The Fallacy of 'Wages Haven't Risen'

If you read the newspaper at all or listen to political speeches, one pseudo-statistic is quoted with such high frequency that you may need to wear ear muffs before your brain starts to bleed. It goes something like this:

"Over the past 8 years, the average American worker has not had any wage increases. Combined with the soaring cost of health care, most people now feel that they are worse off than they were 8 years ago."

Now hold on a second. Let's assume that most health care is employer provided. Employer provided health care is a sort of economic appendix; it arose in the Great Depression when FDR put wage caps on what companies could pay their employees. To get around these wage caps, companies paid their employees in non-direct ways, such as healthcare/dental care, retirement packages, paid vacations and so on. Thus, if you want to really find out what a given worker 'makes' in his job, the rational way to do so would be to look at not just his wage, but also the benefits he receives.

According to NCHC.org,

"By several measures, health care spending continues to rise at the fastest rate in our history.

In 2007, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.¹ Total spending was $2.3 TRILLION in 2007, or $7600 per person. Total health care spending represented 16 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.2 TRILLION in 2016, or 20 percent of GDP.

In 2007, employer health insurance premiums increased by 6.1 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.^"

My hypothesis (I haven't done any econometric analysis or read any rigorous papers on the topic) is that wages HAVE risen; the rise just hasn't been reflected in dollars per hour. Wages have risen in the sense that employers are now paying more and more for their workers to access a higher quality of health care. I'd like to see if I'm right about this, and if so, what the magnitude of the effect is.