Tags

, , , , , ,

I don’t know why the U.S. wage figures that adjust for inflation get so much less attention from politicians, economists, and investors than those that don’t take into account rising living costs. Maybe mainly because the pre-inflation numbers come out along with each month’s anxiously awaited jobs report, while the real wage figures are issued about three weeks later?

Whatever the reason, the inflation-adjusted numbers deserve much more attention. For they’re far and away the best measure of whether workers are keeping their economic heads above water or falling further behind, and whether their bargaining power is or isn’t threatening to fuel strong price increases throughout the economy. And today’s new Labor Department real wage data (which is still preliminary, along with the March numbers) show undeniably that the answer is a resounding “No” on both counts.

Wage “inflation” for the private sector on month in April was exactly zero – for the second straight month. This means inter alia that real wages are actually down since January, from $10.55 per hour to $10.54.

If you try really hard, you can make a modest case for some signs of wage life over longer periods. At 2.33 percent, the April year-on-year rise was certainly stronger than 2013-14’s flat-line and 2012-13’s 0.88 percent increase. But it’s still in line with all the previous 2015 annual increases. Moreover, nearly six years after the current recovery officially began, real private sector wages are still only up 2.13 percent.

Don’t bother looking for any wage inflation in the manufacturing sector – an historic American wage leader that’s turned into a major laggard during this recovery. Inflation-adjusted wages in industry failed to move at all in April for the third straight month. Year-on-year, these manufacturing wages were up just 1.82 percent in April. That’s marginally better than its January-March counterparts, but mainly because inflation-adjusted manufacturing wages fared so poorly in early 2014.

And although this past April-April has been much better for manufacturing workers than the last two – when real wages in industry grew by a measly penny in toto – real manufacturing wages are still down 0.75 percent during the recovery.

The April real wage data did contain ray of hope for the nation’s automotive workforce. Real wages in this sector – which has been leading manufacturing’s recovery bounce-back – jumped 1.24 percent over March levels. If it holds, that will represent the best monthly advance since November, 2013. But this latest improvement followed a (still preliminary) 1.13 percent decline in March. This decrease in turn was the biggest since…last April.

As a result, we’re left with mixed results for automotive wages, for this tendency toward monthly volatility contrasts with 2015 annual growth figures that are by far the industry’s best since pre-recession days. Nonetheless, real auto wages suffered so greatly during the recession and the early recovery years that they’re still down 3.38 percent during the current six-year expansion.

Indeed, the sector’s real wages have been so depressed recently that they are now struggling to stay ahead of the private sector’s overall. That’s important because of the historic role played by American automakers in building the nation’s middle class in the post-World War II period. Indeed, at technical the start of the last recession, in December, 2007, real automotive wages were 12.45 percent higher than private sector wages in general. As of April, the gap had shrunk to 0.47 percent – and those private sector wages adjusted for inflation are up just under five percent total during that seven-plus year stretch.

If anyone can tell me how this adds up to a picture of American manufacturing roaring back in any way but taking a low road, RealityChek’s comments section is open for business!

Advertisements