This morning was a bad one for observers of the U.S. economy who keep insisting that wage inflation is either here or around the corner. That means it was also a bad morning for American workers. For the new Labor Department figures on wages adjusted for inflation showed no change – at best – in the historically sluggish constant dollar paycheck increases that employees have seen for most of the current economic recovery.
These new data figures bring the story up through April, when the Department says after-inflation hourly wages were unchanged on month in the private sector, and slipped 0.09 percent in manufacturing. In fact, both numbers represent deceleration from March – when real private sector wages increased sequentially by a downwardly revised 0.28 percent, and real manufacturing wages rose by a downwardly revised 0.19 percent.
Most analysts take the year-on-year numbers more seriously, because they exhibit less random fluctuation. But if anything, they make the wage inflation meme look even loonier. Since last April, price-adjusted private sector wages are up a grand total of 0.19 percent, and in manufacturing, actually down by fully 1.10 percent.
Between the previous Aprils, moreover, inflation-adjusted wages improved by 0.28 percent in the private sector, and by 0.55 percent in manufacturing. For good measure, the latest April yearly decrease in constant dollar manufacturing wages was the biggest since October, 2012’s 2.09 percent drop.
And throughout the current recovery, which is approaching its ninth anniversary, inflation-adjusted private sector wages have advanced by 4.01 percent, while their manufacturing counterparts have inched up only 0.37 percent.
It’s true of course that broader measures of American worker compensation reveal greater improvement. But that’s not to say “great improvement.” Or even close. It’s also true that the Federal Reserve can cite any number of reasons to raise U.S. interest rates after many years at rock-bottom levels. The new real wage figures, however, make clear that wage inflation isn’t yet one of them.