The Evidence for an Overstated CPI
This chart shows average real hourly wages in 1959 and 1994 and projections for 2030 (in 1995 dollars), using the current CPI as well as a measure that is adjusted in accordance with the commission's estimate of bias. Applying the commission's adjustment backward implies that the average real hourly wage was only $5.30 in 1959, only slightly above the current minimum wage. When the commission's adjustment is applied forward to projec tions of future wage growth, it implies that real wages will more than double by the year 2030. These projections suggest that today's retirees were much poorer throughout their working lives than has been recognized, and that today's youth face a prosperous future.
Sources: Economic Report of the President, Social Security Trustees Report, and Baker 1996a.