Perhaps the biggest catalyst why Fed Funds rate increased following today's payrolls miss is not so much the prior monthly payroll revisions but that after stagnating for months, August average hourly wages rose by 0.3%, the biggest sequential increase since January. The reason why pundits are focused on this number is because Yellen has repeatedly noted that with the unemployment having become utterly meaningless as a result of the 94 million Americans not in the labor force, the only indicator of labor slack is wages, and whether they are finally - after 5 years of waiting - rising.
Well, for the headline-scanning algos who saw the 0.3% number, they were although a Y/Y chart reveals a very different picture:
That said, a quick dig through the data reveals that as we first reported almost half a year ago, there are two vastly different pictures emerging when looking at the two key segment of the US labor force: the supervisors, managers and other workers in position of power, and everyone else.
First, this is how wages for the supervisory workers looked like: nothing but blue skies here, and rising at 3.7%, this was in line with the biggest wage gains in the past decade.
And if this was indicative of the overall work force, the Fed could indeed claim mission accomplished and hike not 0.25% but 2.5%.
There is a problem: supervisory workers only make up 17.5% of the US work force. As such, their wage gains are anything but indicative of the vast 140 or so million US workers.
What about the wages for the remaining 82.5% of US workers: the non-supervisory one. Here is the answer.
This means that on an inflation adjusted basis, 82% of the US population can't even keep up with inflation!
So before anyone decides that the Fed is one and done in September based on the "strong" August average hourly wages, if the Fed is looking at the real chart that matters, that of non-supervisory workers, it will be zero and nothing for a long, long time.