Revision Surprise: Wage Growth Negative For Production Workers

Mish

The BLS reported hourly earnings for production workers rose in Dec. Discounting huge negative revisions, wages fell.

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

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%.

Poof

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

Revisions

  • 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

Comments (6)
No. 1-3
Zardoz
Zardoz

Productive work is valueless... the big bucks are in shuffling papers and bits. Someday, papers and bits, and eventually just bits, will provide for all the needs of humanity

Tony Bennett
Tony Bennett

"This, plus the October revision (and possibly some other revisions) accounts for the huge year-over-year difference."

...

Fugly.

Hours worked for October and November revised lower. Both were 34.4 hours, now both 34.3.

Weekly earnings for ALL workers last report:

October ... $970.77 November ... $973.18

Weekly earning for ALL workers this report:

October ... $967.26 November ... $970.35 December ... $971.38

Lance Manly
Lance Manly

Why do the graphics say Production and Supervisory Workers when it is Production and Nonsupervisory Workers?


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