Revision Surprise: Wage Growth Negative For Production Workers
Every month, I report on hourly earnings in my jobs report. I start from my prior month as my template. Let's compare the most recent two reports, one from today (for December) the other from December 6 (for November).
Two Most Recent Jobs Reports
- November: Jobs Surge in Strike-Ending and Seasonal Adjustment Rebound
- December: Manufacturing One Hit Wonder is Over, Jobs Up a Modest 145,000
In November I commented "Average hourly earnings of Production and Supervisory Workers rose $0.07 to $23.83. That's a 0.29% gain."
This month, I noticed "Average hourly earnings of Production and Supervisory Workers rose $0.02 to $23.79. That's a 0.08% gain. Oops. It looks like we had a little revision here. Last month I reported wages rose $0.07 to $23.83."
Year-Over-Year Wage Growth As Calculated for November
All Private Nonfarm rose from $27.43 to $28.29, a gain of 3.1%.
All production and supervisory rose from $22.99 to $23.83, a gain of 3.7%.
Year-Over-Year Wage Growth As Calculated for December
All Private Nonfarm rose from $27.53 to $28.32, a gain of 2.9%.
Production and supervisory rose from $23.09 to $23.79, a gain of 3.0%.
70 basis points of year-over-year wage growth vanished for production and supervisory workers from November to December due to negative revisions in Oct and Nov.
Let's investigate further.
Production Worker Reported Wage Growth in November
Production Worker Reported Wage Growth in December
- The BLS revised October from $23.76 to $23.73.
- The BLS revised November from $23.83 to $23.77
Using $23.83 as the base, wages for production and supervisory workers fell by $0.02 in December. This, plus the October revision (and possibly some other revisions) accounts for the huge year-over-year difference.
There were smaller changes for all workers, but also negative.
All Worker Reported Wage Growth in November
All Worker Reported Wage Growth in December
The BLS revised October lower but the impact was not as visible.
Phillips Curve Revisited
Last month the Phillips Curve advocates were out in force over the wage increases.
The Phillips Curve, a discredited economic model developed by A. W. Phillips, purports that inflation and unemployment have a stable and inverse relationship.
On August 29, 2017 I noted that a Fed Study Shows Phillips Curve Is Useless. Yet, economists keep trying.
On January 15, 2019 I noted Yet Another Fed Study Concludes Phillips Curve is Nonsense.
But many Fed presidents and former Fed Chair Janet Yellen are believers. In March of 2107 Yellen proclaimed "The Phillips Curve is Alive“.
Of course, the Fed is clueless about what inflation really is, and how to measure it.
Mike "Mish" Shedlock