Although the U.S. government may think it’s efficient to release updates of several key measures of U.S. economic performance on the same day, it sure doesn’t make my job any easier. But since it’s not about me, not only did we get the new (April) industrial production figures today, we got the April real wage statistics, too. And they’ve made it even more difficult to use the words “wages” and “inflation” in the same affirmative sentence.
According to the Labor Department, inflation-adjusted wages for the entire private sector fell on month in March. The decrease was only 0.09 percent, but the dip was the first since last June. The January and February figures were revised only fractionally, and left the recent picture unchanged.
As always, however, it’s the trends over longer period of time that really count, and this is where wage inflation claims keep getting ever sillier. The new Labor data (which are still preliminary, as they are for March) put year-on-year April constant dollar wage increases at 1.33 percent. That’s less than the March annual gain (1.52 percent) and the February advance (1.41 percent), though it did beat January’s 1.14 percent.
More important, the new April year-on-year increase was barely half that of the previous two Aprils (2.53 percent), though it significantly bettered the 0.10 percent decline between April, 2014 and April, 2014. And since the current recovery officially began, in June, 2009, real private sector wages are up a grand total of 3.69 percent. That’s a more-than-eight-year stretch!
Consistent with recent trends, the picture is brighter in manufacturing – but not dramatically brighter. Whereas April real overall wages fell slightly, in manufacturing, they rose 0.28 percent over March levels, and are now up sequentially for the last ten months. Revisions left previous figures unchanged. So that’s impressive.
Year-on-year is where the story turns gloomier. April after-inflation manufacturing wages rose 1.88 percent over the preceding twelve months – another figure besting the comparable overall private sector real wage improvement. Also contrasting with the overall private sector, year-on-year real manufacturing wages have improved each month so far this year, from January’s 1.13 percent.
But as with private sector wages, the April annual increase represented a slowdown compared with the April, 2014-April, 2015 gain (1.92 percent), though it was a major improvement over the previous two Aprils, when real manufacturing wages went exactly nowhere.
Over the even longer term, manufacturing remains a big real-wage laggard. Since the recovery began in June, 2009, inflation-adjusted hourly pay has increased only 1.12 percent – less than a third as fast as real wages for the overall private sector.
And casting a big shadow on the manufacturing wage situation: a new report from the University of California, Berkeley Labor Center claiming that the families of just over a third of what its researchers call “front-line manufacturing workers” are enrolled in a welfare program of one form or another. A principal reason: More and more of these manufacturing workers are temps, hired through employment agencies.
In fact, the Berkeley Center contends, the share of families of these temporary manufacturing hires using welfare is 50 percent – the same as for workers in the traditionally low-wage fast food industry.
It’s important to note that the real wage figures I just analyzed covered both production and supervisory employees, so the two sets of findings aren’t directly comparable. But both make clear that the case for worrying that manufacturing is steadily losing its historic power to lift working class families into the middle class looks a lot stronger than the case that the sector is verging on a powerful upward real-wage surge.