And The Not So Pretty: Record Low Rise In Average Hourly Wages

Tyler Durden's picture

As we first observed in February of 2012, we will not tire of repeating that when it comes to the jobs picture there are two key components: the quantitative, or the headline jobs and unemployment rate numbers everyone is fascinated by at 8:30 am each first Friday of the month, and the qualitative, or the number that gets far less attention, yet which is so very critical to Americans on those occasions they want to use their earned wages to purchase goods and services. And this is where the ugly side of today's jobs report came out. Because while the quantitative data was good, just as we and everyone else had expected from the final datapoint before the election (the good news there is that finally we will revert to reality following November 6), the qualitative data was ugly. How ugly? As the BLS reported, the average hourly earnings in October declined from $19.80 to $19.79 in September, and at $19.57 last October. This was only the fifth sequential decline in this series since the start of the Depression in December 2007. But more important was the Y/Y change in average hourly earnings. At 1.1% (down from 1.4% a month ago), this was the lowest Y/Y increase in this series, topping the collapse in real earnings which started in December 2008, and is now the lowest in history. In other words, more jobs may be added, but on a real basis, wages are not even keeping up with inflation!

Compared to job "gains", it is obvious that all nominal gains are at the expense of wage losses:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
pods's picture

Slavery never went away. It just modernized.
Income taxes=slavery.

machinegear's picture

Today the owners lease their slaves from the government.

LetThemEatRand's picture

Hmm, I wonder why so many young people are advocating "socialism" as an answer as noted in last night's articles here (even if they really just mean a system where wealth flows more evenly among the population and does not concentrate mostly with the top .01%).  Must be the public school system not teaching them the value of the oligarchs having virtually all of the wealth in society while they are told that the problem with socialism is that "you eventually run out of other people's money."

dwdollar's picture

That's something we can agree on.

Broccoli's picture

Concentration of wealth is a problem, crony capitalism is a problem. But just like the Ryan plan, the idea that a more equitable distribution by force if necessary will fix the problem is absurd. There isn't a solution being proposed by anyone that fixes the problem, because there is no solution that preserves the current system. You cannot fix malinvestment. It destroys itself.

We have generational warfare being waged by parents against their own kids and the unborn on an unprecedented scale. If you confiscated the wealth of the top 5%, not just the incomes but all their assets too, it would not cover the Federal budget deficit for even one year. We aren't just running out of other peoples money, we are running out of the future money of the entire world! The truth of the matter is we are stealing incredible amounts of consumption from the future to just keep the current system limping along.

Good news is the scale of the problem is absurdly huge, such that eventually society will be forced to go 'Lol, you thought we were going to pay for spending incurred by the baby boomers in the early aughts... Sucks to be you." The sooner this happens the better. Good news for the US is that we are geographically isolated from the rest of the world and we have extensive energy resources in coal and natural gas. Europe, well, as always Europe is not going to be able to avoid reaping what they sow.

LetThemEatRand's picture

"If you confiscated the wealth of the top 5%, not just the incomes but all their assets too, it would not cover the Federal budget deficit for even one year.

We can debate the merits of confiscating anyone's wealth (I don't advocate it, certainly not wholesale), but your statement reflects the utter misinformation that the oligarchs have foisted upon the "free market" crowd.    Total wealth/assets held by everyone in the U.S. is around $200 trillion.  The top 5% of the U.S. has 60+ % of that wealth/those asserts.  Do the math.  Unless the deficit just jumpted to over $100 trillion a year, you are simply wrong, and in fact you are wrong by a mile.  So, care to debate the facts or just make shit up?

LawsofPhysics's picture

That is certainly a lot of paper fucking promises.

LetThemEatRand's picture

My source included corporate assets, so we're comparing apples and oranges.  But even limiting it to household wealth, the above poster is still wrong by a mile, yet most people who advocate against higher taxes for the top percentage repeat his mantra.   There is plenty of wealth in the U.S. to kill off not just the yearly deficit, but the entire budget deficit, and still have enough left over so the oligarchs can drive a different colored Bentley for each day of the week.  And I'd be interested to know how much of that total is owned by 400 individuals.  I'll bet it's a huge percentage.

The point that I keep making is that the money is there and it always has been.   The argument that I hear over and over that social programs cannot be paid for is simply factually untrue.  They were underfunded on purpose, and the money taken by the oligarchs who don't want to give it back.

Broccoli's picture

I must admit you are correct in the overstatement by a mile. I suppose I made the amateur mistake of confusing studies about income confiscation vs. wealth confiscation, and mashing together several studies to come to an erroneous conclusion. Also not checking my facts before making an authoritative declaration. Is that a suitable mea culpa?

US wealth was $118 trillion in 2008. In 2007, the richest 1% owned 34.6% of the wealth, or around $40 trillion. Assuming someway to confiscate those assets and then sell them off again, it would not only cover the deficit but the entire debt. Even allowing for the depression in asset values such confiscation would entail as you simultaneously destroyed the potential buyer pool to monetize those assets, and the depression in the overall economy, I grant that the government could pay off its debts with confiscation on the wealthy. It just wouldn't be pretty for anyone. And it would by tyranny.

On the other hand, US income was around $13 trillion in the latest statistics I could find. And the top 1% of income captured around 18%, or 2.34 trillion. (The source of these statistics also seems to include capital gains, but it is unclear.) Assuming no change of behaviors and a 50 tax rate, you would still cover the deficit but not pay down the debt. Again these assumptions are unrealistic, I know the Laffer curve is a subject of derision for those on the big government side, but I see no credible refutation of the existance of peak revenues vs tax rates, just argument over where that peak would occur.

What I can point to is historical tax collections that have averaged 18.1% since WWII. With a peak of 20.6% in 2000 and a trough of 14.4 in 1950. In that time tax rates have varied drastically, with very little effect on tax collections. Income, payroll, and corporate taxes alone cannot support our current level of government going by historical trends, no matter how progressive we make them. To support our current level of government, would require VAT taxes or sales taxes, or national property taxes. Both of these tax types have greater impacts on the poor than our current tax scheme.

Edit. On further thought, a wealth tax would probably be less harmful to the poor than a straight property tax, as it accounts for the liability side of property ownership through loans. Wealth taxes, like for example death taxes, have other side effects though with serious consequences.

LetThemEatRand's picture

We actually pretty much agree on all fronts, including that there is no obvious way to erase decades of funneling money to the top other than a wholesale taking of chunks of assets that should have been taxed gradually over decades (e.g., a real capital gains tax, wealth taxes, etc).    If we can all agree the money is available, then we can have a meaningful debate about whether it should be tapped and how, or whether the poor and middle class should simply have to make do with less including programs they've paid into over their lifetimes that will need to be eliminated, so the oligarchs can keep their spoils.

adr's picture

You can't ever have textbook socialism. It sounds great right? Everyone the same, everyone making the same, equal distribution of income, and a generous benficial central state enforcing the equality of everything.

It's a complete fantasy, even more so that the total unregulated free market system.

Socialism always ends in pain and death because you can't force equilibrium on a society that is inherently unequal. The best you can do is try to give everyone the best opportunity to succeed if they take the chance to do so.

The best way to do that is to make sure nobody gets preferential treatment and that power is never concentrated into a single location. Areas where opportunity is the greatest will see the most growth. The chance of failure will actually breed success.

The proponents of socialism want us to believe that everyone will live a great life, like everyone will be sitting in the audience of the Oprah show. EVERYONE GETS A CAR, EVERYONE GETS A HOUSE, EVERYONE GETS STEAK AND LOBSTER FOR DINNER!!!!

Sounds like paradise. Until you see it in practice. Forced equality will always be forced equality to the lowest common denominator. Everyone will get a Yugo, not a Mercedes. Everyone will get a 200sq ft concrete flat, not a 2500sq ft house. You'll eat rationed brick cheese and chopped ham, not steak and lobster.

If you make a system for everyone, it must be made so even the dumbest person out there can understand it. Once that happens nobody actually has to learn anything past that lowest common point to get by. If the people no longer have to learn, they collectively get dumber and dumber as time goes on.

You will have Idiocracy. If nobody was ever taught that Brawndo doesn't have what plants need, they'll keep putting it on the plants expecting them to grow. That's the future with socialism.

LetThemEatRand's picture

Straw man.  I have not heard a single poster on ZH advocate for the "socialism" you describe, yet everytime someone suggests that the wealthy should pay more it is labelled "socialism" and this definition is utilized. 

MoneyShaman's picture

Wealthy do pay more. That's not a falsehood, that's a fact. Middle Class mostly pay payroll taxes, which are benefits to themselves through Medicare, and Social Security, nevermind the fact that Medicare is partly paid by general funds. Wealth redistribution isn't economic growth. No more than UN, or charities shipping food to starving africans who can't produce their own food. It changes nothing. You also assume that too much money is too much money. That investments requiring millions of dollars, or billions of dollars are not needed. Who are you to say that? A aspiring dictator of course. Profits leads to savings. Savings eventually leads to investment that creates more jobs.

MoneyShaman's picture

Here is the fallacy of socialism. It tries to achieve income equality, or wealth equality by redistributing wealth. That money that could be possibly invested in productive means that could employ more people, better the standard of living, not simply through direct wages, but also the productivity of their own work should be disregarded and funneled to achieve income equality, or really "spending equality". When socialist say rich are too rich, they are making a their own subjective value judgement, and pertaining it to be fact. People make profit not only to spend, but to make provisions for the future for a possible circumstance. For a individual that might be retirement, for a company, that might be for "possible" future expansions, additional investments, or branching out into new lines of production of different products. You don't know. That's the thing about dictators, and central planners, they have a pretense of knowledge, or pretend knowledge. You also settle for normative bias, which policy should be this, & the result should be this. You are not telling people what it is, you are telling people what should be. When a person dictates "what should be" suspended on another level apart from reality, you are preaching falsehood. Afterall it is nature that really dictates things in the end. What man does not fundamentally change that. You, like many, including politicians have a habit of telling people what things should be with very vague logical explanation nevermind the fact it's not valid to start with.

RealFinney's picture

But it's got electrolytes!

Jason T's picture

This is a big deal.. Personal income is in for a downer .. going negative in 2013.. current transfer receipts are almost taking up 100% of all Federal Reveunes.. and that's been a huge factor in the boost to income..


Dividend income going to get hit with higher taxes next year, interest income is doomed to shit, rental income will go nowhere.. who can get away with raising rents when incomes aren't going up?

Meanwhile, China's RMB is now 6.24 .. up 33% Vs the dollar since 2005.


MachoMan's picture

On the rent income issue, if you can't raise the rents, then you buy properties for cheaper...  discounting the stagnant (at best) wage situation and expected price increases in everything we need.  This is why the "investors will come in and save all the housing" meme is a bit overplayed...  [aside from incredibly convenient considering R/E will be sold to investors, it will just be in bundles to cronies for pennies on the dollar without public auction].

mayhem_korner's picture



Can you overlay John Williams' SGS inflation chart?  That would show the real loss of buying power...


thadoctrizin's picture

This is probably my biggest qualm with those that predict coming hyperinflation.  To predict that a loaf of bread will cost $100 in the near future one would have to assume that the people have the $100 in pocket to warrant demand at that price point.   How is it possible to see hyperinflation when the average Joe is living paycheck to paycheck because of diminishing wages?  IMO this is the reason the lid is on hyperinflation and also the reason there will be no bailouts for average Joe (ie. .gov will keep Joes nuts in a vice.)

LawsofPhysics's picture

Hyperinflation in what?  Be specific.  There will be massive deflation in things you don't need to survive, massive inflation in things you do need (if you are using dollars and the average Joe uses dollars).  How the fuck is that a good thing?


Moreover, look at commodity cost on that loaf of bread.  If the input costs go up 100x and (as you predict) the .gov won't "bail out the average Joe" why in the fuck would you not expect that cost to be passed on?  There seems to be a disconnect in your logic.

adr's picture

Which is why the government went out with its proxy corproations like ADM and Mosanto to control as much of the raw materials for bread as possible. If they control the raw material they control the end cost as well.

If individuals are allowed to own farmland and can produce grain. They might just trade the grain to a baker who knows how to make bread, as long as the farmer gets some bread back. The banker might also trade some bread for bacon, and the rancher may get the grain he needs from the farmer as long as he trades some ham for it.

Government bread may cost $100 a loaf, but there will be nobody willing to pay for it. They might find out they really didn't need that government in the first place.

LawsofPhysics's picture

So, 7+ billion people are going to return to barter?  Riiiigggggghhhhhttt.  

I have been in agriculture for close to 30+ years.  Do you know exactly what is required to make even one acre of land arable such that it can support a single person?  Ever heard of the Haber Bosch process?  or the sulfur cycle, the phosphorus cycle? do you know how much energy is required to for all this?.

But hey, let's be optimistic.  Let's say the energy is readily available (and no energy or capital is require to mine or build the infrastructure to get the energy), go do some math, show me that there is enough arable land for at least 7 billion people and that there is enough to give everyone at least 4 acres.  Then we can deal with the issue of fresh water and getting to everyone's land.

After you are done doing this math, please pass the hopium pipe.

Better go long sharecropping. (because that worked out so well in the past, right?).

thadoctrizin's picture

I'm not talking about your run of the mill 8-12% annualized inflation were are experiencing now.  I'm talking Zimbabwe style hyperinflation...I see the pic from Weimar of people with wheelbarrows of fiat...Americans don't have the fiat to fill the wheelbarrow and in many cases couldn't afford the wheelbarrow in the first place.  I know in my industry there has been more regulations in place to control my wages to supress them over the last 5-8 years.  This is the game.  They can't let Joe get easy credit or have too much disposable loot cos thats when things really heat up.  They need wage supression to keep a lid on hyperinflation.  This gives them the cover to print like crazy and get their balance sheets in order. 


I can understand that commodity cost rise can account for the inflation we see today but I can't see it slipping into hyperinflation like so many talk about.

LawsofPhysics's picture

"I can understand that commodity cost rise can account for the inflation we see today but I can't see it slipping into hyperinflation like so many talk about."


In order for your statement to hold true, the dollar must remain an accepted form of fiat.  A currency collapse will easily facilitate hyperinflation regardless of whether Joe has shit or is using higher wages to pay down debt (why do so many ignore this possibility when wages rise?).  You are contradicting yourself again, if people "can't afford wheelbarrows", that sure as hell sounds like hyperinflation already.

But I digress, I don't know if I would take that currency bet without some safe store of value in my possession.

Good luck.

thadoctrizin's picture

Paying down debt extinquishes money supply and is inherently deflationary. 

People couldn't afford wheelbarrows during the great depression...was that a hyperinflationary event? 

I hold PMs (which are on sale today BTW) to protect the purchasing power of my labor against insidious consistent inflation due to the debasement of our currency by our dear leaders....NOT because I expect hyperinflation tomorrow.

A point I am making is that there will be no stimulus or QE or jubilee that will benefit the people because that is the one thing that could spark off a hyperinflationary event.  They are intentionally grinding this economy into the ground to give cover the print. Of course another thing that could spark hyperinflation would be as you state a global loss of confidence in the dollar as a could happen, but it will be on their terms and at a time of their choosing. It is hard to believe that Joe America is going to lead the way to hyperinflation by losing faith in his linen.  Try to buy something priced at 30USD with an ASE and see the look you get

LawsofPhysics's picture

"People couldn't afford wheelbarrows during the great depression...was that a hyperinflationary event? "


I wouldn't compare what is happening now to the 1930's.  Completely different situation.  It was possible to switch to a "gold standard" back then (and we did- of course then we reneged on that in the 1970's, which, is what the world is waking up to now).

No way to go to a gold/silver standard now, but I think we are basically saying the same thing, I am simply saying it is much easier for the dollar to go "bidless" than you think.

MachoMan's picture

There will be massive price decreases in things you don't need to survive, massive price increases in things you do need (if you are using dollars and the average Joe uses dollars).

Fixed for internal consistency.

LawsofPhysics's picture

thanks.  Better know the real value of your labor if the currency you have to offer in exchange ain't worth shit huh?

scatterbrains's picture

When the world central banker panic gold grab commences because no one trusts or will deal in worthless fiat then why would the baker trust in it ? You want my fresh baked bread ? give me silver and if you don't have that I'll take $100 otherwise move along I'm busy.

LawsofPhysics's picture

exactly.  And it will not just be silver, it will be anything of real value.

cranky-old-geezer's picture



How is it possible to see hyperinflation when the average Joe is living paycheck to paycheck because of diminishing wages?

Inflation isn't determined by people's paychecks. 

It's determined by currency printing, and Bennie has made clear there's gonna be lots more currency printing, around $250 billion a month we know about (no telling how much more we don't know about), which means lots more currency debasement.  

15% - 20% inflation is a given.  Whether or not it becomes hyperinflation is up to Bennie.  Just depends on how much printing he does.

There's no rule saying your paycheck has to rise to compensate for inflation.   It's obviously not rising 15% - 20% per year.   You're lucky if it rises at all.   You're lucky to still have a paycheck.  Many people have lost theirs.

Yes Bennie will bleed you dry with inflaiton.   Debase the dollars in your paycheck down to nothing.  He doesn't care.

Shovelling money to Wall Street is what he cares about.

ShrNfr's picture

If you are in a deflation, do not expect average wages to go up. Dead ducks don't fly.

dwdollar's picture

Meanwhile... a prominent Republican (Tom Cole) is bragging about how many federal goobermant jobs he's brought to Oklahoma over the past few years as part of his reelection campaign.

MachoMan's picture

Why not?  Isn't this what it's about?  Get all you can from the trough...  while the gettin's good.

q99x2's picture

Compared to gold today wages went up a little. What happened? I didn't sell mine.

Hedgetard55's picture

Stagflation. Wages stagnant, prices for energy and food increasing, as dollar is debased and the wealth is transferred to the banksters.

Spastica Rex's picture

The important wages are keeping up with inflation. Duh.

govttrader's picture

And after all that...the technical trading patterns in the treasury market are just amazing.  The large leveraged traders are certainly back to normal.  Nothing seems to faze these guys.

Hannibal's picture

"Ce qu'on voit et ce qu'on ne voit pas"...

Bastiat's original parable of the broken window from Ce qu'on voit et ce qu'on ne voit pas (1850):

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.[1][2]

adr's picture

I like to add:

If by breaking glass we encourage spending, then we should all break as much glass as possible to encourage this growth. We shall usher in incredible growth through stimulus, and all will be better for it.

In the end we all broke glass and the glassmaker and window repairmen were showered with cash. But instead of growth for all we found the bank account of the glassmaker and repairmen only grew larger.

ptoemmes's picture

What about those who, metaphorically speaking, were to break their glass window but could not afford to pay for its repair?

Spastica Rex's picture

I've been thinking a lot about Bastiat and his broken windows.

Isn't consumerism with its attendent marketing and built-in obsolescence firmly rooted in this fallacy? A large portion of our economy seems to be based on broken windows. Doesn't Apple break millions of windows everytime they announce the release of a new iteration of the iPhone?

MoneyShaman's picture

Consumerism, is consumerism. Wealth is not achieved by more, and more consumption. It's what you earn, not consume. Society builds up wealth by accumulating things. We don't replace mattresses everyday, or every week, or every year, maybe for 10 years. Wealth is having your need met, not simply spending money. I had a debate with the guy who claims that diseases, or illnesses in general are fantastic for the economy, because it creates jobs. Most people have no real comprehension of what a job is. Politicians seem to offend on this a lot quite publicly, as if it's just work you get paid money with. Health care is a expense to large part of society. Imagine if we didn't have diseases, or illnesses, & humans were very healthy. Sure we wouldn't be spending our money on healthcare, to what seems like a disaster to some, or maybe a lot. We could be spending it on something we don't need, & be more happy going to more vacations instead. Bastiat is absolutely correct. To assume that hindering society, or being a inconvenience to society produces wealth is very large fallacy. Economics is like the Theory of General Relativity. Gravity exists, but fluactutates because it bends space, there is nothing that is taken out, or removed. What if we don't need tax lawyers? What if we didn't need lawyers in the first place?


People think jobs is just work with no purpose other than to get money to spend without realizing what a job is. We don't work for the sake of working. The point of every ecconomy is to try not to work, by enhancing our productivity. You think the people in the Star Trek are not wealthier when they can create food recipes in a instant without needing few to 30 minutes, or even hours of cooking to create food recipes? No they create food instantly without needing to work for it. The machine that instantly creates food by putting together matter in such a way that becomes food makes them wealthier. We don't need McDonald's, when we can just have our own McDonald's at home, much more quickly & easily. They don't need to work more to get their food, coincidently, they have warp drive as well. Labor is a cost, not just in money terms, but in real energy expended.  Most people don't even know what a economy does, or tries to accomplish. Keynesians don't have clue. This is where we get convoluted theories of employment without looking at the ends of a economy.


A economy tries to masters it's needs, then it proceeds to other needs that are not fulfilled in the future. Human race wouldn't get wealthier by detonating all the worlds nuclear bombs rebuilding everything.

Kickaha's picture

We have a massive oversupply of labor, and an underwhelming demand for it.

Why would anybody be surprised, and think it is "news", that the market price for labor is declining?

If anything, this is good news, since it means there is some movement towards an eventual equilibrium in the labor market, with the resultant return to some historical norm in the labor participation rate.

I don't like the fact that the reason for the increases in jobs is primarily the dilution of the dollar, which makes a lot of people employable now that they can be employed for less real value per hour.  Hard to justify on a cost/benefit analysis, and certainly grossly unfair to savers.


adr's picture

Which is why massive deflation is the only path forward. However the only way we get deflation is a massive writeoff of debt.

The only way to afford a house on $10 an hour is for the median price of a home to drop to about $20k. However homes dropping to $20k means an average writeoff of $180k in debt tied to those homes.

Because those in power actually derive their wealth from the servicing of that excess value, they will not allow that debt to be discharged. Better to inflate so at least the debt is paid, and even more debt can be added at the new inflated rate, than cancel any debt.

We have never tried deflation as a way to end economic strife. You get there anyway after hyperinflation, but your society as you knew it is over.

LawsofPhysics's picture

Unfortunately, my guess is that all that labor will still want to eat, regardless of the demand for their "services".


So, long personal security contracts then?