A Postscript on Today's Employment Report And Real Hourly Wages

November 2nd, 2012

by Doug Short

I just read an email I received earlier today from Mish Shedlock of Mish's Global Economic Trend Analysis fame. I had cross-posted his fascinating analysis of the ADP employment revisions earlier this week:

ADP Grossly Overstates Job Growth for Last 12 Months by 419,000 Jobs

Today's email from Mish was a comment on today's BLS employment report. He writes:

I still think some of this will be revised away (lower). Last month's gain of 582,000 part-time jobs was partially revised away (just not in the manner I expected). This was a genuinely good report but….

The economy has been adding jobs far faster than hours for about a year reflecting the shift to part-time and reduced hours that I have been talking about.

Moreover real wages have not kept up with inflation. The reason this is all happening is as explained in What's "Really" Behind Gross Inequalities In Income Distribution?

Here are a couple charts.

In support of Mish's comment on real wages, I'll close with a chart of real hourly wages through today's release of the October data. The government's data for production and nonsupervisory employees extends back to 1964. The BLS didn't begin tracking the average hourly earnings of all private employees until March 2006. It's the red line in the chart below.

Here is a closeup look at that red line.

Obviously, the pattern since the end of the last recession is not what the U.S. needs to support healthy economic growth.

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