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No Raises For Anyone: Real Hourly Wages Decline For The First Time Since 2012
In order to justify the US "recovery", one of the recurring themes has been that wages of US workers are going up.... any minute now.
And since any minute now has been the common refrain for about five years now, some are getting skeptical. Not us: we have known since 2009 that the Fed's "plan" of making billionaires trillionaires fixing the economy won't work from the start, but we are always willing to be convinced otherwise.
So for all those who keep warning that wage inflation is just around the corner (you know who you are), please point out on the chart below - which shows that real hourly wages just had their first annual decline since October 2012 - where this wage inflation is so stubbornly hiding?
And in absolute terms:
And some additional insight from the ECRI's Lakshman Achuthan:
Earnings growth has risen for an unwelcome reason – because growth in hours has fallen faster than pay growth. As bad as that is for income growth, it is also not a credible signal of an inflation upturn.
Given the ongoing taper, the Fed, like most other observers, remains optimistic about economic prospects. In turn, a number of economists are focusing on “bullish” indicators of employment and inflation, particularly growth in average hourly earnings (AHE), which has been rising since late 2012. This strengthening has been taken by some to mean there is less slack in the labor market and wage growth is rising. Yet, is the rise in AHE actually indicative of strengthening labor-market fundamentals, particularly inflationary pressures? We turn to our cyclical framework for answers.
For the overall private sector, year-over-year (yoy) growth in AHE has indeed risen noticeably since October 2012.
Since AHE is the ratio of total weekly pay to total weekly hours, it is instructive to look at the growth rates of each, shown in the lower panel of the chart (purple and gold lines, respectively). From this perspective, the real story emerges. Year-over-year growth in both pay and hours has actually been falling since early 2012, with the declines steepening since last summer and the divergence between the two increasing, particularly in recent months. In other words, while rising yoy AHE growth may seem like a good thing, in this case it is actually underpinned by cyclical downturns in the components that comprise it.
Clearly, there are both straightforward and misleading reasons for increasing AHE growth – those which stem from underlying strengthening of hours and pay growth, and those which arise from a technicality, where both indicators are actually falling, or are little changed.
The bottom line is that the current rise in overall AHE growth is not a sign of strength. In most industries, yoy AHE growth has either declined, been essentially unchanged, or has risen for misleading reasons, proffering false hope.
Therefore, the commonly-touted “upturn” in earnings growth is largely illusory, and does not really point to a healing in the labor market, or necessarily imply a welcome rise in inflation, as some claim. It is risky to presume, based on AHE, that policy action has effectively achieved its goals of boosting inflation and healing the labor market. This is even more troubling in the context of the “yo-yo years” environment of weakening trend growth and more frequent recessions than most expect.
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Progress!!!
the double curse.....
wage deflation and real goods price inflation ie. Beef price to rise 30% this summer while income decreases........only means one thing.....
Vegetarianism is about to become a lot more popular?
I believe the word you're looking for is "cannibalism."
Here are some more "Quotes for times of Financial Instability" for you:
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A society in which people are already isolated and atomized, divided by suspicious and destructive rivalry, would support a system of terror better than a society without much chronic antagonism. —Eugene V. Walker, Terror and Resistance (1969)
We’re faced with an unprecedented problem. Not only are revolutionary terrorists finding it easier to infiltrate the bureaucracy, but we’re getting more people in government who feel they should be rules by a sense of conscience. —Robert Mardian
We face a rising flood of throw-away items, impermanent architecture, mobile and modular products, rented goods and commodities designed for instant death. From all these directions, strong pressures converge toward the same end: the inescapable ephemeralization of the man-thing relationship. — Alvin Toffler, Future Shock
It’s a scintillating stratagem. Language is actually employed to keep thought at bay. The words ‘the American people’ provide a truly voluptuous cushion of reassurance. You don’t need to think. Just lie back on the cushion. The cushion may be suffocating your intelligence and your critical faculties but it’s very comfortable. This does not apply of course to the 40 million people living below the poverty line and the 2 million men and women imprisoned in the vast gulag of prisons, which extends across the US. —Harold Pinter, Nobel Lecture on Art, Truth and Politics
Force is never more operative than when it is known to exist but is not brandished. — Alfred Thayer Mahan
Tell the truth and run. —Yugoslav Proverb
The terms for driving a cab in New York are so bad, even many Pakistani immigrants have stopped driving. Instead of pocketing a share of each fare, most drivers must rent their vehicle at a fixed rate, so that they may even lose money at the end of a 12-hour shift. Thanks to an increasingly superfluous supply of labor, however, you can always get someone to do anything, and this is the direct result of having a porous border in a sinking economy. Globalism is not just about exporting decent jobs, but also importing cheap labor until everyone everywhere makes just about nothing. That’s the master plan, dude, so although ningún ser humano es ilegal is self-evidently true, it’s also a smoke screen to make slaves out of us all. —Linh Dinh, Postcards from the End of America: Manhattan
The machine-like behavior of people chained to electronics constitutes a degradation of their well-being and of their dignity which, for most people in the long run, becomes intolerable. Observations of the sickening effect of programmed environments show that people in them become indolent, impotent, narcissistic and apolitical. The political process breaks down because people cease to be able to govern themselves; they demand to be managed. —Ivan Illich
School is the advertising agency which makes you believe that you need the society as it is. —Ivan Illich
The rich march on Washington every day. —IF Stone
There is no inflation... only decreasing portion.
The deep dark pit of deflation is here. Better get used to it bitchez!!
That must be a new definition of Deflation! Bravo!
Hurry while it's still fresh soilent green is a bitch.
That makes every fight a food fight.
...that Keynsians are fucking pie in the sky retards.
Our company must be in the minority. We have paid everyone on staff a bonus that equates to 6 weeks of their pay for the past three years, ample overtime, and we are seeing record orders with double digit growth year after year. Our company is debt free, well capitalized, and has cashflow that is beautiful. Again, we are the minority for sure.
It's nice to have a contract making hollow points for law enforcement.
Ha. Background checks for companies. Potato Potahto.
I haven't had a fucking raise in five fucking years. Shit is fucked up and bullshit. I'll eventually start eating my couch like that chick on My Strange Addiction.
Bullish!!
When the money just doesn't by anything anymore, when credit is zero-cost and everywhere, when $3-4 buys a cup of coffee, NOW you're telling us there's "no inflation" and "money has value"??
Would YOU bother to work, to take risks and to spend capital producing actual goods at ridiculous prices like those of today??
SOMETHING is wrong when "prices are low" yet no one sees any point in producing...
REAL "price inflation" isn't caused by "wages", but by MONEY SUPPLY GROWTH.
Subsistence farming......bitchez !!
Low depth subterranean copper mining in near urban proximity !!!
Mr. Friedman? Is that you?
...
Go towards the light!
It's a mistake to conflate what's going on with labor and general inflation trends. Yes, labor was a big transmission mechanisim in the 1970s. But with 1 in five US families not getting a pay check of any sort, labor isn't exactly holding a strong hand to demand higher wages. Ample supply, lower price (wages). Meanwhile, there's boatloads of inflation in the system and Tylers, you all know that...
"No raises for anyone" is dead wrong. The White House staff has seen very large raises, and the welfare folks have seen a 33% raise in the last few years, and I do consider them wages as they are all in a family business of collecting every benefit they can.
If we could just get Michelle Obama to take all her vacations within the US, we'd be talking some serious economic stimulus.
and don't forget the wall st bankers
They conjure it out of thin air, knowing that people kill and die for it
After the newly unemployed burger flippers lose their minimum wage jobs after getting a raise to $15/hr, the average hourly wage for the rest of the labor force will increase.
The Bureau of Labor Statistics:
"Only counting the people that count, since 1884."
Use REAL Inflation to calculate Real Wages and I suspect things look a LOT worse for most of us.
This is the greatest recovery since forever.
I am going to buy a Maserati, on credit, because my earing power is at a breakout moment.
pods
Just like CNBS says about every stock, this company has unlimited, almost infinite, earning potential in the future.
nice economy
Its the move to part time workers....
Has not Been above the 2008 rate , not one single day..... mission accomplished.
If one were to ponder it more deeply he would come to the conclusion that, as it stands now, you are either unemployed or working for the banksters.
"My guillotine promised to lower my debt."
Picked a bad time to stop my opium habit. Hope and change for all to see bitchez
Who cares about wages from 2012, Wages have decreased since 1980.
Get with the program!!!!
No shit I had to close our store (shit turned south when ocare kicked in an shitc ou not) had a job interview asked for 30.00 an hour the almost choked. FUCK.. I was making 28.hr in 05 with a company truck 401 full benies!' At least he's going to give m the opportunity to prove Im worth it....But Fuck really...150.00'a week just for the ferry
Hello trainwreck. Hello crisis. Hello war.
Weather! When it's cold out, companies don't want to pay. But when it's sunny and warm out, companies don't want to pay even more.
All because of weather, Yellen already told you so.
Must...suppress...wages...and...earnings...increase...profits...
That well is pretty much dried up.
Its adapt ,or die time.
I think it will be die.
3 of 4 previous years for me - no raise
I was going to make a joke but I've lost my humor...How pathetic is this country?
The pillaging continues, and the parasites continue to feed like a thundering flock of mosquitoes on a newborn infant!
Hey but they are buying back their stocks and increasing dividends...
Good thing the price of meat, gas, energy, healthcare, and everything else is dropping to offset this.
The new Inflation ...you now have no paycheck after buying food and gazzz ...
Wealth concentration destroys velocity and creates depressions.
The White House only deals with the banks, the stock market and spins a socialist agenda to convince the naive that life is getting better.
Q1 US GDP was negative. Q2 US GDP will be negative too. Three of four more of these and the ivory towers might realize that they are shitting in their own nests.
Let them eat Fed.
LMFAO!!! Please, the wealthy do not have any "wages"...
America’s and Europe’s economies for 100 years have been based on usury rather than labor.
And, “once usury was chosen as the basis for an economy,” writes Dr. E. Michael Jones of Culture Wars, “it could only proceed at the expense of labor.”
Webster G. Tarpley, Ph.D., in a paper on British Financial Warfare: 1929; 1931-33; How The City Of London Created The Great Depression, outlines how the Fed and Bank of England eschew labor and savings in favor of usury. Among laborers destroyed in the bankers’ boom-and-bust gyrations of the 20s and 30s were farmers , workers and small businessmen.
In short, economic injustice , not justice, is the operative term for central bank policies.
Tarpley writes, “A dominant personality of the City of London during these years was Sir Montagu Norman, the Governor of the Bank of England during the period 1920-1944.”
But, says Tarpley, “acting by himself and relying only on his own British resources, Montagu Norman could hardly have aspired to play the role of currency dictator of Europe. Norman’s trump card was his ability to manipulate the policies of the United States Federal Reserve System through a series of Morgan-linked puppets,” mainly Benjamin Strong.
Norman’s gold standard had ‘provoked unemployment without precedent in world history’, “but Norman did not care. He was a supporter of the post- industrial society based on the service sector, especially financial services. The high pound meant that British oligarchs could buy up the world’s assets at bargain basement prices. They could buy US and European real estate, banks, and firms. Norman’s goal was British financial supremacy:
“…his sights remained stubbornly fixed on the main target: that of restoring the City to its coveted place at the heart of the financial and banking universe. Here was the best and most direct means, as he saw it, of earning as much for Britain in a year as could be earned in a decade by plaintive indsutrialists who refused to move with the times. The City could do more for the country by concentrating on the harvest of invisible exports to be reaped from banking, shipping, and insurance than could all the backward industrialists combined.”
Georg Ratzinger, the deceased German Catholic priest and granduncle of Pope Benedict XVI, explained the catastrophic effects of usury with its contempt for human labor, which he terms Jewish involvement in any economy, in his book, Judisches Erwerbslehen: “Jewish commerce is based upon the exploitation of the work of others without any productive activity of its own and it is characterized by gambling and speculation on the differential in values as the way to achieve riches.”
http://tarpley.net/online-books/against-oligarchy/british-financial-warfare/
Better get those ATM home values up so the sheep can buy, buy, buy.
/sarc off
Wage inflation is hiding under the bed, inside a cardboard shoe box, with dreams of unicorns, rainbows, fairies, and pixie dust...
If we import from slave labor and environmentally destructive production facilities, then we have to move towards lower pay and unemployment. Under terms that Ivory League scholars and politicians determined, globalization requires a commonality of interests for unfettered trade to exist. This does not exist. Therefore, if "CHina" pollutes air and water to keep production costs low, and pays its people slave labor rates under slave labor worker conditions, the US should be applying tariffs. As it does not, the US labor force must move towards the compensation and living conditions of China.
Raise tariffs to correct a myriad of problems. Jobs will return. Global air and water pollution will be reduced.
Thats the 1930s thinking for you....didnt work then....wont work now
Exactly right!
"The 1% are 'swamping hiring agencies' with more and more requests for butlers, chefs, drivers and other staff, according to an article by Lynn Stuart Parramore published by alternet.org. America is fast moving backwards (under the 'leadership' of 'progressives') to pre-industrial class arrangements in which there was a tiny middle class at best, with many of the poor working as servants and indentured servants. Ain't 'progress' grand?" -- The Nationalist Times, April 2014
That sounds like a bunch of new age hooey to me. Bullish.
But seriously, how was 5 years of this called a recovery?
Swiss to Vote on $25-an-Hour Minimum Wage - highest in the world
http://online.wsj.com/news/articles/SB1000142405270230394810457953793090...
Proly helps to be out of EU
Highest in the world for 'highest in the world' cost of living.
Take ur raise out of your 401K and pay uncle sam the extra 10%....its all working as planned
We don't need no stinking minimum wage !
We've been told we're getting a raise come July 1. Six years. They're saying 2-4%. That will buy a tank of gas per month @ $3.60/gal, 12 gal/tank. On a brighter note, chicken neck-bones are on sale at Winn Dixie this week for .31/lb.
As far as I am concerned, wage deflation is the same as price inflation.
But if you are going to create billionaires and trillionaires, you have to make it attractive for them to invest in real production. M&A and buybacks are not real production. But I don't need to explain that to anyone here.
Nothing matters unless the Wall Street bonuses stop.
If the Wall Street bonuses stop then it's a replay of the Hank Paulson, Bernanke tanks in the street threat scenario.
Yet wages continue to climb 5-15% a year in china.
Lakshman Achuthan will be proven to be right all along; we are in a recession (its just the old indicators that he, Wall St, and the Government use that hide this fact in today's uber-financialized economy).
The reason he's right is because he looks at.......(gasp) fundamentals!