Congratulations Workers! You Make a Penny More Per Hour Than Last Month

The average worker makes a penny more per hour than last month in real terms. The year-over-year gain is precisely zero.

In conjunction with the CPI release, the BLS computes Real Hourly Earnings.

In real (inflation-adjusted) terms, the average worker makes $10.75 per hour. That's a penny more per hour than in April. The average worker makes exactly what he did a year ago.

Production and supervisory worker fared even worse.

Production and Supervisory Workers

All Employees Month-to-Month Progress

Production and Supervisory Month-to-Month Progress

From May 2017 to May 2018, real average hourly earnings decreased 0.1 percent, seasonally adjusted.

The decrease in real average hourly earnings combined with a 0.6-percent increase in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period.

Hooray!

Production employees are making less per hour but make it up by working longer.

CPI Distortions

Bear in mind these are actual BLS calculations, accurate only if you believe the CPI tells the real story.

The only group I can come up with that may reasonably match CPI estimates are retired workers who own their own home and are covered by Medicare.

Anyone in school, buying their own private health insurance, or looking to buy a home will tell you the BLS CPI stats are bogus.

Bogus Averages

Note that "averages" tell a poor story. Most of the wage gains go to the top employees. The median worker is making less per month and less than a year ago.

Add it all up and the median wage earner is getting clobbered.

For a look at the latest CPI numbers, pleaser see Year-Over-Year CPI Up Most in 6 Years, Bond Market Reacts with Big Yawn.

Mike "Mish" Shedlock

Comments
No. 1-9
Realist
Realist

Kidhorn. There are more jobs sitting empty in the US than the number of unemployed. So obviously there is demand. If the job sits there, unfilled, it doesn’t matter what the wage is, no one is earning that wage, and it can’t add to aggregate wage growth. If the US could train the unskilled to qualify for those higher paying jobs, then you might see a little aggregate wage growth.

KidHorn
KidHorn

If there was high demand for skilled labor, it would show up in aggregate wage increases. The only plausible way for wage growth to be 0 is if there's almost no demand across the board. Either that or some are having wage shrinkage which offsets wage growth for others.

Realist
Realist

There is demand for skilled workers to fill the many empty jobs, and there is a surplus of unskilled workers who cannot demand higher wages. Automation continues to be an alternative to low skilled labour when they attempt to get wage increases, and to replace some skilled workers when there is as shortage of those skilled workers. The US jobs problem is not a result of trade with other countries, it is the result of a lack of skilled workers. Trump should be training people rather than picking fights with his friends and allies.

FlyOver_Country
FlyOver_Country

Wage growth is happening in certain job sectors, especially the high-skilled jobs or finance. But for the vast, vast majority of workers already employed, wage increases are tied to inflation. If you are lucky and receive a yearly merit wage increase, it’s probably not more than inflation, maybe 2-3%. I remember when I started working in the 80’s and received yearly merit increases of 8-10%.

KidHorn
KidHorn

I thought unemployment was at decade lows. How is it possible for wages to be stagnant when there's record demand for workers?

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