Although this morning’s government data contained a bit of good news for Americans about their hourly wages, it also made clear that, when adjusted for inflation, they remain in technical recession for both the private sector as a whole, and for manufacturing in particular. Moreover, the gap between these two workforces keeps growing.
The good news concerned the real wages improvement that took place both in the private sector in toto and in manufacturing in March. For the former, they advanced by 0.37 percent – the best such performance since July 2015’s identical rise. For the latter, they grew by 0.28 percent – the best such performance since July, 2016’s 0.37 percent, and also the first sequential improvement since that month.
The January-February wage performances for both workforces were revised down – for the private sector from a flat-line to a 0.09 percent dip; for manufacturing, from a 0.09 percent decline to a 0.19 percent drop. But at least these downgrades were more than made up for in March.
Yet the recent upticks still left both private sectors overall and their manufacturing counterparts in real wage recessions – period of six months or more in which after-inflation hourly pay is down on net. For the private sector in general, price-adjusted wages are still 0.09 percent lower than they were last June. For manufacturing workers, these constant dollar wages are down by 0.28 percent since February, 2016.
As indicated by the wage recession figures, however, the long-time divergence between inflation-adjusted private sector and manufacturing wages continued in March, and in fact widened. On a year-on-year basis, real hourly pay is up 0.37 percent for the private sector in toto, but down by 0.65 percent in manufacturing.
Since the current economic recovery began, in mid-2009, the contrast is even greater. During this period, private sector workers’ hourly pay has kept 4.27 percent ahead of inflation. But manufacturing workers’ pay is up only 0.47 percent in real terms – only about 11 percent as much. Last March, the gap was smaller – real wage increases in manufacturing still badly lagged those in the private sector, but their gains were just under 29 percent as great as private sector increases.
The economy has been the issue on which voters have been giving President Trump his highest marks, and many indicators back up this judgment – including continued strong job creation (even when official unemployment is very low) and robust consumer confidence. But if pay keeps struggling to stay even with rising prices, it’s easy to see this Trump strength weakening as this year’s mid-term elections draw closer.