December 6, 2023
The Bureau of Labor Statistics indicated that hourly compensation rose 3.9% in the third quarter after jumping 6.2% in the second quarter and 6.5% in the first quarter. In the past year compensation has risen 4.0-%.
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 third quarter real compensation rose 0.3% after having risen 3.4% in the second quarter and 2.7% in the first quarter. In the past year real compensation has risen 0.4%. The second quarter increase consisted of a 3.9% increase in compensation which was partially offset by a 3.6% increase in inflation, hence a 0.3% increase in real compensation. If the labor market remains tight compensation should continue to climb at a reasonably rapid pace. And if inflation continues to slow real compensation should consistently climb and grow at a far more rapid pace.