Quarterly Increase in U.S. Worker Pay Smallest on Record

[n2doc]

Wages and salaries in the U.S. rose in the second quarter at the slowest pace on record, dashing projections that an improving labor market would boost pay.

The 0.2 percent advance was the smallest since records began in 1982 and followed a 0.7 percent increase in the first quarter, the Labor Department said Friday. The agency’s employment cost index, which also includes benefits, also rose 0.2 percent in the second quarter from the prior three months.

Federal Reserve Chair Janet Yellen and her colleagues are counting on rising wages to boost the economy and bring inflation closer to their 2 percent goal. The setback may prompt some officials to call for a delay in raising interest rates for the first time since 2006.

“You’re really not building up the tightness that everyone says,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York, who projected the overall ECI would rise 0.5 percent, among the lowest estimates. “For the people who were saying the Fed’s got to raise rates in September, this is a shock.”


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http://www.bloomberg.com/news/articles/2015-07-31/worker-pay-in-u-s-rises-0-2-smallest-gain-in-records-to-1982

[Igel]

1. This is the kind of number where increases are important.

But I'm not sure what importance to give to non-increases.

It's an average of total expense for all workers/total # of hours worked. Hourly compensation in March 2015 was something like $33, but a third of that was "benefits."

If my info were included, it would include my pay and all my benefits, not just my pay.

When the # goes up, it means total compensation is going up. Perhaps for some workers it's flat or falling slightly, but it's likely that for most workers it's increasing. Perhaps that's benefits--a lot of the late '80s and '90s and early '00s saw compensation increase for a lot of people but wages not move so much. Perhaps it's wages. Perhaps it's uneven. But still it's likely to mean most people are seeing more because it's unlikely that a large increase could be caused by a few getting very large increases while the vast majority saw no increase or even saw decreases. To get meaningless numbers you have to have extreme outliers, and that's not the way to bet. So it usually means "tightness" somewhere in the work force.

But if the number stays flat, that could mean that wages go up but benefits decrease. Or perhaps the number of minimum-wage jobs increases while high-paid jobs see healthy increases in pay. Perhaps there just aren't any increases, whatever the workforce #s are doing. Perhaps some got moderate increases and some got moderate decreases. You don't need extreme outliers doing weird things to produce this. There are more ways to get low increases.

However, as one pundit pointed out, "If you see the same information presented 7 times and one has numbers that are really out of line, what do you assume? That the one is wrong or the other 6 are wrong?"

This is the one that's out of line. Last month's # was high, this one's low, let's wait to see an average and wait for any revisions.