September 2, 2021

The Bureau of Labor Statistics  indicated that hourly compensation rose 3.4% in the second quarter after climbing  1.4% in the first quarter.  In the six quarters since the expansion ended in the fourth quarter of 2019  — which includes both the recession and the subsequent rebound — compensation has risen at a solid 6.5% pace.

Growth in hourly compensation is a good thing, but some of that increase can be offset by inflation.  So what we are also  interested in is real hourly compensation.  In the second quarter real compensation fell 4.6% after having declined 2.2% in the first quarter ,  The drop consisted of a 3.4% increase in compensation which was more than offset by an 8.0% increase in inflation.  in the six quarters since the last recession ended real compensation has risen at a 3.5% pace..  That is impressive, but the big gain came during the recession.  Real compensation has declined in three of the most recent four quarters.  Over the past decade real compensation has risen 0.8%.

Stephen Slifer

NumberNomics

Charleston, SC