September 2, 2022

Average  hourly earnings rose 0.3% in August to $32.36 after having risen 0.5% in July and 0.4% in both May and June  Despite higher inflation and higher interest rates firms across-the-board continue to scramble to find additional bodies by offering higher wages, better benefits, work from home incentives, and a host of other creative solutions. The year-over-year increase currently is 5.2%.

But these hourly earnings data may still significantly understate the growth in wages.  The Atlanta Fed’s wage tracker has risen 6.7% in the past year compared to a 5.2% increase in the officially-published hourly earnings data.

But the problem is that while nominal earnings have risen 5.2%, inflation has risen even faster and real or inflation-adjusted earnings have declined 3.1% in that same period of time.  Workers have noticed that their real earnings have declined which is going to intensify the pressure on employers for even larger wage gains in the months ahead.  It is hard to imagine that workers and unions will be satisfied with this situation and will renew their efforts to secure higher wages.  This will  put further upward pressure on the inflation rate.

Average weekly earnings were unchanged in August at $1,116.42 after having risen 0.5% in July.  The year increase in weekly earnings is now 4.6%.

Stephen Slifer

NumberNomics

Charleston, SC