May 2, 2024
The Bureau of Labor Statistics indicated that hourly compensation rose 5.0% in the first quarter after climbing 3.5% in the fourth quarter after gaining 4.5% in the third quarter. In the past year compensation has risen 4.7%.
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 first quarter real compensation rose 1.1% after increasing 0.8% in the fourth quarter and having climbed 1.1% in the third quarter. In the past year real compensation has risen 1.5%. The first quarter increase consisted of a 5.0% increase in compensation which was partially offset by a 3.9% increase in inflation, hence a 1,1% increase in real compensation. If the labor market remains tight compensation should continue to climb at a reasonably rapid pace. 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 declined steadily through 2021 and 2022. From 2010 to just prior to the 2020 recession real compensation rose 0.8% per year. The level of real compensation today is basically identical to the level that existed prior to the recession. In effect, workers are no better off than they were four years ago.
Stephen Slifer
NumberNomics
Charleston, SC
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