Here Is The Reason Why 82% Of American Workers Don't Feel Any Wage Growth - Printable Version

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Here Is The Reason Why 82% Of American Workers Don't Feel Any Wage Growth - Zero Hedge - 11-04-2016

Here Is The Reason Why 82% Of American Workers Don't Feel Any Wage Growth

<p>There is a simple reason why the vast majority of American workers, some 82% of them, are not feeling any wage growth: <strong>there simply isn't any. </strong></p>
<p>As a reminder, today the BLS reported that average hourly earnings <strong>for all workers</strong> 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.</p>
<p>There was just one problem with that: that number is for <strong>all workers</strong>, 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. <a href="">According to the BLS</a>, 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.</p>
<p><a href=""><img src="" width="500" height="335" /></a></p>
<p>Indicatively, this particular group of workers saw a 4% annual growth in wages at the time the 2007 recession hit. </p>
<p>In other words, for the vast majority of American workers, <em>real </em>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.</p>
<p>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.</p>
<p><a href=""><img src="" width="500" height="345" /></a></p>
<p>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. </p>

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