The Federal Reserve, which insists that its decisions on interest rates are strictly “data dependent,” today starts a monthly meeting that’s expected to produce an announcement of a small rate hike. If the central bank approves the first increase from the current zero level since December, 2008, it’s hard to imagine that wage data will bear any responsibility. This morning’s figures from the Bureau of Labor Statistics show that it’s as remote a possibility as ever during the current weak recovery.
On a monthly basis, private sector wages adjusted for inflation in November inched up by 0.09 percent. That’s slower than the unrevised 0.19 percent increase in October, and the worst monthly performance since such wages fell by 0.38 percent in June.
The year-on-year numbers, which economists take more seriously, mock the wage inflation claims, too. On a November-to-November basis, constant dollar private sector wages rose by 1.83 percent – much slower than October’s 2.42 percent. These latest annual figures are indeed better than those for the previous Novembers (up 1.74 percent from 2013-14, and 1.06 percent between 2012 and 2013). But at that time, the worries (rightly) centered on wage stagnation, so count me unimpressed.
In addition, the November yearly change continues a dreary recent pattern of real wages slowing down almost as soon as they show any signs of significant pickup. For example, year-on-year inflation-adjusted wage gains hit their 2015 peak so far in January, at 2.43 percent. This rate then decelerated, “sped up” to 2.42 percent in April, and then slowed again before the better October advance.
And since the current recovery officially began, in real wages have risen by only 2.71 percent in toto. That’s a more than six-year stretch.
But maybe the news for manufacturing workers is better, since President Obama and others keep telling us that American industry is enjoying or verging on an historic renaissance? As they say in those rental car commercials, “Not exactly.” In fact, manufacturing again strengthened its reputation as a national wage laggard.
The best manufacturing-related development came for the October data. The sector’s after-inflation monthly wage change was revised up – to zero – from a previously reported dip of 0.09 percent. But according to the November report (whose data is still preliminary, as is the case for the October results), real manufacturing wages flat-lined again sequentially last month. Moreover, these two back-to-back goose eggs were the worst manufacturing real wage results since June’s 0.47 percent monthly decline.
Manufacturing wages do show a pickup on an annual basis. Since last November, they’ve advanced in real terms by 1.61 percent, much faster than the barely detectable 0.28 percent between the previous two Novembers and the 1.16 percent rise from November, 2012-November, 2013. But the latest October annual increase was two percent even, so even this good news needs to be qualified. And since the current recovery began more than six years ago, inflation-adjusted manufacturing wages have actually fallen by 0.19 percent.
Curiously (or not?), this ongoing manufacturing wage weakness has been even more pronounced in the still booming automotive sector. For workers producing motor vehicles and parts, real wages fell sequentially in November for the fourth straight month (by 0.38 percent). In fact, they’re down on net since January, with much of a big August spurt now offset.
Automotive wages after inflation have been rising year-on-year, but since November, 2012-13, the rate has slowed from 2.07 percent to 0.96 percent to this year’s 0.57 percent. All told, adjusting for inflation, automotive wages have decreased by 3.92 percent during this six-plus-year-old recovery.
None of this is to suggest that there’s no inflation anywhere in the U.S. economy, or that the Fed should or shouldn’t hike rates. (Here are my views on that.) But it does suggest that, just as some used to claim that the information technology revolution can be seen everywhere except in the productivity statistics, if you’re seeing inflation in America today, you’re sure not looking at workers’ paychecks.