Remember last month, when there was so much commotion about the big January monthly real wage rise reported by the Labor Department? Surprise was registered even by some folks who recognized that much of the improvement stemmed from falling consumer prices, not genuinely rising pay. Meanwhile, economic bulls were proclaiming that with companies “now reporting unfilled job openings at the highest level since April 06, it is not reasonable to assume such sluggish wage growth will persist much longer.”
Fast forward to today, and you can see how foolish such euphoria remains. Although most of the media focused on Labor’s release of new February inflation figures (which were up a bit higher than modest expectations), in my view, the bigger news came in the department’s publication of February real wages. It showed that Americans’ pay in the private sector, after adjusting for price increases, fell on a monthly, economy-wide basis for the first time since September. And it’s not like real wages have been on a roller coaster ride during this recovery.
On a monthly basis, inflation-adjusted wages resumed slipping in manufacturing overall and the retail sector, too – the latter being important since some signs had appeared that pay in such low-paying parts of the economy were growing relatively quickly, in part due to minimum wage hikes. Real wages in also-low-paying leisure and accommodation sectors rose in February, but by the smallest absolute amount (one penny) since September.
Examined year-on-year, real wages don’t show any momentum, either. The annual rate of increase in the private sector overall fell from 2.43 percent in January to 2.13 percent in February – still the second best rate since 2009, when the recovery was just getting started. But pay trends have been so weak since then that even the last two months still leave inflation-adjusted wages only that same 2.13 percent higher than when the expansion technically began nearly six years ago.
As has been the case throughout the recovery, manufacturing remained a major wage laggard. Its year-on-year real pay increase fell from only 1.53 percent in January down to 1.33 percent in February. As a result, manufacturing wages after inflation are still 0.84 percent lower than in June, 2009, when the recovery technically began.
As for that automotive sector I posted on earlier today, the last two months have been especially kind to its workforce. Month-to-month, their real wages were up 0.86 percent in January and 0.28 percent in February, and in both months, the yearly increases were north of three percent. All the same, this bump still left inflation-adjusted automotive wages 3.19 percent lower than their level at the recovery’s onset in mid-2009.
And speaking of automotive, even this wage deterioration is too much for the two remaining U.S.-owned Detroit automakers. According to Bloomberg yesterday, GM and Ford, “heading into negotiations with the United Auto Workers union, are considering asking to create a new tier of lower-paid union workers in their U.S. factories.”