September 5, 2024
The Bureau of Labor Statistics indicated that hourly compensation rose 3.0% in the second quarter, after climbing 4.2% in the first quarter, 0.6% in the fourth quarter snf 4.6% in the third quarter. In the past year compensation has risen 3.1%.
Growth in hourly compensation is a good thing, but that increase can be offset by inflation. So what we are also interested in is real hourly compensation. In the second quarter real compensation rose 0.1%, after rising 0.4% in the first quarter, declining 2.0% in the fourth quarter and having climbed 1.1% in the third quarter. In the past year real compensation has fallen 0.1%. The second quarter increase consisted of a 3.0% increase in compensation which was partially offset by a 2.9% increase in inflation, hence a 0.1% increase in real compensation. If the labor market remains relatively tight, real compensation should climb in the quarters ahead. Real compensation declined steadily through 2021 and 2022. Workers are beginning to regain some of that lost compensation but they remain far below where they were prior to the recession.
Real compensation jumped in 2020 and the first half of 2021 as government stimulus checks boosted wages. But real compensation declined steadily through 2021 and 2022. From 2010 to just prior to the 2020 recession real compensation rose 0.8% per year. Real compensation is growing more slowly now than it did prior to the recession, and the level of real compensation today is roughly the same as it was prior to the recession. In effect, workers are no better off today than they were four years ago.
Stephen Slifer
NumberNomics
Charleston, SC
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