January 29, 2026
The Bureau of Labor Statistics indicated that hourly compensation rose 2.9% in the third quarter after climbing 1.1% in the second quarter In the past year compensation has risen 3.2%.
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 declined 0.2% after falling 0.5% in the third quarter. In the past year real compensation has risen 0.3%. The third quarter decline consisted of an increase in compensation of 2.9% which was more than offset by a 3.1% increase in inflation, hence a 0.2% decline in real compensation. If the economy continues to expand and productivity growth soars, real compensation should once again begin to climb. Workers have earned a fatter paycheck.
Stephen Slifer
NumberNomics
Charleston, SC
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