No Raise For You: Earnings Growth Drops To New Post-Lehman Lows

The "good news" about today's jobs report - the weather is no longer a factor and monthly jobs can resume ramping higher. Supposedly. Because the "bad news", according to the BLS, is that  weather actually was a factor, however not for the number jobs but hours worked, which dropped to just 33.3 for production and nonsupervisory employees, down from 33.5 in january and 33.8 a year ago. So there was some weather scapegoating once again, but only for what looked out of the normal. Explainable.

Ok fine - let's ignore hourly earnings.

In order to normalize for the weekly hours worked, we decided to look at the big picture which ignores hours worked, and average hourly earnings. So we looked at average weekly earnings. In February, this number was $682.65, down from $683.74 for production and nonsupervisory employees. However, the real impact of declining wages is seen nowhere better than in the annual increase in average weekly earnings. The chart below needs no explanation: when wage growth is at 1%, or half of the Fed's inflation target, you will not get any sustained economic recovery.


And what if one looks at the average weekly earnings growth of all employees? Well, at $831.40, or an increase of just 1.3% from a year earlier, we just hit a new post-Lehman low, and a solid decline on a real basis. Five years into the "recovery", weekly earnings growth is the lowest it has been in five years!

So with no wage pressures, employers can continue hiring as many people as they want: after all they are paying them at a rate reflecting of true economic growth.