Hourly wages and real hourly wages from the BLS, chart and inflation calculation by Mish

Please consider the BLS Real Earnings Report for August 2023.

All Employees

• Real average hourly earnings for all employees decreased 0.5 percent from July to August. This result stems from an increase of 0.2 percent in average hourly earnings combined with an increase of 0.6 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
• Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent increase in the average workweek.
• Real average hourly earnings July $11.09
• Real average hourly earnings August $11.04

Production and Nonsupervisory Workers

• Real average hourly earnings for production and nonsupervisory employees decreased 0.6 percent from July to August, seasonally adjusted. This result stems from a 0.2-percent increase in average hourly earnings combined with an increase of 0.8 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
• Real average weekly earnings decreased 0.3 percent over the month due to the change in real average hourly earnings being combined with a 0.3-percent increase in the average workweek.
• Real average hourly earnings July $9.70
• Real average hourly earnings August $9.64

Geek Notes

Rounded to the penny, I calculate the same real average hourly earnings as the BLS. However, I do not calculate the same month-to-month percentage change for all employees as the BLS. This is the result of intermediate results rounded up by the BLS.

The real average hourly wages for July and August to 6 decimal places are $11.085994 and $11.042580 respectively, which we both round to $11.09 and $11.05.

Using the unrounded numbers, I calculate a change of -0.391606301 which I round to -0.4. Using $11.09 and $11.05 as the starting point, the percentage change is -0.450856628 which the BLS rounds to -0.5.

I believe -0.4 percent is more accurate. Regardless, multiple roundings of intermediate numbers rather than rounding the final result is the cause of this discrepancy between my calculations and that of the BLS.

Hourly Earnings and Real Hourly Earnings Detail

Hourly wages and real hourly wages from the BLS, chart and inflation calculation by Mish

Why Sentiment is Weak

Economic writers keep wondering why sentiment is weak. Someone on Twitter asked me that just today. The above chart tells you all you need to know.

Wages have seemingly soared. But adjusted for inflation, wages are falling fast.

For private workers, since January of 2021, wages have risen in nominal terms from $29.92 to $33.82, a seemingly nice gain of $3.90 or 13.0 percent.

Adjusted for inflation, private worker wages have declined from $11.39 to $11.04. That’s a 3.1 percent decline. These calculations assume you believe the CPI numbers. Anyone attempting to buy a house will scoff at those numbers. So will renters and anyone who does not own their own house.

The long-term numbers have been terrible for years, decades actually.

Hourly Earnings and Real Hourly Earnings

Hourly wages and real hourly wages from the BLS, chart and inflation calculation by Mish

Congratulations production and supervisory workers! You now make 26 cents more per hour in real terms than you did in February of 1973. That’s about a half penny more each year for 50 years. Well, at least it’s positive. Recent experience isn’t.

Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter

CPI data from BLS, chart by Mish

Earlier today I noted Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter

The price of gasoline rose 10.6 percent, rent another 0.5 percent, shelter 0.3 percent, and new cars 0.3 percent leading the way to a 0.6 percent increase in the CPI in August.

Rent of primary residence has gone up at least 0.4 percent for 25 consecutive months!

Other than the above (and everything else), Bidenomics is working fine.

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