Understanding the Chart
- BLS data shows that average hourly wages are up 0.33% in June from May. Production Workers gained 0.39%.
- The BLS calculates two measures of the CPI, one for everyone and one called CPI-W for hourly workers.
- Real means "inflation adjusted".
- I calculated real wages by subtracting either the CPI (often called CPI-U) from the all workers change and CPI-W from production wages.
BLS Report on Real Hourly Wages
With the above backdrop, please consider the BLS report on Real Wages for June 2021.
- Real average hourly earnings for all employees decreased 0.5 percent from May to June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 0.9 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
- Real average weekly earnings decreased 0.9 percent over the month due to the change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek.
- Real average hourly earnings decreased 1.7 percent, seasonally adjusted, from June 2020 to June 2021.
Production and Nonsupervisory Workers
- Real average hourly earnings for production and nonsupervisory employees decreased 0.6 percent from May to June, seasonally adjusted. This result stems from a 0.4-percent increase in average hourly earnings combined with an increase of 1.0 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- From June 2020 to June 2021, real average hourly earnings decreased 2.2 percent, seasonally adjusted.
- The change in real average hourly earnings combined with a 0.6-percent increase in the average workweek resulted in a 1.6-percent decrease in real average weekly earnings over this period.
My calculations differ very slightly from BLS calculations. Fred, the St. Louis Fed repository does not have a direct data feed for the BLS result so I downloaded wage and CPI data to do the require calculations.
Real Average Hourly Earnings
There was a huge spike in wages at the beginning of Covid due to far more lower-paid than higher-paid employees losing their jobs.
Ignoring a 0.03% rise in October 2020 (The BLS has October at 0), real wages for production workers have only risen 3 months out of the last 14 month. This matches the BLS report +- 0.1 percentage point rounded.
For all workers on average, real wages have only risen twice in the last 14 months, again matching the BLS report.
Congratulations Bond Holders
Believe the CPI?
These calculations presume you believe the CPI. It's safe to say, most don't.
Core CPI Jumps the Most Since 1991 Yet Little Bond Market Reaction
For comments on the CPI, please see Core CPI Jumps the Most Since 1991 Yet Little Bond Market Reaction
Coming up soon, I offer a revised CPI that accurately takes housing into consideration.
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