Although this morning’s data from the Labor Department showed that the inflation-adjusted wages picture brightened marginally in June, they also revealed that two underlying trends on the American compensation front remained as discouraging as ever – especially in manufacturing. Further, the statistics confirmed that real hourly pay in industry has reached a milestone that factory workers clearly won’t want to celebrate.
The two underlying trends have to do with the technical real wage recessions (two or more consecutive quarters of net decline) that private sector workers overall, and their manufacturing counterparts, continue to suffer.
For the former, constant dollar hourly pay is down on net since last July – by 0.19 percent. For manufacturing, the real wage recession began two-and-one half years ago. Since January, 2016, after -inflation hourly wages are off by 0.09 percent.
The milestone? Real hourly pay in manufacturing has lately been performing so much worse than pay in the overall private sector that the two figures have now converged for the first time since these statistics have been tracked (beginning in 2006).
In May, price-adjusted wages in manufacturing and the overall private sector both stood at $10.75 per hour in 1982-84 dollars. This morning, those preliminary May readings remained intact, and the preliminary June numbers revealed both categories of workers to be earning $10.76 per hour in real terms.
By comparison, when the last recession began, at the end of 2007, constant dollar manufacturing wages topped their overall private sector counterparts by 2.79 percent. When the current recovery began, in mid-2009, the gap had actually grown – to 3.98 percent.
But during the current expansion, real private sector wages have now improved by 4.36 percent, whereas in manufacturing, constant dollar hourly pay is up only 0.37 percent – less than a tenth as fast.
On a sequential basis, real wages in manufacturing and the overall private sector both increased in June by 0.09 percent. On an annual basis, however, real private sector wages are flat, and real manufacturing wages are down 1.10 percent.
Between the previous Junes, constant dollar private sector wages advanced by 0.84 percent, and their manufacturing counterparts climbed by 0.46 percent.