June 1, 2023
The Bureau of Labor Statistics indicated that hourly compensation rose 2.1 % in the first quarter after fallen by 0.7% in the fourth quarter of last year. In the past year compensation has risen 3.0%.
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 first quarter real compensation declined 1.7% after having fallen 4.7%in the fourth quarter, In the past year real compensation has declined 2.6%. The first quarter decline consisted of a 2.1% increase in compensation which was more than offset by a 4.7% increase in inflation, hence a 2.6% decline in real compensation. If inflation continues to exceed the increase in compensation workers will continue to seek big increases in compensation to get their real compensation back on the upswing. That will prevent the inflation rate from declining rapidly.
Stephen Slifer
NumberNomics
Charleston, SC
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