Inflation jumped in August. That means real (inflation-adjusted) wages took a dive. Production and nonsupervisory workers took the biggest hit.
Please consider the BLS Real Earnings Report for August 2023.
All Employees
- Real average hourly earnings for all employees decreased 0.5 percent from July to August. This result stems from an increase of 0.2 percent in average hourly earnings combined with an increase of 0.6 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 a 0.3-percent increase in the average workweek.
- Real average hourly earnings July $11.09
- Real average hourly earnings August $11.04
Production and Nonsupervisory Workers
- Real average hourly earnings for production and nonsupervisory employees decreased 0.6 percent from July to August, seasonally adjusted. This result stems from a 0.2-percent increase in average hourly earnings combined with an increase of 0.8 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- Real average weekly earnings decreased 0.3 percent over the month due to the change in real average hourly earnings being combined with a 0.3-percent increase in the average workweek.
- Real average hourly earnings July $9.70
- Real average hourly earnings August $9.64
Geek Notes
Rounded to the penny, I calculate the same real average hourly earnings as the BLS. However, I do not calculate the same month-to-month percentage change for all employees as the BLS. This is the result of intermediate results rounded up by the BLS.
The real average hourly wages for July and August to 6 decimal places are $11.085994 and $11.042580 respectively, which we both round to $11.09 and $11.05.
Using the unrounded numbers, I calculate a change of -0.391606301 which I round to -0.4. Using $11.09 and $11.05 as the starting point, the percentage change is -0.450856628 which the BLS rounds to -0.5.
I believe -0.4 percent is more accurate. Regardless, multiple roundings of intermediate numbers rather than rounding the final result is the cause of this discrepancy between my calculations and that of the BLS.
Hourly Earnings and Real Hourly Earnings Detail
Why Sentiment is Weak
Economic writers keep wondering why sentiment is weak. Someone on Twitter asked me that just today. The above chart tells you all you need to know.
Wages have seemingly soared. But adjusted for inflation, wages are falling fast.
For private workers, since January of 2021, wages have risen in nominal terms from $29.92 to $33.82, a seemingly nice gain of $3.90 or 13.0 percent.
Adjusted for inflation, private worker wages have declined from $11.39 to $11.04. That’s a 3.1 percent decline. These calculations assume you believe the CPI numbers. Anyone attempting to buy a house will scoff at those numbers. So will renters and anyone who does not own their own house.
The long-term numbers have been terrible for years, decades actually.
Hourly Earnings and Real Hourly Earnings
Congratulations production and nonsupervisory workers! You now make 26 cents more per hour in real terms than you did in February of 1973. That’s about a half penny more each year for 50 years. Well, at least it’s positive. Recent experience isn’t.
Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter
Earlier today I noted Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter
The price of gasoline rose 10.6 percent, rent another 0.5 percent, shelter 0.3 percent, and new cars 0.3 percent leading the way to a 0.6 percent increase in the CPI in August.
Rent of primary residence has gone up at least 0.4 percent for 25 consecutive months!
Other than the above (and everything else), Bidenomics is working fine.
There’s plenty of thanks to go around including Biden and Trump for tariffs and sanctions, Congress, Senator Joe Manchin for saving the ridiculous Inflation Reduction Act that increased inflation, of course the Fed and back to Biden for preposterous regulations on a number of fronts.
s/ I figured it out. With a pencil and a pad I figured it out!
Seven and a half cents doesn’t buy a hell of a lot,
Seven and a half cents doesn’t mean a thing!
But give it to me every hour, Forty hours every week
And that’s enough for me to be living like a king!
I figured it out /s
After 50 years of inflation and dollar devaluation real production wages made a
new all, an upthrust, but fell to 9.64, slightly above 1973 @9.38. In deflation real
wages will rise.
The layoff announcement reached an all time high. Co HR are fighting back, b/c
they cannot pay those crazy wages.
UAW strike start today. The guppies will pay the price, cut heads. The race to the bottom has started. Detroit is ground zero. It will spread.
those numbers don’t jibe with reality. born in 1958, by 1973 a village idiot could drop out of HS and live a cushy life and even buy a house. ain’t happeniing past 30 years.
the village idiots will be our busboys and other assorted low paying jobs.
One big difference between 1973 and now is that women are in the workforce. So technically you need to make double the wage of 1973 if you want to be a single income earner and live the same life that someone in 1973 lived.
That applies whether you are trying to do it as a single or as a family because you still compete with 2 income families when trying to buy a house, car and other items.
If workers think things are getting worse now, Wait until the debt Ponzi explodes in our face. Interest on the national debt is now the 2nd biggest item in the federal budget. We’re in a debt trap. The last time this happened was 1929.
the employees with pensions are gonna just get so screwed in the future few decades. their SS and retirement funds will pay for cat food and rusty bikes. the hungry immigrants will walk all over them, literally and figuratively.
Overall, it is a small amount. The workers who have stored up acorns thru the years are getting hammered much worse on what they have saved for retirement. Inflation there (and stocks not doing well) is like a stock split, only they never send you the new shares.
“There’s plenty of thanks to go around including Biden and Trump for tariffs and sanctions, Congress, Senator Joe Manchin for saving the ridiculous Inflation Reduction Act that increased inflation, of course the Fed and back to Biden for preposterous regulations on a number of fronts.”
Don’t disagree with this statement but at what point in time since the Roman empire circa 2000 years ago has there been sensible or perfect wage adjustments, a perfect economy, perfect government or perfectly content workers/masters?
I would offer that there will never ever be any perfect system, the best we can come up with is for each individual that really wants something badly enough (wealth, power, fame, etc) will go out an achieve it.
Lots of companies, including apple and google, started in garages and ended up where they are because those guys wanted it bad enough. The only question is who here wants it bad enough?
correct. i still marvel at the nitwits that became employees instead of owners, since the 1970s. special case of idiocracy. it’s always been masters and serfs, but past 50 years it’s really diverted to the olden days of 1800s. thank heavens for the nitwits that will keep being employees/serfs. let them eat cake and pay taxes like the little people they are. i’m scared i might provoke a guillotine brigade like i’m mike pence on jan 6th. stand back proud boys. i’m armed and dangerous.
Owning and running a business takes a whole different mindset from being an employee. The vast majority of people don’t like change or risk, so being an employee is their preferred place. Calling them “nitwits” insults the majority.
And you are misunderstanding further in your “cake” comment – the serfs couldn’t afford cake which is the metaphor for those who are out of touch with their fellow man.
correcto mundo. it was not too long in history that vast percentage of amerikans owned their own little farms or shops. and actually had to think about things to make it to the harvest and get paid. no need for thinking to be an employee debt serf. or as Taleb calls them, slaves. they are dumbed down on purpose. no accident. they are like baby seals, begging to be clubbed.
And as your employee, I DEMAND respect or I will proceed to trash your company to my best ability. You will feel pain and not even know I’m doing it on purpose.
i’m frightened.
That’s the Fed for you, a 1% decrease in big screen TVs completely offsets a 40% increase in food.
I’m sure they will hedonically adjust the price of the new iPhone down at least 20% because part of it is made of Titanium.
haha
oh wait
beef going up 25-50% in next few months
herds culled and futures are up big time
avg price for feeder(at 800lbs) is over $1,600
this is before they fatten them up to 1,200 for slaughter
$2 lb HOOF weight before
I just saw T-bone for $10.99 on FRONT PAGE
wondering if they have some bug soup available
Wait a second, the Fed says that inflation is to be blamed on workers wages and that workers need to lose their jobs so that inflation will come down (and so will wages). In other words, ther will never be inflation as long as wages never grow.
tell the middlebrows and lumpenproles they must tighten their belts. in amerika they are fat dumb and happy. no problemo. there will be no “BIG GULP REVOLUTION”. sorry proud boys.
I’ve been charging $35
doing some work for son at $50 an hour
still to hot so I limit hours
Lots and Lots of work out there
basically telling those who don’t want to pay
good luck and hope its done right
How much of the $7,000,000,000,000 conjured up by the government in 2020-2021 did these people get?
Inflation killed real earnings this month obviously. But year over year real hourly earnings are up 0.7%.
Up? Based on the official inflation figures which are usually distorted to understate the true inflation rate. But based on the real inflation rate then wages are down in purchasing power.