Is Your Hourly Pay Or Salary Keeping Up With Inflation?

The Atlanta Fed has a wage tracker data series. I added CPI information to see who is and isn’t keeping up with inflation.

Wage data from the Atlanta Fed, CPI from the BLS, chart by Mish

I downloaded data from the Atlanta Fed Wage Growth Tracker.

The Atlanta Fed’s Wage Growth Tracker is a measure of the nominal wage growth of individuals. It is constructed using microdata from the Current Population Survey (CPS), and is the median percent change in the hourly wage of individuals observed 12 months apart. Our measure is based on methodology developed by colleagues at the San Francisco Fed.

The the Atlanta Fed data I added CPI data from the BLS. We can track real (inflation-adjusted) wages by subtracting the increase in the CPI from the increase in nominal wages.

Real Wage Growth Tracker

Wage Growth Discussion

  • The bottom quarter of wage earners (Blue) consistently loses to inflation. Not once in the entire series of this data dating to 1997 have wages kept up with inflation. Thank You Fed!
  • The Median wage earner (Red) loses to inflation a substantial portion of the time. Since 2000,I estimate that about 40 to 45 percent of the people lose to inflation about half the time.
  • Those at the 75th percentile, the top quartile (Green) consistently beat inflation by a lot. Congratulations!
  • The average person (Yellow) nearly always beats inflation even though some 40 to 50 percent of the people lose to inflation at least half the time.

The data is worse than it looks for anyone renting and struggling to buy a home because home prices are not in the CPI.

The Fed’s Big Problem

On average, the economy looks OK. But averages are misleading. Several large groups of people are struggling. They all have one thing in common.

Case-Shiller home price index, CPI rent index, and the index of hourly earnings for production and nonsupervisory workers.

Wage data is another way of looking at The Fed’s Big Problem: There Are Two Economies But Only One Interest Rate

Who’s Unhappy?

  • Those looking to buy a home but cannot afford the record high prices, are not faring well in this economy.
  • Anyone whose wage growth is in the bottom half.

In general, renters and those under the age of 40 are most likely impacted. Click on the above link for details.

More By This Author:

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The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
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