Hourly Earnings and Real Hourly Earnings
- Wages appears to be spiraling out of control (top 2 lines blue and red), but appearances deceive.
- Real (CPI-adjusted) wages have gone nowhere for decades.
- Production and nonsupervisory workers made $9.38 per hour in CPI-adjusted dollars in 1973. Today they make $9.42 per hour.
Nominal Wages Year-Over-Year Percent Change
Hooray?
- Production and nonsupervisory workers are making 6.35 percent more per hour than they did a year ago.
- All workers are making 5.11 percent more per hour than they did a year ago.
Things don’t look so good when you factor in inflation running a hot 9.1 percent more than a year ago.
Real Wages Year-Over-Year Percent Change
Workers Currently Losing to Inflation
For 15 consecutive months dating to April 2021, workers have had big wage hikes but those hikes have not kept pace with inflation.
Q: What happened in April 2021?
A: The third and largest by far free-money free money stimulus package by president Biden.
People immediately when on a huge goods buying spree that neither manufacturers nor supply chains were prepared for.
The trend of no wage gains go back much further.
Production and supervisory workers make only four cents more per hour in real terms than February 1973!
Free Money Stimulus Checks and the CPI
For discussion of the CPI, please see Consumer Price Index Jumps Another 1.3 Percent, Much More Than Than Expected
Recession is Here and Housing Will Lead
For discussion of the recession and the impact durable goods and housing play, please see A Big Housing Bust is the Key to Understanding This Recession
Also see Expect Huge Negative Revisions to New Home Sales as Sales Crash and Orders Cancelled
The Fed aims to cool inflation and they will. The result will be like trying to slice a tomato with a hammer.
This post originated at MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
[new-security], the proceeds of which are used to finance plant and equipment
expansion, or the construction of a new house, rather than the purchase of an
(2) [existing-security] or to finance the purchase of an existing house (read
bailout), or to finance (1) [inventory-expansion], rather than refinance (2)
[existing-inventories].
The former types of investment are designated as (1)
“REAL” [new construction] as contrasted to the latter (2), which
constitute “FINANCIAL” investment [existing property].
FINANCIAL speculation (the transfer of title to existing
goods, properties, or claims thereto), provides a relatively insignificant
demand for labor and materials and in some instances the over-all effects may
actually be retarding to the economy.
Compared to REAL investment, FINANCIAL investment is rather
inconsequential as a contributor to employment and production.
Only debt growing out of REAL investment or consumption
makes an actual direct demand for labor and materials.
The change in real average hourly earnings combined with a decrease of 0.9 percent in the average
workweek resulted in a 4.4-percent decrease in real average weekly earnings over this period.