If you had any doubts that American workers are experiencing a dramatic slowdown in inflation-adjusted wages, the newest figures on this pay indicator just put out by the Bureau of Labor Statistics (BLS) should emphatically dispel them. In fact, they make clear that the nation is now stuck in a technical real wage recession – meaning that constant dollar hourly wages have fallen on net for at least two straight quarters. Moreover, when looking over the last two years, the worst results have been registered in price-adjusted hourly pay for blue-collar workers.
Keep that in mind if the Federal Reserve, as expected, announces a new tightening of monetary policy this afternoon, in large measure because the U.S. labor market supposedly has healed the wounds suffered during the Great Recession and the historically weak recovery that followed it.
For all private sector workers and for manufacturing workers, constant dollar hourly pay is down 0.19 percent since last March. And for blue-collar workers in these swathes of the economy, the story actually is slightly worse. Production and non-supervisory employees in the private sector overall have seen their after-inflation hourly pay fall by 0.33 percent since last February. For their counterparts in manufacturing, real wages are down 0.12 percent since December, 2015. (Government workers’ wages aren’t tracked by BLS, because they’re set largely by politicians’ decisions, not by market forces. Therefore, they tell us little about the economy’s fundamentals.)
And the new real wage figures add to the evidence – presented at RealityChek last month – that increases in such take-home pay adjusted for prices have slowed dramatically over the last year.
Here are the new numbers for all private sector workers:
February, 2014-15: +2.03 percent
February, 2015-16: +1.33 percent
February, 2016-17: 0 percent
And the new results for private sector production and non-supervisory workers:
February, 2014-15: +2.15 percent
February, 2015-16: +1.77 percent
February, 2016-17: -0.33 percent
Here are the figures for all manufacturing workers”
February, 2014-15: +1.33 percent
February, 2015-16: +1.32 percent
February, 2016-17: +0.09 percent
And finally, here are the new data for blue-collar manufacturing employees:
February, 2014-15: +1.90 percent
February, 2015-16: +1.75 percent
February, 2016-17: -0.57 percent
In fact, the only piece of good news in the new BLS report is that the January and February real wage figures are still preliminary. But unless they see unprecedented upward revisions, or constant dollar wages enjoy a strong rebound in the next few months, expect the real wage numbers to start turning up the political heat both for a Federal Reserve that’s apparently thinking “Mission Accomplished,” and a president apparently convinced that his mere election is speeding up the recovery.