Inflation exceeds average hourly earnings in the aggregate (private sector) and for Leisure and Hospitality Services (production and nonsupervisory). But they are still ahead of 2020M02 levels.

Figure 1: Average hourly earnings in private nonfarm payroll (blue, left log scale), and in leisure and hospitality services (brown, right log scale), both in 2020$/hour. 2022M04 real wage uses Cleveland Fed CPI nowcast (5/6). Source: BLS via FRED, Cleveland Fed, and author’s calculations.

Note that Cleveland Fed April CPI nowcast is 0.28% m/m, compared to Bloomberg consensus of 0.2%. If Wednesday’s release exceeds 0.28%, then real average hourly earnings might decline again.

While both real wage series are higher than pre-2020M03 (not holding composition constant), it’s interesting to note that leisure and hospitality services earnings are above the 2016-19 trend.

Figure 2: Average hourly earnings in leisure and hospitality services (brown) and 2016-19 stochastic trend (light blue), both in 2020$/hour. 2022M04 real wage uses Cleveland Fed CPI nowcast (5/6). Source: BLS via FRED, Cleveland Fed, and author’s calculations.

A caveat: My comparison is pre- vs. during the pandemic, and using the CPI as a representative cost-of-living indicator. As noted by Rampell/WaPo, over the past year (2020Q4-2021Q4), the cost of living for low-income households has risen more than for high-income households. That’s consistent with the fact that the CPI is a plutocratic index, representing consumption weights for households at about the 75th percentile. Using a CPI calibrated to say the 20th percentile might change results noticeably.