Real Wages Decline in December, Barely Up From Year Ago

Mish

Real wages for production workers fell 0.2% in Dec. Real wages for all employees fell 0.1%. Both barely up from yr ago.

The BLS informs us that Real Earnings Declined in December.

Real Wages All Employees

  • Real average hourly earnings for all employees decreased 0.1 percent from November to December, seasonally adjusted. This result stems from an increase of 0.1 percent in average hourly earnings combined with an increase of 0.2 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 no change in the average workweek.
  • Real average hourly earnings increased 0.6 percent, seasonally adjusted, from December 2018 to December 2019. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in essentially no change in real average weekly earnings over this period.

Real Wages Production and Supervisory Employees

  • Real average hourly earnings for production and nonsupervisory employees decreased 0.2 percent from November to December, seasonally adjusted. This result stems from a 0.1-percent increase in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
  • Real average weekly earnings decreased 0.2 percent over the month due to the decrease in real average hourly earnings combined with no change in average weekly hours.
  • From December 2018 to December 2019, real average hourly earnings increased 0.7 percent, seasonally adjusted. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.1-percent increase in real average weekly earnings over this period.

Real Weekly Take-Home Pay

  • Real weekly take-home pay was flat year-over-year for all employees.
  • Real weekly take-home pay fell year-over-year for production and supervisory workers.

Revisions

I commented on the December BLS revision in Revision Surprise: Wage Growth Negative For Production Workers.

Today's CPI report shows the damage.

How Bad Is It?

Those allegedly "real" wages are not very real. Ask anyone buying their own medical insurance or anyone looking to buy a home how far behind they are falling.

For discussion, please see Medical Care Costs Soaring Out of Control

The average Joe is actually getting hammered.

Mike "Mish" Shedlock

Comments (19)
No. 1-10
mkestrel
mkestrel

My medical insurance increased by 17.5% from 2019 to 2020. That is just for my self and spouse. I do not know how families make that work.

Tengen
Tengen

People will continue to be squeezed by stagnant wages and higher costs of living, particularly in health care and housing. I'd like to think this would wake people up to the futility of the red/blue game, but by now we should all know better than that.

This game will go on until collapse, and with the Fed printing like mad who knows when that will be.

Tony Bennett
Tony Bennett

"The average Joe is actually getting hammered."

...

Absolutely.

And they don't have "409Ks" to offset. Pity the masses who are getting squeezed and don't have the luxury to save. I had to laugh when Ben Carson ran for POTUS. Said something along the lines of 'everyone needs to strive to be in the top 10 percent' ... no matter that by definition ...

CautiousObserver
CautiousObserver

The Fed just posted the next month's schedule for repo operations.

The Jan-Feb schedule shows the Fed will reduce term-repos by $20 billion through the middle of next month. I decided it is better not to guess what their schedule will be after that. They could be adding anywhere from $20 billion to $40 billion per month to their balance sheet after T-bill purchases until the middle of 2020 depending on how they extend this schedule, and they will probably extend the T-bill program past July once we get there.

Zardoz
Zardoz

Have they tried bit twiddling? We in the bit twiddling industry are making bank. Bits for all!

bradw2k
bradw2k

This must be that "slow growth" some commenters tell us about.

Realist
Realist

Agree with Brad.

Expect slogflation (slow growth, low inflation) to continue for the foreseeable future. Growth has averaged 2%/ a for the last 10 years and should slow towards 1% over the next decade. Eventually growth will slow toward 0 in the long term. I have explained this in greater detail before.

Governments and Central Banks everywhere are pursuing pro- growth policies that are pushing on a string. Net result is more growth in debt than in the economy; more borrowing of growth from the future.

For the average person (not the top few percent) the future is a slow decline in living standards; where costs go up faster than income. It is a slow, insidious decline. Almost imperceptible.

Sechel
Sechel

Very concerning we're not seeing wage growth. Feels like once again the economy is growing because consumers are taking on a greater debt load. It's not even good debt such as investing in a business.

HandleWasHere
HandleWasHere

Real wages "barely up from a year ago" means wages did indeed outpace inflation over the last year. You say that as if real wages are expected to rise consistently and significantly year over year.... when there is no reason at all to expect they would.

MrGrummpy
MrGrummpy

While 'average wages' have not changed a great deal, hasn't total workers employed increased? Assuming those new jobs are somehow 'productive', the nation as a whole should have an increase in total GDP. More workers employed and fewer relying on government assistance should be a good thing. Or am I wrong?


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