The BLS informs us that Real Earnings Declined in December.
Real Wages All Employees
- Real average hourly earnings for all employees decreased 0.1 percent from November to December, seasonally adjusted. This result stems from an increase of 0.1 percent in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
- Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.
- Real average hourly earnings increased 0.6 percent, seasonally adjusted, from December 2018 to December 2019. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in essentially no change in real average weekly earnings over this period.
Real Wages Production and Supervisory Employees
- Real average hourly earnings for production and nonsupervisory employees decreased 0.2 percent from November to December, seasonally adjusted. This result stems from a 0.1-percent increase in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- Real average weekly earnings decreased 0.2 percent over the month due to the decrease in real average hourly earnings combined with no change in average weekly hours.
- From December 2018 to December 2019, real average hourly earnings increased 0.7 percent, seasonally adjusted. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.1-percent increase in real average weekly earnings over this period.
Real Weekly Take-Home Pay
- Real weekly take-home pay was flat year-over-year for all employees.
- Real weekly take-home pay fell year-over-year for production and supervisory workers.
Revisions
I commented on the December BLS revision in Revision Surprise: Wage Growth Negative For Production Workers.
Today’s CPI report shows the damage.
How Bad Is It?
Those allegedly “real” wages are not very real. Ask anyone buying their own medical insurance or anyone looking to buy a home how far behind they are falling.
For discussion, please see Medical Care Costs Soaring Out of Control
The average Joe is actually getting hammered.
Mike “Mish” Shedlock
While ‘average wages’ have not changed a great deal, hasn’t total workers employed increased? Assuming those new jobs are somehow ‘productive’, the nation as a whole should have an increase in total GDP. More workers employed and fewer relying on government assistance should be a good thing. Or am I wrong?
Real wages “barely up from a year ago” means wages did indeed outpace inflation over the last year. You say that as if real wages are expected to rise consistently and significantly year over year…. when there is no reason at all to expect they would.
I think the “barely up” applies to nominal wage growth. Real wage growth is down 0.2%.
And yes one would expect aggregate and average real wages, as a measure of standard of living, to increase every year — in a healthy economy.
This must be that “slow growth” some commenters tell us about.
Have they tried bit twiddling? We in the bit twiddling industry are making bank. Bits for all!
The Fed just posted the next month’s schedule for repo operations.
The Jan-Feb schedule shows the Fed will reduce term-repos by $20 billion through the middle of next month. I decided it is better not to guess what their schedule will be after that. They could be adding anywhere from $20 billion to $40 billion per month to their balance sheet after T-bill purchases until the middle of 2020 depending on how they extend this schedule, and they will probably extend the T-bill program past July once we get there.
Farm subsidies were instituted during The Depression … and deemed “temporary” …
I made a pretty major error when I first posted about the revised term repo schedule. Hopefully it is correct now.
Regarding “temporary” government programs, I think Milton Friedman had it right. There is “nothing is so permanent as a temporary government program.”
“The average Joe is actually getting hammered.”
…
Absolutely.
And they don’t have “409Ks” to offset. Pity the masses who are getting squeezed and don’t have the luxury to save. I had to laugh when Ben Carson ran for POTUS. Said something along the lines of ‘everyone needs to strive to be in the top 10 percent’ … no matter that by definition …
He said “strive to be”. He did not infer everyone could be in the 10%.
People will continue to be squeezed by stagnant wages and higher costs of living, particularly in health care and housing. I’d like to think this would wake people up to the futility of the red/blue game, but by now we should all know better than that.
This game will go on until collapse, and with the Fed printing like mad who knows when that will be.
My medical insurance increased by 17.5% from 2019 to 2020. That is just for my self and spouse. I do not know how families make that work.
Workers in many cases need to work until 65 and medicare. In the “old days” many could … and did … retire a few years earlier … which would open up slots for the younger generation. The work pipeline is constipated.
We have two young kids. Thankfully my wife is a nurse at a Children’s hospital and has full coverage for herself and the kids. So fortunate as it would cost an extra 500 a month to put on my employer coverage. So yeah, not sure how others make it work.