There is a simple reason why the vast majority of American workers, some 82% of them, are not feeling any wage growth: there simply isn’t any.
As a reminder, today the BLS reported that average hourly earnings for all workers rose by 0.4% on a monthly basis, slightly more than consensus expectations. In part due to upward revisions to earlier months, the year-over-year rate accelerated to +2.8%, which was a new cyclical high and will be welcomed by the Fed as confirmation that its policies are working to boost worker income, and thus, inflation is just around the corner.
There was just one problem with that: that number is for all workers, however when one looks at the subset of production and nonsupervisory private workers, which in October amounted to 101 million, or just over 82% of the entire private workforce, their wage growth story is very different. According to the BLS, these particular workers made on average $21.72 per hour, up only 2.4% from $21.21 a year ago, which as the chart below shows is where wage growth for this group has been all year, and after a modest dip in late 2014, has been largely unchanged since the start of 2014.
Indicatively, this particular group of workers saw a 4% annual growth in wages at the time the 2007 recession hit.
In other words, for the vast majority of American workers, real wage growth is still anemic, barely outrunning official measures of inflation, which was 1.5% in September, according to the most recent CPI report, and was 2.2% for core items, effectively eliminating any nominal wage growth.
So where did the wage growth go? Simple: the 18% of supervisory, managerial workers private workers that are excluded from the above grouping, but make up the balance of America’s 122.7 million private workers. It is this group that saw a surge in their implied average wages, which soared by an all time high 4.7% in October.
So when the Fed sits down to hike rates next month in hopes of keeping inflation in check, it may want to hike rates only for those 18% of workers who are benefitting from rising wages, because for the rest of America, the income picture remains as dreary as it has been for years.
The post Here Is The Reason Why 82% Of American Workers Don’t Feel Any Wage Growth appeared first on crude-oil.top.