominal wage gains were essentially flat at the start of the pandemic, and this is true for both low and high wage levels.

[As u/Integralds points out, the COVID-induced deflation seen here also played some role in the jump.]

The same issue goes for the long drop that Altman highlights. It was a mixture of real declines (due to sticky nominal wages and increasing inflation) and composition effects (low-wage workers coming back to the labor force, thus dragging the average back down).

Edit: formatting