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NewsFlash: September 15, 2006

Real wages still stagnant, even as inflation moderates

Analysis by Jared Bernstein, EPI senior economist

After adjusting for inflation, average weekly earnings fell 0.5 percent last month, and real hourly wages were down slightly, by 0.2 percent, according to the Bureau of Labor Statistics release of real earnings by non-managerial workers.

On an annual basis, the 3.9 percent increase in hourly wages was fully offset by inflation, meaning no increase in the buying power of the hourly earnings of the 80 percent of the workforce in blue collar manufacturing jobs or non-managerial service jobs.  In 27 of the last 29 months, real hourly wage growth has been flat or negative on a yearly basis.  Weekly earnings were up 0.3 percent over the past 12 months, as more hours per week offset stagnant wages.

Recent reports have stressed increases in labor costs over the past few quarters.  However, other evidence shows these increases to be largely related to stock options and bonus payments, not to improvements in core wages for the majority of workers.  Today’s report corroborates that impression.  Even as inflation moderated last month, most workers’ real wages continue to stagnate or fall behind.

Click here [PDF] for the BLS report.

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