Those same new official U.S. inflation statistics that reveal how President Trump’s tariffs have or haven’t affected consumer prices can also show whether American workers’ paychecks have been keeping up with the (slowly) rising cost of living. And the latest Bureau of Labor Statistics (BLS) data contains some good news for the nation’s employees, for its manufacturing workers in particular, and as a result for President Trump – although mainly in comparison to inflation-adjusted wages’ lackluster previous performance during his administration.
According to the new real wage figures (which bring the story up to June), price-adjusted pay for workers in the private sector overall rose by 0.18 percent sequentially last month – about in line with the results for the last few months. The year-on-year numbers, though, were much better. Price-adjusted wages improved by 1.49 percent between June, 2018 and June, 2018 – compared with their bare 0.09 percent increase between the previous Junes. (The BLS doesn’t look at government workers’ pay because that’s largely the result of politicians’ decisions, and thus says little about the state of the national labor market.)
The only fly in this ointment: This year so far, annual advances in private sector wages have lost some momentum. The June year-on-year rise was somewhat lower than its January counterpart (1.68 percent).
Real wages in manufacturing lately have made better progress, reversing a trend that’s held until very recently. On a monthly basis, they were up 0.19 percent in June, slightly better than the increase for the private sector generally. The June annual rise of 0.64 percent was less than half the overall private sector figure, but was much better than the change between June, 2017 and June, 2018. Yet that’s only because during that period, real manufacturing wages actually fell by 1.10 percent.
And over longer time periods, the manufacturing results have been similarly mixed compared with the trends for private sector wages generally. For instance, during this calendar year so far, the advance in real manufacturing wages has been more than twice as fast as that for all private sector workers – 0.37 percent to 0.18 percent. Alternatively put, whereas the annual gains in real private sector wages have slowed since January of this year, the 0.64 percent June figure for manufacturing represents a major acceleration from January’s 0.09 percent rate.
Constant dollar manufacturing wages have even closed the immense gap that opened earlier during the current economic recovery with overall private wages.
From the mid-2009 beginning of the ongoing economic expansion (American history’s longest ever) to this June, after-inflation manufacturing pay is up only 1.03 percent in toto versus the 6.01 percent increase for the overall private sector. In other words, the real private sector wage improvement, however modest in and of itself, has been 5.83 times faster.
As of the previous June, however, the gap was 12.05 to one – more than twice as great.
Nevertheless, when it comes to real wages, President Trump still faces a big political problem: Under his administration so far, they’ve risen much more slowly than during the most comparable Obama administration period, both for the private sector overall and especially for manufacturing.
Specifically, during the first 28 months of President Trump’s tenure, after-inflation private sector wages have increased by only 2.25 percent in all, and real manufacturing wages have inched up only 0.09 percent. During the last 28 months of the Obama administration, these numbers were 3.09 percent and 3.52 percent, respectively. If the real wage increases and the private sector-manufacturing gap don’t start getting considerably better soon, expect to hear a lot about such numbers from smart Democrats as the 2020 election approaches.