Wednesday, 22 of November of 2017

Economics. Explained.  

Average Hourly Earnings

November 3, 2017

Average  hourly earnings were unchanged in October after having jumped 0.5% in September.  After a long period of time during which hourly earnings were stuck around the 2.0% mark, they have gradually begun to rise.  During the past year hourly earnings have risen 2.4%.  Hourly wages appear to be  gradually accelerating.  This series would be growing more quickly except for the impact from retiring baby boomers.  When you lose a number of people who have been working for 40 years who are making high wages, and replace them by younger workers who are making much less, this series will have a downward bias.  The Atlanta Fed has a series called “wage tracker” in which it tries to adjust for this bias and it believes that wages are currently rising at a 3.6% pace which seems to make more sense given the apparent tightness in the labor market..

In addition to their hourly wages workers can also work longer hours or overtime hours.  Increases in their total income are captured by the increase in weekly earnings.  Weekly earnings were unchanged in October after having jumped 0.5% in September.  Weekly wages have risen 2.4% during the course of the past year.

While there has been a lot of discussion about the lack of growth in wages, they appear to be rising a bit more quickly and are able to support a moderate sustained 2.5% pace of consumer spending.

Stephen Slifer

NumberNomics

Charleston, SC

 

 


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