Economic Indicators | Wages Incomes and Wealth

Wages fall behind inflation for seventh month

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May 14, 2008

Wages fall behind inflation for seventh month

By Jared Bernstein

Though the rate of job loss slowed last month, both hourly wages and the weekly hours worked were lower, as the economic downturn continues to be felt in the job market.  With today’s release of the consumer price index for April, we are able to examine the recent trend in real (i.e., inflation-adjusted) hourly and weekly earnings.

The chart below shows the yearly growth of real hourly and weekly earnings for the 80% of the workforce that are blue-collar production workers and non-managers in services.  Since last October, average paychecks for these workers have been losing ground in real terms. 

Figure: Annual change in real weekly earnings, April 2007-April 2008

Note that in most of these recent months, real weekly earnings have been falling faster than hourly earnings.  This is due to the loss of hours worked.  In April 2008, for example, real hourly earnings fell 0.7%, while weekly earnings were down 1.0%.

Workers’ wages are thus facing two pressures in the current job market: hourly and weekly wage growth that is not keeping up with inflation and diminishing weekly work hours.

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