January 7, 2022

Average  hourly earnings jumped 0.6% in December to $31.31 after rising 0.4% in November and 0.6% in both September and October.  The year-over-year increase currently is 4.7% but in the past three months they have climbed at a more rapid 6.1% pace.  Hourly earning are now considerably higher than the $28.51 level that existed in February 2020 — just prior to the onset of recession.  Firms in  low-paid industries have to ante-up to get the workers they need by offering higher wages to new employees, this series is likely to register sharp gains in the months ahead.

But the problem is that while nominal earnings have risen 4.7%, inflation has risen even faster and real or inflation-adjusted earnings have declined 1.7% 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.  And because firms are readily able to pass those higher costs along to their customers, this will also put further upward pressure on the inflation rate.

Average weekly earnings rose 0.6% in December to $1,086.46 after rising 0.4% in November..  Weekly earnings have risen 4.7% in the past year.

Stephen Slifer

NumberNomics

Charleston, SC