The Myth Of Wage Inflation Comes Crashing Down: Real Hourly Earnings Slide To Lehman Bankruptcy Levels

Tyler Durden's picture

One of the more insidious lies spread by the recently flipflopping cadre of "suddenly" permabullish millionaire sellers of newsletters has been that wages - that most important component of any real, durable, self-sustaining economic recovery - are rising. Maybe they are rising for said millionaires, but not for the US population. Of course, this propaganda is perfectly explainable: if there are expectations of, and confidence in rising wages, Keynes 101 says that sooner or later employers will have no choice but to match expectations with reality. And sure enough, in nominal terms, after plunging to just a 1% increase in Y/Y terms, absolute wages paid to US workers have staged a tiny, if observable rebound, still well below historical levels.

Of course, what said newsletter sellers always fail to mention is that nominal wages are meaningless in a world in which food and energy prices are soaring, and where, as even the BLS admitted earlier, food prices have surged the most since 2011. In other words, what matters are real, not nominal wages.

Luckily, there is propaganda ("ignore the present focus on the future"... for 6 years now), and there are facts.

The chart below shows that, as reported moments ago by the BLS, real average hourly earnings just posted their third sequential decline in a row, dropping from $10.33 in February, to $10.32 in March, to $10.30 in April, to $10.28 in May.  Furthermore, this was the first year over year decline since October 2012.


And to put today's $10.28 real average hourly earnings number in context, this is the same real wage seen last in July 2013, July 2012, March 2011 and then, if one goes further back... the month after Lehman failed!

In other words, while the S&P has nearly tripled since its lows real American wages are.... unchanged.

But please keep believing the lies that wages are virtuously rising, any minutes now.

Source: BLS

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ejmoosa's picture

If only we had a natural recovery, instead of this fake one.

Haus-Targaryen's picture

The Coming Great American Expatriation

For those of you who are active in the ZH Comments section, you know by now I am an American who has expatriated himself to Germany, without any desire to return. Some of my reasons are financial, political, personal, but moreso than anything – it was the ability to find work. While the number of expatriates who renounce their citizenship remains fairly low (maybe … to be discussed later), I keep running into more and more Americans who are in my shoes, and after a bit of number crunching, it’s a trend I expect not only to continue, but to accelerate as well.

According to the IRS’ numbers, in 2013 over 3,000 Americans gave up their citizenship. This is not new information for ZH readers, as this trend has been very well documented. What has yet to be documented is the discrepancies between the IRS’ figures and the figures from foreign nations.

The inherent problem with the Federal Register – other than it being a number being released by the Federal government – is that if they are to be believed, in 2012 over 200% (2,158) of the individuals who turned in a Green Card of the passport went to South Korea(1), while almost 50% went to Switzerland (411) in the first 9 months of 2012 alone(2). (Yes, those percentages are correct – let me explain.) The problem with these figures, if correct, in 2012 of the 933(3) people, per the IRS, who gave up their American citizenship or Green card – 2,158 of them went to South Korea, per the South Korean government, and 411 (almost half) of them turned in their passport to the Embassy in Switzerland alone, per the American Consulate in Switzerland. Made even easier – according to the Treasury, in 2012 only 933 gave up their GreenCard or passport, whereas according to the South Korean government, 2,158 South Koreas gave up their American citizenship to become South Korean, or are South Korean and gave up their Green Card. Seems rather impossible, maybe the South Koreans invented a new form of QE. Never mind the other 180 some-odd countries on the planet. Just like most figures released by the Treasury – the above numbers are either cooked, or they are using Federal Reserve/IMF math to come up with them.

While the world works itself away from the Petro-Dollar model and, as the USD as the world’s reserve currency comes to an end (both topics have been discussed on ZH in such detail, it almost isn’t worth citing) – one has to ask what societal consequences will come about when the United States’population wakes up on a Saturday morning one day – to have none of their cards working, their bank accounts wiped out, and all the societal chaos that goes along with that. Need I remind you all –that DHS has purchased over 1.6 billion rounds of hollow point (not target practice ammo) ammunition at this point(4), enough for an Iraqi style “hot war” in the United States that lasts for 20 years. Never mind the thousands of APCs, Armored Humvees, and other odd military like procurements ZH has documented extensively that have been acquired for domestic use over the past few years.

One thing we have to keep in mind, that I sometimes believe is lost here and on many other alternative media sites is, that our current overlords are not stupid people. Quite the contrary –actually. These procurements tell us something interesting about the coming reset – wealth will not be completely destroyed. Someone has to drive these APCs, use the Ammo, fly the helicopters, and follow orders to do so. I find it unlikely the people doing this will be doing it for free – and they will want some form of compensation. There is an old Roman saying, which I find applicable here. “The first and last people paid is always the Praetorian.” You see, the upcoming reset will not be a destruction of wealth – but will be the transfer thereof. There will be a small group of people with excessive wealth with a well-armed and well-paid Praetorian, and then everyone else. This elite, if history is any indicator of what is to come, will hide behind the US flag, the Star-Spangled Banner, Summertime Baseball and Hotdogs, and will be able to convince a large group of people they are here to help, and anyone who opposes them are “terrorists.”

What makes things scary in conjunction with the military build-up of the American police forces, the coming financial collapse (whether it be tomorrow or in 5 years – it is coming) is the current demonization of Constitutionalists, Libertarians and the non-religious sects of the Tea Party by the Justice Department, White House and the military. Couple this with the eroding American middle class – for many/most today, the “American Dream” is nothing but a propaganda tool used to keep people in place, calm and compliant.

If, after the banking system eventually does collapse under its own weight, and financially – the ability to retire, work, or even provide a better life for your children than you had (aka the “American Dream”) is now materially more of an impossibility than it already is isn’t an incentive enough for many to start looking elsewhere – bullets flying across their front lawn from the ensuing chaos likely will. Couple this with the IRS’ mad dash for cash post -ollapse – and taxes for those of us who have anything left will be skyrocketing (see Greece, but worse), the United States will not be a great place to be.

However, it isn’t all “doom and gloom.” While I am of the opinion, that the above is inevitable, stemming from the American middle class makes you more or less a desired commodity on a global scale, especially in Europe. Just like the United States – most European countries had a “Baby Boom” after the end of the Second World War, have overpromised, and now need people to immigrate & work to help pay their bills. Traditionally, in this day and age of “social welfare” it is more financially prudent to “import” people who are either independently wealthy, independently educated/skilled, or both (preferably). If these European countries (I will use Germany as an example, as it is what I am familiar with, but essentially it’s a wash) see the opportunity to import potentially millions of the American middle class, and thus reduce their dependency on the Third World to supplement their respective populations, I imagine many would be rolling out the “red carpet.”

When it comes to immigration, one wants other states to pay to educate/teach a trade to people, and then have said educated/skilled laborers relocate and generate wealth in the new country. What makes this difficult is, the state that has trained these people usually has a vested interest in keeping them themselves. However, in times of civil war, inconsistent supplies of basic commodities, extreme poverty, or a combination of the above – these people tend to go where the grass is greener – especially if there is a concerted effort to attract these people.

All this being said – when things get really bad in the United States, the intrinsic nature of people is to try and make a better life for yourself as well as your children. If it no longer becomes possible to provide that within the United States, those with the intelligence and/or good advice will look elsewhere. Couple that with northern European nations needing to fill in their populations with people who are workers, who don’t want to rely on the system, and people they do not have to educate – there is a“perfect storm” brewing where many of the descendants of those who came to the United States in the 18th and 19th centuries might make the return trip, in rather large numbers.

So how does this apply to me? Well, before the market went mad after the implosion of the .com bubble in 2000/2001 diversification meant – at least for the layman – differing stocks and bonds. After the Real Estate explosion people started to diversify into precious metals, other currencies, and some back into real estate. However, now with the storm clouds on the horizon, looking more imposing than either of the two bubbles before – if you have the means – perhaps diversifying into real estate outside of the USSA isn’t that bad of an idea, especially when you compare prices with many locations within the American real estate market to places outside of it.

You a “big city” kind of person? About $65k in today’s dollars gets you a 1 bedroom apartment in Berlin, with no closing costs, a balcony, and there is already a renter there.

You more of a rural person? Just north of $200k gets you a 4 bedroom house with a large yard just outside Leipzig, and it is considered “altbau,” or built and survived the second world war

Or if you want a “fixer upper” this can be had for $13k

Lastly, I am sure some of you are thinking: “But wait Haus, if the US gets wiped out, so will the Europeans, it would be chaos over there as well.” Sure, there would be chaos here too, but lest we not forget, that in many European countries over the past few hundred years there have been wars which were devastating, hyperinflation, bankruptcies without the continent descending into utter chaos. While I cannot quantify it, save for anecdotal evidence like what happened post Boston Bombing, Hurricane Katrina and Rodney King, I lack that same kind of social optimism I have in my countrymen that I have for people in (at least the north of) Europe.

Time will tell.






CheapBastard's picture

Nice thoughts Haus. I could move to any of these three in a heart beat: germany, Austria or South Korea. SK is pretty expensive these days [and I'm a Cheap Bastard] but you can budget and make ends meet there. As far as I know [which is not much] foreigners are not allowed to buy an aprtment or house in SK. I am not sure about Germany or Austria but you say a foreigner can for Germany.


Do you have any info on SK? Thanks for your post. Verythought provoking.

Haus-Targaryen's picture

I don't know much about South Korea, save the huge discrepancy between the South Korean and IRS numbers.  I've never been there. 

I can tell you foreigners can buy essentially whatever you want to in Germany.  There are a ton of 200-400 year old castles for sale if you want them. 

I can recommend Germany a lot.  Austria is nice as well.  Switzerland is where it is at, its just hard to get into.

Four chan's picture

we shipped your wage inflation out to the slave nations decades ago along with the middle class and neither is coming back to our shores. it points up the folly in the false mandates the fed states. remember the 2 real ones, capture all assets with boom and bust it creates and enslave the people to debt. none dare call it treason.

CheapBastard's picture

Thanks for the great info and reminder there are many options out there. Please keep posting your info and thoughts!

roadhazard's picture

Germany... You should have moved to the woods instead.  I'm werking on my second book.

Haus-Targaryen's picture

Meh - woods are fun an all, but not where I would want to spend forever. I'd get lonely.

max2205's picture

That's where the shallow graves are...

Ghordius's picture

Germany and woods aren't mutually exclusive. in fact, one third of Germany is covered with forests. here a link about what you can even hunt, in Germany

firstdivision's picture

Yes people, you to can move to Germany and be under Putin's thumb. 

At least the APC's will be driven by an American that is running over other American's.  In Germany, it'll be a Russian driving those APC's.  Russia is an expansionist empire just like Britain, France, and America.  They're just waiting for the right time to do it again.


Haus-Targaryen's picture

This comment is so stupid, I am actually at a loss for words. 

Well done.

firstdivision's picture

Let me know where all your $NG comes from again

Haus-Targaryen's picture

So LNG = Russian APCs in the streetz? Plz.

duo's picture

I've always wondered if us European-Americans would be enticed by European countries to re-patriate.  We don't seem to be welcome here much anymore.

Haus-Targaryen's picture

I think those who have a skill/trade and/or independently wealthy would be welcomed back without much "to-do." 

Monty Burns's picture

No.  A certain tribe has ensured that Third World flotsam will get preference. Ask the millions of white south africans living in poverty there now.

papaswamp's picture

Just read an article...number of expats to exceed last years record breaker. Those that can do so seem to be getting out while the getting is good.

Haus-Targaryen's picture

Yeah, I can imagine it is going to keep going up.  I wish I had more definite demographic info, but I would imagine the young and very educated will be the ones turning in passports with ever increasing frequency.  Let me explain --

After finishing school, most of us aren't married -- aren't tied down, and are wanting to start our careers.  Given the abysmal state of the American job market for college educated grads, expanding ones job hunt abroad seems ever more likely.  So you move to a place like Germany at 24 or 25 or so.  You live here for a couple years, get married to a "local" in your late 20s, and then the IRS not only wants all of YOUR info, but hers as well.  Oh, you nor her can open bank accounts with Banks X, Y and Z for a bunch of nonsense reasons.  So at this point, you'Ve been in the foreign country for a while, married, maybe a kid or two -- and the IRS is trying to make your life miserable -- here is my passport k, thx.

Oh, and expat'ing yourself is a great way to escape federal student loan debt.  Especially in countries that have forbidden the garnishing of wages due to student loans. 

Dingleberry's picture

Good read Haus.

Two things concern me. The euro is the DM in drag, and I fail to see how the southern euro membrs are ever going to hold their end of the bargain. So the Germans will have to bail them out so they can buy BMWs. This will never end, unless the south changes its entire culture.

Also, I have read the local munis in Germany make Chicago's structure debt look good.

The grass is always greener.  Hope it stays that way for you.

Haus-Targaryen's picture

It depends on the Muni. 

You have some (Offenbach) which might as well be an Athens suburb.  Most Munis are able to keep their debt managable, the problem is ultimately the Bund is reponsible for Muni debt, unlike in the USA.  So they are lacking the incentive to keep it as under control.  This is expected to change soon.

I have no doubt the Euro is on limited time.  Its a horrible idea -- and when it does break apart, there will be much crying and gnashing of teeth, et al. but after lots of complaining, beer drinking, pounding on tables, people will get back to lives a lot quicker here than in the USA.  Why?  The elderly people here have lived through 3 to 5 (depending on DOB and where they lived) currency implosions.  There is a "meh, again.  Damnit" type of mentality and things will move on. 

I can only imagine in the USA, when EBT cards quit cashing, and chaos starts to break out, the police will do what they did in Katrina, and go home to protect their families, as will many soldiers/national guard, and it will snowball in the US.  The societal implications of such a disaster -- especially nation wide would be felt for decades.  It would fundamentally change the country, and I am not sure for the best.


Dingleberry's picture

You are correct about the societal implications of the EBT crash. Europeans are used to living with less consumerism than the States, plus they do not have tens of millions of dependent "disenfranchised" on the permanent dole in exchange for democrat votes. Nearly all major cites here are now feral, if not apocalyptic.

Does Germany allow mass illegal immigration like we do? I cannot imagine with the social supports offered that it does.

Haus-Targaryen's picture

Immigration in Germany suffers the same problem as it does in the USA -- discourse about it, when put into an economic context makes you a "racist." The good news here, is Germany is run by a ton of budget hawks.  Typically the German government only does stuff if it can pay for it.  So this brings me to your answer; 

No -- Germany does not have the same social-demographic issues that the USA does.  Its largest demographic sub-segment of society are Turks.  These turks came over to the United States in mass numbers beginning in the late 40s, which stopped in the 70s.  There are millions of turks here, but now more Turks are returning to Turkey than are coming to Germany.  (Another demo hole the German government needs to fill)  The Turkish subsegment of German soceity looks similar to that of Irish immigrants to the US in the late 19th century -- there is a small, but rapidly growing middle class of them.  

The worst part about Turks is young Turkish men from the ages of about 14-28.  They, for the most part are truly insufferable.  This of course doesn't go for all of them, as I work with two interns at work, both Turkish who are awesome dudes who fit into this Demographic.  You just go to shopping malls, and you'll see groups of these guys chasing and cat-calling German windows.  They love e46 BMWs with huge mufflers, stickers everywhere, etc., etc., but if you can overlook the egregious immaturity -- for a working class immigrant population -- really good people.  

Because of the EU -- Germany hasn't been hit nearly as hard as the UK and France for other poor immigrants.  The German social system is not nearly as kind as the UK and France'S is.  Moreover, the total German speaking world in just over 100 million people, whereas English is the world's language and French is almost 200 million people.  These langauges are easier to learn than German as well.  So the UK and France take most of the hits -- but this is legal immigration thanks to this stupid "Free movement of peoples" idea within the EU.  

Illegal immigration isn't a problem her, per se, the largest issue we have is North Africans getting on a boat and going to Italy, the Italians not wanting to deal with them give them 50€ and a train ticket to somewhere in Germany.  Again, the German government doesn't appreciate this, and there are about 300 illegal immigrants hiding inside a church in Hamburg for the past 10 months.  German political aslyum can be easy to get if you are coached on what to say, but the German government has started hiring native peoples from lands (Sierra Lyon for example) to filter out those who are actually from there seeking political asylum and those from places like Chad who (lost their passports) and then say they are from Sierra Lyon.  

The Worst immigrant population here are the Senti and Roma.  Truly the lowest life-forms on the planet.   These people live, eat, breed and think link animals.  There aren't many of them -- but wherever they go -- they destroy the entire neighborhood around them for decades to come.  There is a reason why everyone in Europe hates the Senti and Roma -- truly horrible poeple. 

KnuckleDragger-X's picture

It's the silicone tits of recovery....

Ness.'s picture

Consumer prices rising, wages flat and falling, housing collapsing, wars raging, oil wells burning.  I mean if you can't find a reason to BTFATH you must be taking crazy pills!!



mrdenis's picture

Sounds like Billy Joel's....." We didn't start the fire ".............

onewayticket2's picture

i suppose the answer is, sadly, "there's a LOT of [central bank] money on the sidelines"  (hattip knuckles)

if the Fed wants it to go up, it'll go up...they're majority? owners/operators now.  (and there doesnt appear to be ANY press on the story leading me to believe the masses do not, will not, and may never "get it")


nuclearsquid's picture

And ye, the deflation thus caused a thousand thousand central bankers to cry out with gnashing of teeth.

101 years and counting's picture

wage deflation is allowed because the central printers dont care about the bottom 99%.  

Jayda1850's picture

Anyone else waiting for the negative Q2 GDP print if only for the sake that the MSM couldn't spin its way out of a textbook definition of a recession?

ejmoosa's picture

I talk to a lot of people on a daily basis.  Most are clueless.

They do know there was a golf tournament last weekend.

That the NBA season is over.

That the World Cup for Soccer has started.

That the NFL kicks off soon.

But they do not have any idea about Learner lost emails, the flood of immigrants acoss the southwest border, that the US collects more in Federal tax dollars than all businesses combined earn in after tax income, or that Iraq is now worse off than before we went there.

So for the second quarter GDP print to matter would take a miracle.


BullyBearish's picture

Definately a BTFATH indicator.

Seasmoke's picture

Income is going down. Better raise the income tax !!!

Dr. Engali's picture

The globalists are dragging their feet. We are getting closer to China's levels, but we still have a ways to go.

LawsofPhysics's picture

That which cannot be sustained, won't be.  Fuck the paper-pushers, their "labor" is of no real value anyway.

Chuck Knoblauch's picture

Increase the value of existing money.

Stop making more of it!

Devaluation causes inflation.

Economics For Dummies.

JRobby's picture

Oligarch / Republow marketing campaign to stop any minimum wage hikes that might reduce gross profit from "seriously evil, sinful, look out for lightning bolts greedy" to "wow, that's really fucking greedy"

Not leaving the Demogods out of this, not at all. They are assigned the min wage hike side of the argument so the electorate can be properly aligned. That is: divided and fighting amongst themselves.


BLOTTO's picture

Voting doesnt work - we, the commoners, have lost the last 213,456,300,230 elections in a row.


Voting doesnt work when they own both sides - to control the outcome of course.


We need to 'sever the beasts' head right the fuck off its body...only then can we begin the healing process...


JRobby's picture

Load your own then. Stocks are running out.

ejmoosa's picture

Voting indeed does not work.

100% turnout, and we were still selecting from two choices that are both set on ruling us from afar.

Comte d'herblay's picture

The ignorance of basic economics from some on this site is appalling.  You cannot just raise wages to any level over current one on a massive scale WITHOUT A CONSEQUENT INCREASE IN PRODUCTION. 


Because without more and better efficiency the raise from current levels to a higher level will---- within less time that it takes to make your next credit card payment---cause prices for everything to rise and if the past is any indication, will actually go beyond the wage increase.

If everyone in the world immediately got a 50% rise in income, that income increase would immediately flow back to the very same entities that gave you the raise in the first place due to worldwide gigantic increases in demand.

Think about it.

This isn't a conspiracy, it's natural economic law as certain as the earth rotates on its axis.



Nue's picture

Wages don't matter because workers don't matter. When I can borrow at 0% and use the alchemy of Wallstreet accounting to convert that debt straight to income. Why do  I need  workers? Why do I need a product?  Why do I need a middle class? I don't need anything but for the fed to keep pumping.

yogibear's picture

Housing bubble #2 collapsing, wages declining,Federal Reserve buying up treasuries from countries dumping anything in dollars.

Baby-Boomers retiring at 10,000/day causing a significant tax collection decline.

Tax collection only going up on trading profits.


What can go wrong?