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