Friday, January 12, 2018

Real wages in 2017

 - by New Deal democrat

Now that we have the report on consumer prices for December, let's take a look at what happened with real wages in 2017.

Consumer prices increased +0.1% in December, and wages for non-managerial workers rose 0.3%,  This for that month the average worker earned 0.2% more.

For the year, the nominal wages of non-managerial workers rose 2.4%, while prices increased 2.1%, meaning that for the entire year workers saw a whopping 0.3% increase in real pay:

Here's a close-up of the last 5 years:

But because inflation accelerated slightly in the second half of the year, and nominal pay increases slackened, real pay has actually decreased roughly -0.8% since peaking in July, and is barely up at all over the last 24 months.

Next let's take a look at the real aggregate pay that non-managerial workers earned in 2017.  I like this measure because it tells me how much the economy as a whole has delivered to the middle and working class during the economic expansion.  Here's the graph:

For the entire expansion, real aggregate pay has increased ~23%.  On a YoY basis, aggregate real payrolls increased about 2.5%, about the average for this expansion:

In other words, consumers have more money in the aggregate, but only because the number of hours and jobs in the economy has increased, and almost not at all because their individual hourly pay increased in real terms in 2017.