September 1, 2022

The Bureau of Labor Statistics  indicated that hourly compensation rose 5.7% in the second quarter after rising 4.4% in the first quarter.  In the past year compensation has risen at a 6,7% pace.

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 second quarter real earnings declined 4.4% after falling 4.4%  in the first quarter.  In the past year real compensation has declined 1.7%.  The second quarter drop consisted of a 5.7% increase in compensation which was more than offset by an 10.1% 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