What Are Real Wages?

Real wages refer to the amount of consumer goods and services that can be actually purchased in monetary terms. It is one of the important signs reflecting the actual living standards of workers. In the case of constant nominal wages, the actual wage level depends on factors such as consumer product prices, changes in the composition of employees' consumption, rents, and taxes. China has long adopted a method of price stabilization to ensure the basic level of actual wages of employees. After 1978, consumer prices rose due to price adjustments. To this end, the state has adopted measures such as raising the wage level of employees, adjusting the types of wage areas, and implementing non-staple food subsidies. ^[1]

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Real wages =

The difference between nominal and real wages

Link between nominal and real wages

Nominal wages and real wages are closely related. With other conditions unchanged, the changes are consistent, that is, the higher the nominal wage, the higher the real wage, and vice versa. However, the changes of the two are often inconsistent, that is, nominal wages are unchanged or even increased, while real wages may be lowered because the level of real wages depends not only on the level of monetary wages but also on the level of prices. If nominal wages remain the same, prices rise, or if the increase in nominal wages cannot keep up with the rate of increase in prices, real wages will fall.

Trends in nominal and real wages.

The changing trend of capitalist wages is that nominal wages generally rise, real wages sometimes increase and sometimes decrease, and in the long run it is an upward trend. As labor productivity increases faster than real wages, while real wages rise, the level of exploitation will continue to increase.