Sunday, 18 of February of 2018

Economics. Explained.  

Average Hourly Earnings

February 2, 2018

Average  hourly earnings rose 0.3% in January to $26.74 after having risen 0.4% in December and 0.3% in November.  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 2.9% and are  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 2.9% pace.  This series had been growing a lot more quickly than the official hourly earnings, but it did register a big drop in January.  We will see whether the January drop is long-lasting.  Either way, it is pretty clear that hourly wages are finally beginning to climb.

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 fell 0.2% in January after having risen 0.4% in December 0.6% in November.  The January drop clearly reflect the drop in the workweek in that  month and should prove to be temporary.  Weekly wages have risen 2.6% 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 2.8% pace of consumer spending.

Stephen Slifer


Charleston, SC



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