December 8, 2022

The Bureau of Labor Statistics  indicated that hourly compensation rose 3.2% in the third quarter after climbing 2.3% in the second quarter and 2.1% in the first quarter.  In the past year compensation has risen 4.0%.

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 third quarter real compensation fell 4.4% after declining 5.5% in the second quarter and 6..5% in the first quarter.  In the past year real compensation has declined 4.0%.  The the quarter drop consisted of a 3.2% increase in compensation which was more than offset by a 7.8% increase in inflation.  If inflation continues to exceed the increase in compensation workers will seek even bigger increases in compensation to get their real compensation back on the upswing. That will further boost the inflation rate.

Stephen Slifer

NumberNomics

Charleston, SC