The Labor Department’s July inflation-adjusted wage figures came out Wednesday, and for a change, the biggest new development (at least IMO!) isn’t on the month-to-month front, the year-to-year front, or even the trend-since-the-recovery-began front (though all of these numbers once again trash the idea of any major wage inflation taking hold in America).
Instead, the big news looks like the fact that, as of last month, real wages for the private sector have experienced their worst six-month stretch since the March-September, 2011 period. That was nearly four years ago!
Back then, wages after inflation for the private sector dropped by 0.58 percent cumulatively. Since this past January, they’re down by 0.47 percent on the same basis.
Moreover, manufacturing wages tell the same story. On a constant dollar basis, they’re now in their worst six-month stretch since July, 2012 through January, 2013. Back then, real manufacturing wages sank by 0.86 percent on net. Since this past January, they’re off by 0.56 percent.
Not that the bad news, as suggested above, stops there. Real private sector wages actually rose in July by 0.10 percent. That meager advance, however, was the best performance since January. The 1.94 percent year-on-year increase was better than June’s 1.75 percent. But it was the second worst since last December. It’s also true that this July’s annual real wage gains were much better than those of the last few Julys. Yet that’s only because those annual real wage increases were practically nonexistent – and from 2010 to 2011, these wages actually decreased.
And don’t think that the real wage picture brightens when you examine the trends during this economic recovery – an especially important indicator since developments during business cycles (recessions or expansions) give us the most informative data. Since the last recession officially ended – in mid-2009 – inflation-adjusted private sector wages have risen only by 1.74 percent. In other words, that’s the total extent that American workers outside government (where wages are set by politicians’ decisions) have kept ahead of living costs over the last six years.
Interestingly, over the past year or so, the manufacturing real wage path has closely tracked the overall real wage path. As with private sector wages, the inflation-adjusted 0.28 percent monthly gain registered in manufacturing was the best performance since January. And as with private sector wages, manufacturing’s 1.24 percent July year-on-year improvement topped June’s 1.05 percent. As a result, that rise was also a second-worst since December.
Over the longer run, however, there’s been notable divergence between real private sector wages and real manufacturing wages. Whereas the former have risen – slowly – during the current economic recovery, the latter are down by 1.31 percent.
And so it keeps getting ever truer: You can say “wages” and “inflation” in the same affirmative sentence. But you can’t legitimately say that with a straight face.
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