Workers' paychecks grew faster in the first quarter, a possible concern for the Fed
Source: Associated Press
WASHINGTON (AP) — Pay and benefits for America’s workers grew more quickly in the first three months of this year, a trend that could contribute to higher inflation and raise concerns about the future path of price increases at the Federal Reserve.
Compensation as measured by the government’s Employment Cost Index rose 1.2% in the January-March quarter, up from a 0.9% increase in the previous quarter, the Labor Department said Tuesday. Compared with the same quarter a year earlier, compensation growth was 4.2%, the same as the previous quarter.
The increase in wages and benefits is good for employees, to be sure, but could add to concerns at the Fed that inflation may remain too high in the coming months. The Fed is expected to keep its key short-term rate unchanged after its latest policy meeting concludes Wednesday.
Fed Chair Jerome Powell and other officials have recently backed away from signaling that the Fed will necessarily cut rates this year, after several months of higher-than-expected inflation readings. Big price increases for rents, car insurance and health care have kept inflation stubbornly above the Fed’s 2% inflation target.
Read more: https://apnews.com/article/pay-income-economy-inflation-42fff23c6d2ae49ad56e990aea558b4a
= new reply since forum marked as read
The Employment Cost Index is considered the best measure of employee compensation (see below)
http://www.bls.gov/news.release/eci.nr0.htm
Their table shows the 12 month INFLATION-ADJUSTED number is +0.8%. At a glance I don't see their inflation-adjusted 3 month number anywhere.
==================================================================
From: https://www.piie.com/blogs/realtime-economic-issues-watch/us-wages-grew-fastest-pace-decades-2021-prices-grew-even-more
By fixing workforce composition, the ECI provides a more accurate picture of what is actually happening to wages.
[1] The Pandemic’s Effect on Measured Wage Growth, The WHite House, 4/19/21
https://www.whitehouse.gov/cea/written-materials/2021/04/19/the-pandemics-effect-on-measured-wage-growth/
=====================================================
This particular one is INFLATION-ADJUSTED wage and salaries for private sector workers.
Note the build-up to the Q2.2020 peak. Then it plateaued through Q1.2021, President Biden's first quarter, then went down, thanks to the beginning of a strong economic recovery combined with Trumpian supply chain shortages causing prices to go up faster than wages.
Finally it has been turning up since a local bottom in Q3.2022 for six quarters thanks to subsiding inflation and strong wage growth.
The last reading (103.6) is 2.7% below the peak, and 2.5% below the Q1.2021 value.
We're not quite at the 2019 Q4 pre-pandemic level of 104.4, but are getting there (We're down 0.8% from that level).
It seems that according to the media, that workers trying to catch up to inflation and to having the same purchasing power as before the pandemic is a major contributor to roaring inflation. Myself I think that as long as their compensation lags inflation, they are a restraining force rather than a contributing force to inflation.
Source: https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing
There's a "Download data" link at the lower left of the second graph at the Source
The source link just above also compares to inflation-adjusted average hourly earnings and also to inflation-adjusted median usual earnings of full-time workers.
This (the ECI) is reportedly the Fed's favorite wage and salary indicator as explained earlier in the post.
We just can't have these worker bees finding out what freedom from the yolk of debt is like, they might figure out that they have more value than we afford them! They might have better lives, and better health, gawd forbid!
Kick in to the DU tip jar?
This week we're running a special pop-up mini fund drive. From Monday through Friday we're going ad-free for all registered members, and we're asking you to kick in to the DU tip jar to support the site and keep us financially healthy.
As a bonus, making a contribution will allow you to leave kudos for another DU member, and at the end of the week we'll recognize the DUers who you think make this community great.
