Often in discussions about the economy, particularly the labour market, reference is made to the “average industrial wage” as some sort of benchmark. For example Sinn Fein TD’s (members of the lower house of parliament in Ireland) restrict themselves to keeping a proportion of their salary equal to that average, I understand.
So why use it as a benchmark? It may surprise people to learn that industry accounts for quite a small proportion of employment. According to the CSO (latest data, for April to June 2011), total employment was 1,821,300. Of these less than 13%, 233,700, were in industry. Health and social services account for slightly more (237,900). The wholesale and retail trade account for significantly more, 265,000.
So on numerical grounds there is no reason to single out industry. Remember manufacturing industry is smaller still, since this will not include “extraction” (mining and quarrying). On economic grounds, there is no reason to think of industry as being particularly important. There is a tendency in some quarters to fetishize industry which harks back to some golden era when industry was particularly significant (& which smacks of mercantilism to me). But the idea that jobs in industry are somehow special and the services sector is just some add-on is baseless. Maybe its the fact that its the labour movement (traditionally strong in industry) has tended to make use of such benchmarks that accounts for the choice of reference sector. It may also be that data on industry has tended to be more readily available (for example because of sources like the Census of Industrial Production). As it happens, in Ireland the public sector is where the unions are best represented anyway. Either way, times have changed and we must move on from what is arguably a rather nineteenth century perspective.
So if you want a reference wage, for some reason, use that of the whole economy. Indeed on statistical grounds, its probably better to use the median rather than the mean, but that’s another story.
As far as I know a ‘whole-economy’ measure of average wages was only complied relatively late, from the first quarter of 2008 (bit.ly/QGPCYp). Prior to that the only reliable measure over time was earnings in industry. This is probably why it entered into the popular consciousness as a benchmark for average earnings while, as you rightly point out, it is not really appropriate as the coverage is not very wide.
Shane, yes its largely a data issue: inexplicable that we knew so little until recently. Although I think there is also a mindset that thinks of industry as being somehow specially significant.