Weekly earnings are up in real terms. Here’s the piece-by-piece explanation.

February 10th, 2015 at 8:50 am

Over at PostEverything. Real weekly earnings gains are being driven exclusively by more weekly hours worked and slower inflation. Which isn’t all that sustainable.



Source: BLS, my analysis.

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4 comments in reply to "Weekly earnings are up in real terms. Here’s the piece-by-piece explanation."

  1. Jerry Marsh says:

    Looking forward to your new book. When can we expect to be able to buy it?

    • Jared Bernstein says:

      Thnx, but you’ll never be able to buy it…because I plan to give it away! (I think…more to come.)

  2. Fred Donaldson says:

    One of our historical expectations was that a reasonable amount of inflation would occur annually and that the middle class would get commensurate raises and could pay back its debts with cheaper dollars. Inflation also contributed to high interest rates than today for those dependent on steady streams of money, including the retired.

    Most of us can recall buying a house and the lender explaining that ten or 20 years from now, you would be making much more money and would need a smaller portion of your pay to satisfy the debt. That is not the case today, and depending on how you measure COLA, many families may earn dollars worth less, to pay even higher property taxes, previous loans and credit debt at 20% or more.

    It is a bad economy for borrowers and a good one for lenders. I doubt that is a happy coincidence and that some deliberate policies have led us to this stagnant point.

  3. Smith says:

    Good stuff. But when you analyze other measurements (GDP, employment, work force participation), you’ve been using some smoothing techniques, so I’m wondering about trends, monthly and yearly.

    Also, where is productivity in all this? What is the amount labor could potentially take from the economy with zero effect on inflation because of productivity increases? Also trended?

    Lastly, why isn’t core inflation the proper statistic to use? Or trending or smoothed core inflation? Didn’t we see until oil dropped dramatically in Nov and Dec, inflation was more normal and closer to 2%? How many people think those areas of stability, the MidEast and
    Russia, will continue to produce oil at the same level? What happens if the world economy recovered and prices rose? Could we do some advance work in that regard? Expect and extra 1% to 2% temporary extra inflation from sharp oil price increases at some point, fueled by speculators, which conservatives, Republicans, Fed-bashers, big business, bankers, Wall Street, and the 1% will use to bludgeon Obama, progressives, and labor.

    Figure out how to counter the inevitable now, please. Or you get the Fed raising rates to counter phantom inflation (rising oil) killing off robust recovery and potential continued real wage growth.