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Real average and aggregate wages declined in October

Summary:
Real average and aggregate wages declined in October October’s consumer inflation reading came in at a surprisingly high +0.4%, which as shown in red in the graph below, was one of the 3 highest in the past two years. Meanwhile average hourly earnings increased less than +0.2% – the second lowest reading in the past two years, shown in blue: As a result, real average hourly earnings decreased -0.2% last month, the worst reading since late 2017: In a longer term perspective, this means that real wages declined to 97.6% of their all time high in January 1973: On a YoY basis, real average wages remained up +1.7%, as they have been since June, and still below their recent peak growth of 1.9% YoY in February: Aggregate hours and payrolls have improved

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Real average and aggregate wages declined in October

October’s consumer inflation reading came in at a surprisingly high +0.4%, which as shown in red in the graph below, was one of the 3 highest in the past two years. Meanwhile average hourly earnings increased less than +0.2% – the second lowest reading in the past two years, shown in blue:

Real average and aggregate wages declined in October
As a result, real average hourly earnings decreased -0.2% last month, the worst reading since late 2017:

Real average and aggregate wages declined in October
In a longer term perspective, this means that real wages declined to 97.6% of their all time high in January 1973:

Real average and aggregate wages declined in October

On a YoY basis, real average wages remained up +1.7%, as they have been since June, and still below their recent peak growth of 1.9% YoY in February:

Real average and aggregate wages declined in October

Aggregate hours and payrolls have improved significantly since July, so even though they declined -0.1% in October, real aggregate wages – the total amount of real pay taken home by the middle and working classes – are up 30.1%  from their October 2009 trough at the beginning of this expansion:

Real average and aggregate wages declined in October

For total wage growth, this expansion remains in third place, behind the 1960s and 1990s, among all post-World War 2 expansions; while the *pace* of wage growth has been the slowest except for the 2000s expansion.

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