Average Hourly Wages vs. CPI: Are You Ahead?

Average hourly earnings for all employees unexpectedly declined 0.2%, $0.06 per hour in December vs. November. This was the largest month-to-month percentage drop since the data series began in 2006.

The following charts will help put wages in perspective, on an annual basis (percent change in wages vs. wages the same month a year ago).

Average Wages All Private Employees

Average Wages Production and Nonsupervisory Workers

Average Wage Increase Minus CPI

No Benefit From Inflation

Economists tout the benefits of inflation. The idea is nonsensical.

Wages vs. the CPI are up 0.88% vs a year ago, but wages minus the CPI have spent more time in negative territory than positive territory since June 1973!

Moreover, please note the CPI does not take into consideration property taxes, income taxes, payroll taxes (social security, disability, unemployment), debt service, or various fees. The above numbers are even worse than they look.

I repeat my challenge to Keynesians: "Prove Rising Prices Provide an Overall Economic Benefit".

Related:
Strong Jobs Growth in December with Upward Revisions to October and November

About the Author

Investment Advisor Representative
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