We don’t yet have all the data I need to update my full-monty-wage-mash-up, but a few series to which I pay attention are now available for the first half of the year: median weekly earnings (MWE) of full-time workers and two flavors of average hourly earnings. What do they show?
Not much, in terms of wage pressures. MWE is a very noisy series–medians are a more volatile statistic then means–so in order to show underlying pace in nominal weekly earnings, I’ve smoothed the series (using an HP filter; both figures show year-over-year changes). Amidst the jumpiness, the deceleration is clear.
MEDIAN WEEKLY EARNINGS, FULL-TIME WORKERS, NOMINAL YR/YR CHANGE
Source: BLS, my analysis.
Average hourly wages of all workers has been flat-lining at 2% since 2011, which, btw, is also about the rate of inflation since then (2.2%), implying stagnant hourly earnings. So if paychecks are growing in terms of their buying power, it’s due to more hours of work as opposed to higher real hourly earnings. The other series is for “production, non-supervisory” workers: those in blue collar and non-managerial occupations. That one has accelerated a bit, from around 1.5% at the end of 2012 to around 2.5% now.
This acceleration, in my not-at-all humble opinion, is a very good thing, something to be nurtured, not stomped out. Not only is inflation still relatively low and “well-anchored,” but there are important pressure valves by which real wage gains could and should be absorbed. Labor’s share of national income remains unusually low, so a distribution within “factor incomes”–i.e., from capital to labor–would be welcomed. Relatedly, higher relative earnings by median and lower-wage workers could also be “paid for” out of diminished inequality.
So sure, let’s watch all the gauges, most notably in this space, unit labor costs–the growth of compensation relative to productivity–as that feeds strongly into prices. But, while it feels odd to have to assert this, real wage gains are a good, welcome, and long sought-after development. Not a problem.