I am reading a new copy of data for metro areas for the Employee Cost Index. In this one the Twin Cities and St. Cloud are combined into one statistical area. What jumped off the page to me was that in the 12 months to March 2009, employee compensation (wages and salaries plus benefits) rose 0.5%. Through June 2009, the rise is only 0.4%. For just wages and salaries, 1.1% and 0.9%. That is, the rise in compensation in benefits had to be less than for wages and salaries. But for the six months of 2009, consumer prices in Minneapolis-St. Paul (not including St. Cloud) fell 1%. So here's a case where we get to see if money illusion happens. Will people recognize that relatively puny nominal wage increases when they are experiencing larger real wage increases are a good thing? Particularly when one of those things with falling prices might be benefits?

I don't have an answer to any of these questions -- it's just one of these things I wonder about.

Labels: economics, Minnesota