The meme of the day is wage growth is accelerating.
I disputed that notion on February 7, in Acceleration in Wage Growth is a Statistical Mirage.
On February 16, I reported Congratulations Workers! You Make One Penny More Than a Year Ago.
That penny more a year is by hour, in “real” inflation-adjusted terms. The calculation is from the BLS.
Nonetheless, the Fed is not happy with wage destruction.Various Fed presidents seek still higher inflation.
Inflation Targeting
Instead of using an inflation target of 2%, San Francisco Fed President John Williams proposes the Fed use a price-level target, that would allow inflation to run higher during expansions to make up for prior shortfalls.
We need that discussion, but in the opposite sense because the Fed’s insistence inflation in a disinflationary world has seriously harmed median and average wage earners.
Occupational Employment Statistics (OES) from the BLS supports this view.
The following charts are from OES data downloads at the state and national level coupled with additional CPI data from the BLS.
Data for these charts are from May 2005 through May 2016. Those are not arbitrary dates.
The latest OES data is from May of 2016 and prior to May of 2005, the OES used varying months. Having all yearly data from May allows easy comparison of wages vs. year-over-year CPI measurements.
National Hourly Wages
Wage Differentials Mean vs. Median Hourly Wages by State
Every month, analysts track the monthly jobs report for “average” wage increases. Such analysis is misleading because most of the benefits go to the top tier groups.
This behavior is not unexpected, but it makes it very difficult for the bottom half of wage earners who do not own a house, to buy a house.
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