Whether or not you favor the Federal Reserve hiking the interest rate it directly controls anytime soon, it should be clear by now that a tightening decision can’t possibly be justified by a belief that American wages are finally showing signs of inflationary life. Today’s new government figures on inflation-adjusted wages are the latest reminder.
The good news is that real wages for the private sector overall rose month-to-month in October by 0.19 percent, and that September’s 0.10 percent increase was revised up to that pace. (This figure, though, like October’s, is still preliminary.) This means that October’s year-on-year wage gains after inflation are 2.42 percent – which seems encouraging because it’s on the high side for the current economic recovery.
The problem is that this entire economic recovery has been on the low side for American history. Since it began – more than six years ago, in mid-2009 – real wages are up a grand total of 2.62 percent. In fact, wages adjusted for inflation rose year-on-year at a slightly faster 2.43 percent pace in January, and also hit 2.42 percent in April. Each time, the yearly gains slowed immediately afterwards.
As usual, in many respects, the picture is gloomier in for manufacturing workers. Their after-inflation wages dipped on a monthly basis in October. And although the decline was only 0.09 percent, it was the first such decrease since June. As a result, this snapped manufacturing’s first three-month real-wage winning streak since June, 2013. September’s 0.19 percent monthly manufacturing real wage gain remained unchanged. And both left August’s 0.66 percent sequential increase seeming like a long time ago.
In October, manufacturing also returned to lagging the rest of the private sector in terms of year-on-year wage changes. September’s 2.29 percent annual improvement was the first such advance greater than two percent since October, 2009. Unfortunately, even though the latest figures left that figure un-revised, it’s still the first two-plus-percent year-on-year improvement in six years. For in October, the rate fell back to 1.91 percent.
At least, however, this October-to-October increase beat every such change since 2009, so that’s a sign that manufacturing wages after inflation are rising faster. But it’s also evidence that they are nowhere close to rising fast. And in inflation-adjusted terms, manufacturing wages are still lower than they were (by 0.28 percent) than when this recovery began more than six years ago.