We have a graph showing change in average compensation per employee. But this doesn’t really tell the whole story, because the average cost of living may decline in policy scenarios, due to things like energy efficiency policies, cheaper electricity, different travel patterns, etc. Also, our calculated reductions in public health outcomes, like hospital admissions and ER visits, correspond to lower spending. (Health care is very expensive.) To provide a more holistic sense of the change in worker finances caused by the policy package, we might want to calculate a cost-of-living adjustment.
Conveniently, we already calculate a change expenses for “labor and consumers,” which should account for policy-driven changes in spending on energy and most equipment and labor, but not changes in health care spending. We could monetize all the health outcomes, not in terms of VSL, but in terms of how many real dollars actually come out of a household's pocket as a result of each outcome, and add them to the change in household expenses. We then divide by the number of households or workers and adjust the average compensation per employee to reflect the fact that the dollars may not need to stretch as far, with lower expenses to maintain the same quality of life.
We likely would want to continue to display the unadjusted "change in average compensation per employee" line, as well as the version adjusted for cost of living.
We might also want to reallocate avoided healthcare spending in the I/O model from health care to the other ISIC codes that households spend their money on.
We have a graph showing change in average compensation per employee. But this doesn’t really tell the whole story, because the average cost of living may decline in policy scenarios, due to things like energy efficiency policies, cheaper electricity, different travel patterns, etc. Also, our calculated reductions in public health outcomes, like hospital admissions and ER visits, correspond to lower spending. (Health care is very expensive.) To provide a more holistic sense of the change in worker finances caused by the policy package, we might want to calculate a cost-of-living adjustment.
Conveniently, we already calculate a change expenses for “labor and consumers,” which should account for policy-driven changes in spending on energy and most equipment and labor, but not changes in health care spending. We could monetize all the health outcomes, not in terms of VSL, but in terms of how many real dollars actually come out of a household's pocket as a result of each outcome, and add them to the change in household expenses. We then divide by the number of households or workers and adjust the average compensation per employee to reflect the fact that the dollars may not need to stretch as far, with lower expenses to maintain the same quality of life.
We likely would want to continue to display the unadjusted "change in average compensation per employee" line, as well as the version adjusted for cost of living.
We might also want to reallocate avoided healthcare spending in the I/O model from health care to the other ISIC codes that households spend their money on.
Suggested by Skip Laitner on 7/8/2020