Contrary to popular belief, wages have been rising a bit faster than prices. In other words, real wages haven’t stagnated as widely believed, but have been moving higher, albeit at a slow pace:
(1) Real hourly wage rate. Average hourly earnings for all workers divided by the core personal consumption expenditures deflator (PCED) rose to a record high during February of this year. It edged down in June, but was up 0.4% y/y. This measure of real hourly wages is up 6.7% since the start of the data during March 2006. Using the headline PCED, real hourly wages also rose to a record high during February of this year and are up 5.2% since the start of the data. That’s not great, but it isn’t stagnation either.
(2) Real wages per worker. I calculate earned income per worker by dividing wages and salaries in personal income by payroll employment. It was at a record high of $49,500 during June. Dividing this series by the headline PCED shows that real wages and salaries per worker is up 1.4% y/y, and 6.0% since the start of 2006. Again, that’s not great, but it isn’t stagnation either.
Today's Morning Briefing: Jackson Hole. (1) Central bankers just wanna have fun. (2) Talking about the dynamics of the labor market. (3) Are investors jumping the gun ahead of Yellen? (4) She won’t let us down. (5) Pleasing the boss. (6) Less slack, yet wage and price inflation remain subdued. (7) Wage stagnation is a bit of a myth. (8) Drilling down to forward earnings by industries finds some gushers. (9) Standouts include Internet Retail, Oil & Gas Exploration, Consumer Finance, Biotech, Semiconductors, Specialty Chemicals, and Gas Utilities. (More for subscribers.)
(1) Real hourly wage rate. Average hourly earnings for all workers divided by the core personal consumption expenditures deflator (PCED) rose to a record high during February of this year. It edged down in June, but was up 0.4% y/y. This measure of real hourly wages is up 6.7% since the start of the data during March 2006. Using the headline PCED, real hourly wages also rose to a record high during February of this year and are up 5.2% since the start of the data. That’s not great, but it isn’t stagnation either.
(2) Real wages per worker. I calculate earned income per worker by dividing wages and salaries in personal income by payroll employment. It was at a record high of $49,500 during June. Dividing this series by the headline PCED shows that real wages and salaries per worker is up 1.4% y/y, and 6.0% since the start of 2006. Again, that’s not great, but it isn’t stagnation either.
Today's Morning Briefing: Jackson Hole. (1) Central bankers just wanna have fun. (2) Talking about the dynamics of the labor market. (3) Are investors jumping the gun ahead of Yellen? (4) She won’t let us down. (5) Pleasing the boss. (6) Less slack, yet wage and price inflation remain subdued. (7) Wage stagnation is a bit of a myth. (8) Drilling down to forward earnings by industries finds some gushers. (9) Standouts include Internet Retail, Oil & Gas Exploration, Consumer Finance, Biotech, Semiconductors, Specialty Chemicals, and Gas Utilities. (More for subscribers.)
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