Several weeks ago we revealed the "The Mystery Of America's Missing Wage Growth [5]" in which we showed why matter how hard the Fed tries to push the S&P 500 higher (and it has certainly done an admirable job of manipulating the market to record highs), it has over the past 7 years failed to trickle down any of this redistributed "wealth" in the form of rising wages for US workers. Or rather, for most US workers. Because as usually happens, this is a story with two parts.
First, as a reminder, the main reason why wage growth remains subdued, and 50% below the Fed's target, has to do with what continues to be record slack in the economy, manifesting itself most recently in the form of a record 93.2 million Americans who have voluntarily or otherwise, exited the US labor force. This can best be seen on the following chart comparing the undistorted employment-to-population ratio chart with wholesale wage growth for all employees.
[6]
It is here that things get interesting, because as the BLS itself breaks down the quality of the US labor force, there are two groups of workers: supervisory and non-supervisory. This is how the Bureau of Labor Statistics defines the all important former category:
Production and related employees include working supervisors and all nonsupervisory employees (including group leaders and trainees) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping, trucking, hauling, maintenance, repair, janitorial, guard services, product development, auxiliary production for plant's own use (for example, power plant), recordkeeping, and other services closely associated with the above production operations.
Nonsupervisory employees include those individuals in private, service-providing industries who are not above the working-supervisor level. This group includes individuals such as office and clerical workers, repairers, salespersons, operators, drivers, physicians, lawyers, accountants, nurses, social workers, research aides, teachers, drafters, photographers, beauticians, musicians, restaurant workers, custodial workers, attendants, line installers and repairers, laborers, janitors, guards, and other employees at similar occupational levels whose services are closely associated with those of the employees listed.
According to the BLS there were 98.4 million "prouduction and non-supervisory" private [7]workers in March, or 82.5% of the total 119.3 million private [8]workers employed in the same month.
This also means that there are about 17.5% supervisory, or "boss" jobs in the US.
It is the distinction between the two that is critical. Because as the BLS also reported today, in addition to a disappointing 2.1% wage growth for all US employees, this was accompanied by an even more disappointing 1.56% annual increase in compensation for the majority of America, i.e., its non-supervisory workers, whose average hourly earnings rose from $20.50/hour a year ago to $20.86 in March.
As the chart below shows, not only is wage growth for 83% of America non-existant, it has in fact stalled into what appears to be a recessionary wall.
[9]
But, if wage growth for over 80% of America's workers is sliding even as wage growth for all American is flat, that must mean that the wage growth for the tiny 17% of America that is its bosses and supervisors must be soaring.
And sure enough, it is.
In fact, as the chart below shows, wage growth of "supervisory" workers has never been higher!
[10]
So the next time your boss or some other handsomely paid "supervisor" appears on CNBC and, dumbfounded, proclaims that there is tons of wage growth, they will be absolutely correct... when referring to their own wage situation, and that of the other 20 million or some private American workers who are not a part of that "lowest" class of US society - its nonsupervisory workers.
So for all those 98.4 million "non-supervisory" workers trapped in wage hell and what increasingly - to them if not to their bosses - looks like a recession, here is a simple solution: demand to be promoted.
Good luck.
Source: BLS [11] [11]
